AT&T Inc. and Time Warner Cable are in a race to bundle as many telecommunications technologies and services they can to provide the best value for customers.
Nowhere in the country is that race more intense than in Wisconsin, where the companies are jockeying for market position. In effect, the telephone company wants to expand to provide television service to compete with the cable company, and the cable company is expanding to provide telephone service to compete with the telephone company. And they’re both offering digital music and other services along the way.
It’s at this juncture that Scott VanderSanden begins his tenure as the president of AT&T Wisconsin, which employs about 5,000 people in the state. VanderSanden succeeds Paul La Schiazza, who recently accepted a promotion to be the president of AT&T Illinois. VanderSanden previously served as AT&T’s vice president of regulatory affairs in Madison.
Much is hanging in the balance as VanderSanden assumes the top job at 722 N. Broadway St. in downtown Milwaukee, where the sign outside the building has changed over the years from Wisconsin Telephone Co., to Wisconsin Bell, to Ameritech, to SBC and now back to AT&T. However, the new company is not your father’s Ma Bell.
VanderSanden recently discussed his new job and the outlook of the telecommunications industry with Small Business Times executive editor Steve Jagler. The following are excerpts from that interview.
SBT: Given your background on the regulatory side of the business, are there any regulatory things hanging fire for telecommunications in Wisconsinω
VanderSanden: “The issues for many years were issues with competitors of ours, and the competitors were also customers of ours. Those disputes have diminished in the last two or three years.”
SBT: Is part of that, quite frankly, because the disputes were between AT&T and SBC Communications, and now SBC Communications has acquired AT&T, so it just doesn’t matter anymoreω
VanderSanden: “Well, those sets of disputes, obviously, went away somewhat with the merger. But there still remain competitors out there such as TDS Metrocom, and there’s others out there, U.S. Exchange. Those disputes have diminished, largely because the Telecommunications Act (of 1996) has been fought out, and all of the interpretations have been made, and we kind of know the rules of the game now.
“The next evolution is, you know, the entrance of cable providers into the telephony market. That’s a slightly different animal than the prior form of competition with TDS Metrocom, if you will, because they’re basically working exclusively or almost entirely off of their own pre-existing network.”
SBT: While were talking about the competition with the cable company … What is it exactly that AT&T hopes to provide in the way of television programmingω
VanderSanden: “It will be known as a video service. It’ll be our network, which we refer to as our Internet protocol network. We are looking to enter the video market as soon as practical.”
SBT: What will you provideω Will you provide many of the same TV stations that are provided on cableω
VanderSanden: “Well, we have actually started our network evolution, in our vernacular, that’s something that’s referred to as ‘Project Lightspeed.’ It’s basically a building out of our network, where we’re pushing fiber optic cable to increase the bandwidth to the home closer to the customer. As we do that, and I think we’re looking at spending about $4.6 billion over the entire 13-state footprint, we’ll be able to offer to the customer, the consumer, more choices.
“To that end, the product you refer to, we’ll refer to as ‘U-Verse,’ that has a number of features. One is video content. We’re looking at providing over 300 channels. There will be a digital music feature, as well as the reality of having higher speed broadband for Internet access at your home. And somewhere down the line, a newer voice over Internet protocol (VOIP) … In layman’s terms, ‘Lightspeed’ is the network, and ‘U-verse’ is the product.”
SBT: What’s the timetable of U-Verseω
VanderSanden: “We have made a commitment that we will introduce that product in 15 markets across our 13-state footprint in 2006. As it relates to Milwaukee, I think the fairest answer is as soon as we can.”
SBT: Are we talking months or yearsω
VanderSanden: “Probably closer to months.”
SBT: Has AT&T been negotiating with TV channels, like ESPN and other cable networks, to be included in your new serviceω
VanderSanden: “The short answer is yes, we’ve been negotiating to get content.”
