AT&T sees multi-billion dollar investment in Net

New York -- Better late than never.

Only decades after the creation of the Internet protocol -- and a scant four years after the World Wide Web infiltrated the popular lexicon --AT&T has declared the Internet to be the future.

"There's a new standard, and it's IP," announced AT&T CEO C. Michael Armstrong. "It gives a technological freedom that just didn't exist a few years ago."

Speaking Thursday morning at Internet World, Armstrong announced several billion dollars in new investments in Internet projects as he lashed out at the Baby Bell local phone companies for levying what he called a "hidden tax."

Hear AT&T CEO Michael Armstrong's complete keynote from Internet World.

AT&T's interest in the Internet most dramatically manifested itself in the recent $48 billion acquisition of cable television operator TCI. The long distance company plans use TCI's cable lines into about one third of American homes to deliver high-speed Internet, IP-telephone and television service.

"If all these services are digital, there's no reason to confine them to separate lines," Armstrong said.

He said the introduction of high-speed access to the home will mean a surge in e-commerce and in the number of telecommuters.

"We will do for IP what we've been doing for years for the telephone," Armstrong announced, making what some might at first have construed as a threat. "We'll make it safe, reliable, and secure."

Billions for IP
He also announced that AT&T will invest billions into three new IP initiatives: An international clearinghouse for IP-telephony services. The clearinghouse will help voice-over-IP carriers work together, with the intent of delivering lower rates to consumers.

Armstrong said 50 companies are using the new clearinghouse already. An interoperability lab. The lab, yet to be created, will allow software and hardware developers to work together to "ensure the consistent development of standards" in IP products.

A research center. AT&T will invest several billion dollars in a multi-year agreement with UC Berkeley to carry out research and development for Internet technologies.

Armstrong charged that the chief threat to the development of IP telephony, a technology upon which AT&T has staked a considerable sum, is the access fees local exchange carriers charge long distance companies to carry long-distance calls.

The fees are about six times the actual cost to the local carriers to transmit the calls, which Armstrong said constitutes "a hidden tax." He said the Baby Bells' plan to apply those fees to voice-IP calls would "choke the development of this industry and stifle innovation."

Not only should IP calls be free from access charges, Armstrong argued, the charges should be eliminated for conventional long distance calls as well. Separately, Armstrong said the company is comfortable with earnings estimates.