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AT&T: Fed Stimulus Package Should Focus on Broadband

Telecom Makes Pitch as Video Service Hits 1 Million Customer Mark

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NEW YORK ( -- AT&T is eyeing President-elect Barack Obama's stimulus package as a "wonderful opportunity" to continue to build out broadband networks into areas where it make little commercial sense to invest. While broadband penetration has grown over the past several years, there remains an opportunity to reach the last 25% to 30% of homes where it isn't necessarily available.

John Stankey, CEO of AT&T Operations, said part of the stimulus package should focus on communications infrastructure for rural and outlying areas. When people ask why he hasn't invested as heavily in rural Kansas as he did in urban Dallas, he said, "it's that I can't earn back my cost of capital in rural Kansas." His remarks came during today's Global Media and Communications Conference, hosted by investment bank UBS.

He continued: "So it seems to me if you lower the hurdle rates on the cost of capital, you might have an answer to some of that, and I think the policy makers are kind of looking at that as a dynamic. That's probably going to be pretty good for our business."

Historical model
The government could follow the model of deploying universal voice service when it shapes its broadband policies, he suggested.

While voice services used to be AT&T's core product, it has expanded into a host of other offerings as consumers increasingly move from landline services to mobile phone plans. Mr. Stankey said AT&T is also seeing a shift from fixed broadband environments to mobile broadband and from linear TV viewing to on-demand, internet-delivered TV.

The telecom, along with Verizon, has been challenging traditional multichannel TV providers -- cable and satellite TV companies -- to deliver video service to homes, and it announced its video customers will pass the 1 million mark this week. Previously it had suggested it would do so before the end of the year, and Mr. Stankey plugged the milestone as happening ahead of schedule.

AT&T is working toward integrating its various products and its consumer and business offerings, he said, including on the marketing side. "From an advertising perspective -- direct mail, sponsorships, how we buy media time, by bringing both sides of the business together -- there are a lot of efficiencies that come out of that process," he said.

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