According to Chairman Edward R. Whitacre, "at&t will not give its pipes away." Mr. Whitacre is a lifelong employee of the old AT&T and the Bell Telephone system, and no doubt (in his mind anyway) his crowning achievement was to put the telephone company back together--at least the parts not owned by Qwest and Verizon, which by-the-way, include MCI, that old Bell nemesis that started this mess back in the last century.
The pipes Mr. Whitacre is referring to are the last mile connections to our houses and places of business, favorite bars and so on. The last mile is an industry buzzword for the copper wire that connects us to the old telephone network. I say "old" for even though the telephone network is still the big kahuna for talking and faxing (about 180 million U.S. telephone subscribers use it every day), it is aging fast. In fact it is technologically dead, a condition that Mr. Whitacre will not admit, for at&t is racing forward with a new hybrid system to transmit voice and data and video that relies on that poor, brittle, slow copper wire for the "last mile."
Mr. Whitacre does not talk about the miles in between the last miles. In the last few years, tens of thousands of miles of copper have been replaced by fiber optic cable. More than we need. There are more unused strands of fiber-optic cable strung around the world than stars in the sky. And those strands of glass connect population centers all over the world; East, West, North and South; yep it runs under the oceans too. Compared to copper wire, fiber-optic cable is like a Ferrari is to a Volkswagen Beetle. It ain't no contest Alice.
Messages race around the world on fiber (and satellite), but when they get to our neighborhoods they screech to a halt and crawl into the house on copper wire. Mr. Whitacre likes it that way. Now don't get me wrong; at&t (and Verizon and Qwest) have miles and miles of fiber-optic cable too, but they also have lots of competition for that long haul business. And so they have staked out the last mile to defend their turfs; not with innovative products and services--no, with money. Money thrown at the politicians in Washington.
Mr. Whitacre says he paid for that last mile and therefore deserves a decent rate of return on his investment. (I'll get back to that in a minute.) And furthermore, he says, "I'm not going to let my competitors use it for nothing." He claims to be talking about Yahoo and Google and Microsoft and a hundred other companies that are bringing new and better communications tools for us to use. But he is really talking about us--the consumers. He wants to build a fence around that last poor little strand of slow-poke copper and charge extra for certain Internet activity. at&t can't compete with better products and services and so why not just lock the gate? Of course we, the poor lobby-less consumers, do not have a Congressman hooked on our tool belt, but if we did, we would point out that we already paid for access to our ISP--handsomely in fact, to the tune of $40 per month and up for broadband service. And our ISP pays for every bit and byte of data that it transmits over Mr. Whitacre's slow poke last mile.
Now back to Mr. Whitacre's claim that at&t deserves a decent rate of return on its investment. Why? Is Disney guaranteed a decent rate of return when they make a bad movie? Remember the New Coke? Was Coca-Cola rewarded for that flop? If you're old enough, you surely remember the Edsel, the largest disaster in automotive history. Who reimbursed Ford for that fiasco? If at&t can't make money under the present Internet open source system, step aside. Who cares if at&t carries Internet traffic or not? Do you? I don't?
Mr. Whitacre has worked for a monopoly for so long that he can't stop looking to the government to bail him out. He's used to bullying his way to success, the consumer be damned. Sadly he has the money to do that in Washington. But it will be a temporary victory, for the Googles and the Skypes of this new age will surely find a way around Mr. Whitacre's legislative roadblock. Where will at&t turn then? Probably to new management; executives seasoned in the rough and tough world of free enterprise. at&t and the other Bell survivors will have to flush out the current crop of monopolist bred managers, if they are to survive.
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