Tuesday, August 01, 2006

AT&T at strategic decision point for wire line service

It's decision time for Ma Bell. It's no secret that telcos like El Dorado County's provider, AT&T, have seen revenue from their wire line business decline as consumers stampede to cell phone service. Some consumers have even dropped their land lines completely, relying exclusively on their cell phones for voice communications. AT&T CEO Ed Whitacre told a meeting of regulators in San Francisco today that AT&T will lose 2.5 million to 3 million land line customers this year.

If AT&T is to restore lost revenues from its wire line services, it must offer more than just what's known as Plain Old Telephone Service (POTS). AT&T must bring high speed data service -- i.e. broadband Internet connectivity -- to its wire line offerings and so do very quickly throughout its customer base if it hopes to recoup its lost revenues.

In El Dorado County, there's tremendous pent up demand for broadband since many county residents and businesses are limited to dial up service that might have been adequate in 1993 but is woefully inadequate today. AT&T should seize this opportunity and upgrade its aged, deteriorating wire line infracture in the county to fiber optic, which would allow it to offer voice and broadband Internet as well as other services in a way that's far superior to the frequently problematic interim technology of DSL. By upgrading its wire line plant in El Dorado County, AT&T can offer multiple services that can generate revenues that can more than offset the decline in its traditional land line POTS service.

If AT&T concludes investing in its wire line assets in El Dorado County won't generate adequate investment returns, it's time for it to bite the bullet and make the necessary business decision to pull out of the county. Divesting would make way for other providers to serve the county's pressing current and future telecommunications needs. It would also remove the chilling effect on market competition in the county that AT&T casts by its mere presence.

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