AT&T cable telephony on hold

Workers aren't the only thing being sacrificed at AT&T. The cable division is reining in its ambitions in the cable telephone business.

Suppliers and Wall Street executives said that AT&T is largely putting on hold plans to expand its cable telephone operation, a business that served as the rationale for AT&T Chairman Mike Armstrong's $100 billion-plus cable system shopping spree. AT&T currently offer telephone service on portions of 16 systems. The executives said that AT&T has told them that no additional systems would launch telephone services this year. Further, telephone service will not be expanded much in the systems already offering service.

"AT&T does not plan to issue any more cities this year," said Antec CEO and president Bob Stanzione, who was a major supplier of cable telephone equipment to AT&T Broadband.
At the end of December telephone service was available to about 6.2 million out of the 24 million homes AT&T's systems pass. (The unit has 16 million actual basic cable subscribers.) Last fall, the company had been looking at nearly doubling that both through adding new markets and completing upgrades of existing systems in areas such as San Francisco and Chicago. "Now I don't think they'll add even a million homes passed," said one telephone analyst.

AT&T Broadband would not detail its cable telephone plans, but Chairman Dan Somers hinted at the fallback recently, telling securities analysts that after adding 200,000 phone customers in the fourth quarter to hit his goal of 550,000 by year end, the company would probably maintain that pace. "The kind of growth we're sustaining is the kind of growth we've had," Somers said. "We think this buisness needs to show margin improvement." - John Higgins