AT&T Consumer Services

AT&T doesn't really want to talk about long-distance, which seems odd.

AT&T doesnt really want to talk about long-distance, which seems odd. The company remains No. 1 in the dog-eat-dog consumer business, with 60 million customers and the best profit margins among major carriers. And long-distance made up half of its $18.9 billion revenue.

But Wall Street sees "long-distance" and shudders. In the companys annual report, AT&T Chairman C. Michael Armstrong reiterated that the telco must stop hiding double-digit growth in wireless and broadband behind declining long-distance revenue.

Under a restructuring plan announced last fall, business services will become AT&Ts principal unit. AT&T Consumer becomes a tracking stock, while the other two spin-offs — Wireless and Broadband — will be offered as common shares.

AT&T watched long-distance sales decline through 2000 and expects the rate of decline to reach the mid- to high teens in 2001, as more regional Bells get approval to sell long-distance. Despite the drop, however, voice long-distance revenue is a cash cow that could fund other initiatives.

One proposal being bandied about is to roll AT&T Broadband into the consumer division.

Broadband has been sucking up capital to build the infrastructure needed for its successful line of cable-based services to the home — local phone, high-speed data by cable modem and interactive services. AT&Ts recent purchase of NorthPoint Communications DSL assets gives it another possible vector to sell voice and data locally.

Betsy J. Bernard, AT&T Consumers newly arrived CEO, led U S Wests DSL program. An 18-year AT&T vet who also held high-level jobs at Qwest Communications International and Pacific Bell, Bernard knows both sides of the business.

AT&T is also looking for relief from Federal Communications Commission efforts to get regional Bells to play fair in wholesale pricing and provisioning. "We need to be sure that the Bells dont have an automatic home field advantage because they own the bat, the ball and the scoreboard," Armstrong says.