| MS Software Still Buggy! AT&T's Delivery of TV Hits a Glitch
Internet-Based Service
Is Delayed by Problems
With Microsoft Software
By DIONNE SEARCEY and ROGER CHENG
January 26, 2007; Page B4
AT&T Inc.'s rollout of its new television service is being delayed by glitches in the Microsoft Corp. technology that helps power the Internet-based system.
The phone giant has begun offering the service in 11 markets, but problems with the Microsoft software have slowed the rollout, AT&T Chief Financial Officer Rick Lindner said in an interview. AT&T has decided against heavy marketing of the TV service because it doesn't want demand to increase until the problems are solved, he said.
AT&T executives discussed their TV rollout yesterday as the San Antonio-based company posted fourth-quarter results, its first financial report since its $86 billion acquisition of BellSouth Corp. The company said it anticipates bigger-than-expected savings from its takeover of BellSouth. (See related article.)
Mr. Lindner chalked up any issues with its TV rollout to "normal new-product development" and said that AT&T plans to offer TV to eight million homes by year end. "We're adding customers slowly, watching the platform and trying to train our technicians and improve installations," Mr. Lindner said.
At least seven major telecom companies world-wide are using Microsoft's system, and others are testing it. Microsoft, of Redmond, Wash., said the company spent much of the past year fine-tuning its system and that it is helping AT&T to deliver a highly competitive TV service. "We believe the biggest challenges are behind us," said Microsoft spokesman Jim Brady.
AT&T is facing formidable competition from cable companies that are selling less-expensive residential phone service and are starting to offer the same to small- and medium-size businesses. AT&T hopes its Internet-based TV will help it fight back.
AT&T originally had planned to offer TV in at least 15 markets by the end of last year. The company has blamed that delay on enhancements it was making to software and billing systems. Yesterday, Mr. Lindner pinned at least some problems with its rollout more directly on Microsoft's technology.
AT&T plans to offer its TV service to 19 million homes by the end of 2008. Microsoft is one of its main technology vendors under a deal announced in 2004, when AT&T was SBC Communications Inc.
Edward Whitacre, AT&T's chairman and chief executive, said that despite the delays and software glitches, he had faith in the technology and strategy AT&T has employed. "We like this stuff," Mr. Whitacre said during a conference call with analysts. "It works, and it's the right thing financially."
AT&T shares rose 16 cents, or 0.4%, to $36.79 in 4 p.m. composite trading on the New York Stock Exchange.
In taking over BellSouth, AT&T also gained full control over Cingular Wireless, which it had shared with BellSouth. AT&T says it expects the net value of savings from that merger to be as much as $22 billion, about $4 billion more than it had initially estimated.
AT&T's wireless unit, which it is renaming with the AT&T moniker, continues to benefit the company. Cingular reported Wednesday that its net income tripled in the fourth quarter as it added a record 2.4 million net new subscribers in the quarter.
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