January 30, 2006 11:58 pm

AT&T chief warns on internet costs

Ed Whitacre, AT&T?s chairman and chief executive, warned on Monday that internet content providers that wanted to use broadband networks to deliver high-quality services such as movie downloads to their customers would have to pay for the service or face the prospect that new investment in high speed networks ?will dry up.?

?We have to figure out who pays for this bigger and bigger IP network,? said Mr Whitacre, who was in New York ahead of AT&T?s annual presentation to investors and analysts on Tuesday. ?We have to show a return on our investments.?

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?I think the content providers should be paying for the use of the network ? obviously not the piece from the customer to the network, which has already been paid for by the customer in Internet access fees ? but for accessing the so-called Internet cloud.?

The major US telecommunications providers, including T&T, have come under pressure from their investors in part because of their hefty investments in new fibre optic-based networks capable of delivering advanced TV and video services to their customers.

Ahead of Congressional hearings on the so-called ?net neutrality? issue, which are due to begin in the next few weeks, senior industry executives have been floating ideas about how they might be able to charge some content providers, for example digital movie download services, for using their networks.

While they have emphasised that they are not seeking to charge additional fees for content and other services delivered on a ?best effort? basis, they argue that content providers seeking guaranteed delivery of high quality content should be willing to pay.

?If someone wants to transmit a high quality service with no interruptions and ?guaranteed this, guaranteed that?, they should be willing to pay for that,? the AT&T chief said.

?Now they might pass it on to their customers who are looking at a movie, for example. But that ought to be a cost of doing business for them. They shouldn?t get on [the network] and expect a free ride.?

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