Here’s a sneak peek at a new commercial for a wireless company. It opens with a look into the office of a top executive, who is conducting a meeting. Into the foreground comes the head honcho’s doppelganger, who speaks:
“Hi, there. I’m Randy’s phone. Randy is working on a big announcement. But Randy doesn’t have AT&T service, so he missed the heads-up call about President-elect Obama’s speech touting the benefits of broadband. While the President-elect talks about it being unacceptable to be 15th in the world with broadband adoption, Randy will go out and announce 12,000 more job cuts. That should go over well with the new Administration. Good luck in Washington next year.”
It was quite a week for broadband policy, dominated at first by AT&T, then capped off by the Obama announcement. AT&T Chairman Randall Stephenson started it off on Dec. 2 with a speech to a Fortune 500 conference on economic policy. He boasted about how his company’s investment in technology, about how AT&T’s investment “enables companies like Google, Amazon.com and E-Bay to grow using this Internet infrastructure.”
Time out for this Irony Alert. It shouldn’t be lost on anyone that since AT&T and Verizon swallowed the long-distance industry, that they, particularly AT&T, have tagged Google as Public Enemy No. 1. AT&T’s friendly legislators have introduced bills to have Google investigated. AT&T’s hired consultants produce bogus studies to sully the company. Telephone company lobbyists fought a rear-guard action to kill Google’s ad deal with Yahoo. Now, it turns out that AT&T has admitted it is partially responsible for Google’s success. Stop the presses! (For those too young to know this expression, you can look it up on Ask.com.)
Stephenson in his speech boasted about bringing back 5,000 jobs from overseas, noted as well that: “Bottom line, when government adopts policies that encourage investment in infrastructure technology, job growth and commercial velocity always expand.” In fact, the government has been pretty kind to AT&T. The Federal Communications Commission (FCC) and the Justice Department have let it buy up most of the rest of the telecom industry that Verizon doesn’t own (or doesn’t want.) AT&T, as with others, doesn’t have to share its broadband lines with pesky competitors. In short, life is good.
How good? In its third-quarter earnings report, just about every one of AT&T’s indicators did just fine. Earnings per share? Up. Revenue? Up. Earnings? Up.
In fact, things are going so well for AT&T that it can spend $2 billion each quarter simply to buy back stock and boost its stock price. That’s $6 billion through the first three quarters of 2008 that won’t help to lay one new foot of fiber, or bring faster service to one new rural community, or help one new school get connected. All it does is jack up the stock. At the same time, AT&T’s investment in its network is about the same level, or higher, than the stock buy-back. That combination signals to analysts that AT&T is focused on harvesting the money in the short term. Through three quarters this year, AT&T’s capital expenditures were $14.8 billion, the same as its depreciation. For comparison, Verizon’s capital expenses were $12.5 billion, with $10.8 billion for depreciation.
Two days after Stephenson’s speech, AT&T announced it would cut 12,000 jobs and lower its capital expenditures next year. The company didn’t say in which part of the company the cuts would occur, although it said that jobs would be added in broadband and wireless. In making the announcement, the company didn’t say anything about cutting back its plan to spend more non-productive billions to buy back stock.
AT&T’s news set the stage for Obama, who said on Dec. 6 he wants to “renew our information superhighway.” Obama said: “It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the internet, every child should have the chance to get online, and they’ll get that chance when I’m President – because that’s how we’ll strengthen America’s competitiveness in the world.”
He’s right, and the difference between Obama’s speech and the lip service that broadband got under the Bush Administration is that Obama and his policy team means it. There’s even talk of some sort of broadband provisions in the next stimulus package early next year. It’s a given that the words, “stimulus package” in Washington are the equivalent of throwing chum in the water. Both attract sharks.
There might be good reason for some help some companies. But companies that spend billions of non-productive dollars and are profitable in the midst of a recession need not apply and shouldn’t be eligible. Randy should know that, even if his phone won’t pass on the message.