Malone: Data Is Key to AT&T


New York -- Liberty Media Group chairman John Malone said
last week that gauging his new bosses at AT&T Corp.'s success by the level of
penetration they get in the cable-telephony market is an unfair characterization.

Instead, he said, the real litmus test is how well AT&T
deploys high-speed-data services.

"If they can take local telephone fast enough into
cable, you shouldn't make that the figure of merit," Malone said, shortly after
accepting the "Man of the Year" award from the Center for Communications here.
"If you do, there is no way you can succeed. In my opinion, the real race condition
is for data, not telephony. Ultimately, telephony will ride on the back of data."

Malone added that AT&T has a hefty implementation
challenge ahead, which the company understands.

Malone said that given the prices paid for cable,
AT&T's $48 billion purchase of his former company, Tele-Communications Inc.,
seems like a bargain. But AT&T still has a way to go before investors are sold on its
cable strategy.

"The challenge is: Can you introduce those synergies
across the business in a timely way?" Malone asked. "The market has to take a
step back and look."

Malone also had good words for AT&T chairman C. Michael

"I think with Armstrong, if you say what he is about
is to diversify, to put in assets that ultimately have a lot of synergies, then already,
he's quite successful," Malone said.

But even as the players are rapidly changing in the
industry, cable operators themselves have to change the way they do business in order to
succeed, he said.

"One of the issues [is that] the [cable] industry has
historically been like a big partnership," Malone said. "They have never been in
competition with each other except on the edges. The cable industry needs cooperation.
Because of the footprint involved, they have to work collaboratively or grow to a huge
scale to satisfy competition. Collaboration is key."

During his speech, Malone touched on the growing influence
of the Internet and how companies with little track record but huge capitalizations can
change the landscape virtually overnight.

"Today, the amount of wealth creation taking place at
start-ups is such that the best and the brightest can be lured away tomorrow morning to
take your knowledge of the marketplace and combine it with their energy and technological
feel to build an entirely different company overnight, which has your genetic code as part
of it," he said.