SBT: So, you’re getting into television, and the cable company’s offering telephone service. Is this a race to bundle services and provide them to the most customersω
VanderSanden: “All of the information we have is that consumers want what we would consider a bundle. One of the advantages that we feel our bundle will have over what’s currently in the marketplace is our bundle will include cellular (from Cingular Wireless). That’s something that cable doesn’t offer today. However, I think if you read various articles in magazines and newspapers, you’ll see that they’re racing toward getting that. They’re trying to get a deal with Sprint or others. I don’t know if it’s a race to see who gets to the finish line first. I think probably both sides realize that consumers want the bundle.”
SBT: From a business standpoint, the bundling of these services – what will be advantages AT&T Wisconsin will provide for businessesω How will the bundling of services translate into value for the readers of our publicationω
VanderSanden: “Well, I think the most immediate would be the higher-speed Internet access. If I were thinking as a small-business owner, clearly a lot of your communications are going back and forth across the Internet and will have a higher speed. As we continue to deploy ‘Lightspeed,’ the closer the fiber gets to the business location, the better service they’re going to get. The most immediate benefit will be a higher speed and a more consistent broadband or Internet access.”
SBT: Going back, for a moment, to VOIP. Is that the end game hereω Are you telling me, is the phone company actually going to evolve to providing phone service over the Internet, rather than the traditional telephone over wiresω
VanderSanden: “We will continue to evolve towards that. How rapidly we get there, it’s difficult to say right now.”
SBT: There was some controversy recently over some advertising by a group that received funding from AT&T, calling for competition for cable companies. Many people said the advertising was disingenuous, since AT&T, in effect, would benefit by being able to compete against cable. What do you say to that criticismω
VanderSanden: “I think you’re referring to the ad campaign by the group TV For Us. My guess is that’s the campaign you’re talking about … I think the real answer to that question is TV For Us is an independent group. We were involved in their funding, as were many other folks. They are out there with a message that resonates well with AT&T, obviously, and I think it resonates with consumers. At the end of the day, their message is straightforward: Customer choice for video services is something they support. It’s something my company supports, and as best we can tell, most consumers support that.”
SBT: AT&T sprawls across 13 states, and that will increase to 22 when the company acquires BellSouth. Is there anything unique about the Wisconsin marketω
VanderSanden: “The one thing that stands out in Wisconsin, and particularly in Milwaukee, is that it’s the first area in our 13 states that saw what I would say is very aggressive and very effective competition on the part of Time Warner. They have been very aggressive in rolling out their bundle in Milwaukee.”
SBT: I recently checked out the ATT Blue Room (www.attblueroom.com). I mean, we’re talking about underground, alternative music. We’re touring A.J. Hawk’s “crib.” We’re hearing Deion Sanders call A.J. Hawk his “new homey.” John Mayer’s music videos are there. Austin City Limits. All of this hip stuff. When I think of all those things, the first company that comes to mind isn’t the old phone company. What’s the corporate strategy behind all thatω
VanderSanden: “First, thanks for looking at the Blue Room. It is a pretty cool thing. Really, what we’re trying to do is we’re trying to change our internal and external mindset at AT&T. We’re trying to shift it more toward the premier communication company, combined with an entertainment provider. What we’re trying to do with the Blue Room is give all consumers access to content they’d have a hard time finding elsewhere. In there will be exclusive footage of a concert or some type of recording you wouldn’t get anywhere (else). We’re trying to basically make people want to do business with us because of the really cool services and features we can provide. So, thanks for checking it out.”
Scott VanderSanden
Title: President of AT&T Wisconsin
Age: 42
Education: Bachelor’s degree in business finance from the University of Wisconsin-Eau Claire and master’s degree in business administration from the University of Wisconsin in Madison.
Hometown: Tinley Park, Ill.
Current residence: Oregon, Wis.
Family: His significant other, Susan; and two children and one stepchild.
Hobbies: “I like to compete. I’ve participated in just about every sport.”
Golf handicap: 10
