Ackerman addresses net neutrality, New Orleans

BellSouth Chief Executive Officer Duane Ackerman shared his thoughts on a range of subjects--including video offerings, network neutrality and the status of its network in New Orleans--in an informal question-and-answer-style presentation at the Citigroup Entertainment, Media and Telecommunications Conference this morning.

The issue of network neutrality comprises two subjects, he said: access and network management. On the first subject, he said, “We don’t want to block anyone’s access to a Website or change their experience.”

On the subject of network management, which will become increasingly important as carriers such as BellSouth move deeper into the video market, telecom carriers will have to work with content providers as well as government agencies to establish workable solutions, he said. “There will ultimately need to be some commercial agreements established. Seldom can you deal with ubiquity without multiple revenue streams making that happen.”

“I’m not sure we want to put it on the backs of consumers to make all this happen,” he added. “I believe there are ways to do this that are smart and good for the overall marketplace.”

“I would not say I’ve got this plan all worked out,” Ackerman said later, in response to another question on network management and neutrality. “We’re just at the very beginning of this. Probably 5% of our customers drive 80% of our traffic…But whether we’re talking about video, music or games, we’re going to consume a lot of bandwidth. I don’t have a specific plan, but there’s room for some rational discussion here to say, ‘Is there not a role for the carrier? Can [carriers] make this market better, and is there not some value in making that happen?’ I think that makes a lot of sense.”

When asked about the importance of proprietary content to BellSouth’s business model, Ackerman acknowledged the benefits of unique content but seemed to favor a mix of proprietary and non-proprietary offerings. “As you see more fragmentation here, the amount of time for which that’s proprietary will become shorter,” he said. “Unique content is going to be important, but taking this world…and making it easy for a mass market to do what they want to do when they want to do it is going to have a great deal of value.”

Ackerman also predicted continuing price competition for large enterprise customers, given the abundance of competitors in the space. BellSouth’s revenue from such customers declined about 3% in 2005, he said, adding, “I’m not looking for any great deal of growth there.”

In addition, Ackerman provided a brief update on the impact of hurricanes on BellSouth’s business along the Gulf Coast. Along the Mississippi and Louisiana coasts, he said, “Most customers who want service now have it.” But in the city of New Orleans, three parishes are “not back” in service. “Today they’re pretty vacant,” he said, with only a few establishments actively operating.

“The [New Orleans] community hasn’t decided what it’s going to do,” he said, referring to reconstruction plans. “When it does, we’ll certainly participate. We’ll be judicious about how we [restore service].”

New Orleans represented about 3% of BellSouth’s total access lines. Though the company adjusted its revenue expectations soon after the hurricanes hit, “It hasn’t had an impact to date that’s been overwhelming,” he said. “We’ve been able to manage.”