Optimistic Somers: 'I'm Happy to Stay'

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DENVER -AT&T Broadband CEO Daniel Somers indicated last week that the MSO is still eyeing a full-year goal of 3 million new revenue-generating units, despite the economic slowdown.

At Cable Television Laboratories Inc.'s media day here last Wednesday, Somers also spoke publicly about a report that said AT&T Corp. chairman Michael Armstrong wants his job once AT&T divests its broadband and wireless divisions.

"I'm thrilled so many people want my job," Somers said. "I'm happy to stay as long as they want me to. I have a great job.

"I run the largest broadband company in the world. I'm sure a lot of people want my job."

Although Somers declined to discuss specific first-quarter digital video, voice or data growth figures, he said, "I don't think there will be any difference in trends when we announce our first-quarter results."

AT&T Broadband projects a 25-percent increase in RGUs in 2001 from last year, when the company added 2.4 million RGUs.

"Our business is good," he said. "I don't see any signs that our basic products are under pressure from economic concerns that exist in the marketplace.2000 was a good year.

"This year will be a better year for our company," he said, both in terms of RGU growth and margins, which AT&T expects to increase by 3 percentage points.

Responding to speculation that the MSO would cut back on capital expenditures, Somers said that AT&T Broadband planned to complete construction in systems that have begun the rebuilding process-so all subscribers in those markets can receive new video, voice and data services-before it moves on to new activity.

"We're targeting our capital a little better," he said.

AT&T will "absolutely" continue with rebuilds, Somers said, but he declined to provide a capital-expenditure figure for 2001.

Somers said video-on-demand deployments remain on the front burner for this year, but other forms of interactive TV are on the back burner. AT&T has 3 million set-tops deployed, the vast majority of which can handle VOD.

On ITV, Somers said: "Cable ought not add a new product that has a huge learning curve hockey stick [graphically] until other products get to a certain level of maturity. That's not smart business and not smart operationally."

"Why launch something brand new when the revenue streams aren't clearly articulated?" he added. "I don't need to jump the engine anymore."

Somers said investors are seeking returns on capital that's already been invested to deliver digital video, voice and data services.

Somers defended AT&T Broadband's course of spending capital over the past two years to grab market share with new services.

"How do you do that and expect positive cash flow out of the hockey stick?" he asked, referring to standard new-business growth charts in which penetration begins slowly during a heavy spending period, only to shift to large penetration increases and a slowdown in capital spending in later years.

Somers said AT&T Broadband continues to work with Liberate Technologies Inc. and Microsoft Corp. on software trials, with a focus on system operations and scaling the interactivity.

"It's a work in progress," he said.

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