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AT&T CEO Has Tough Message For Regulators

SAN FRANCISCO –- Spectrum, government regulation, Google and the iPhone were the topics in the air, as AT&T CEO Randall Stephenson participated in a Q&A session at the Web 2.0 Summit here today.

He began with government regulators, saying they are holding back faster broadband access to consumers and have stymied some of the telecom giant's decisions to invest more in infrastructure. He added the situation is better than it was a few years ago and pointed to California, Texas and a few other states that repealed what he called restrictive regulations.

Randall Stephenson
Stephenson
Source: AT&T

Stephenson referred to a project in Connecticut where AT&T had planned to distribute its IP-based U-verse service that would provide up to 32 megabits of broadband to homes. "This week the PUC [Public Utility Commission] said 'No, we want you to be a cable company.' We had to turn off all investment and lay people off," Stephenson said.

He described AT&T's desire to promote speeding up the velocity and volatility of commerce. "If you want to slow that down, put in rules and regulations like in 2001. If I could wave a magic wand, I'd say to [the franchise regulators], 'Get out of telecom. Get the hell out.'"

And then there's the iPhone. One of AT&T's more high-profile businesses has been its partnership with Apple, which Stephenson said is "going great." But he had to face questions about AT&T's Edge network, which supports the iPhone.

He said the iPhone uses Edge because Steve Jobs wanted it that way. He wanted "a broad network that covers all the U.S. There isn't another one like it."

Stephenson admitted he was personally frustrated by Edge's slow speed, but "Wi-Fi is a pretty darn good surrogate at up to 6 megabits per second speeds."

"Edge will get better as we upgrade to 3G in most markets." He also said AT&T plans to soon make changes in how iPhones can be purchased so that businesses can buy them as part of their corporate accounts and distribute them to employees. Existing AT&T customers have to buy iPhones as if they were new customers.

On the upcoming government auction of 700 MHz spectrum, Stephenson said he wasn't sure if AT&T would participate. When asked why AT&T would be willing to potentially cede the spectrum to Google, which has said it's prepared to make a minimum bid of $4.6 billion, Stephenson noted that's not quite the case. "Google has not said it will bid $4.6 billion, but would if the network was open and met a litany of other conditions."

He said the decision on whether to bid on the spectrum will come down to whether AT&T can figure out if it's worth the expense.

"I don't know if you can make money providing open access," he said. "Can someone go in and bid the reserve prices of $4.5 billion and then build a network? Can you make money" after all that? "It's an interesting question."

He did say he thinks the spectrum will be open to others regardless of who buys it and expects AT&T to participate. "It's the best spectrum you're going to see for a long time."

Asked about Google and other Internet companies benefiting from AT&T's infrastructure investments, Stephenson said it didn't bother him at all. "Others ride the capital investments we've made; it's the nature of the business." He later noted AT&T itself is going to move aggressively in competition with Google's Goog411 business.

"We're getting our ad-supported model up pretty quickly. If anyone should have an ad-supported network, it's us."