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April 1, 2012
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One-On-One: Mary Pat Regan

AT&T Kentucky President Mary Pat Regan discusses the company’s services, future growth and planned capital investment in Kentucky

By Ed Lane

Ed Lane: You were appointed president of AT&T Kentucky in early 2009 and oversee regulatory, legislative and community affairs in the state. Could you further elaborate about your job duties and responsibilities?

Mary Pat Regan: I have responsibility for regulatory and external affairs teams. The external affairs team works out in the communities and in Frankfort. It monitors bills that are being moved through the Kentucky General Assembly. Our team defends and protects if there are potential adverse implications to AT&T or our customers. It also runs bills like the modernizing telecom laws that passed in 2004 and 2006. The external affairs managers also have responsibility in the communities for volunteer and foundation check presentations.

The regulatory team is responsible for dealing with the Public Service Commission, in implementing any laws and providing reports. Basically this team keeps AT&T on the straight and narrow, and in compliance with applicable laws.

EL: One industry trend seems to be for wired telephone systems to bundle with other IT service providers to provide a package of services to compete with cable broadband providers. What are future trends in this segment of the telecommunications industry? 

MR: Customers are really demanding service packages. They want a one-stop shop, so AT&T’s products and services are in response to our customer’s needs. Our competitors are also offering packages.

EL: What is the lowest cost for AT&T’s wireless and landline services in Kentucky? 

MR: A low-income family can qualify for (government-supported, discounted) Lifeline service available from AT&T. A qualified family gets a credit off its bill.

The least expensive landline plan with the Lifeline credit is $15.90, while the least expensive price for wireless service with a Lifeline credit is $16.74. For anyone, the least expensive wireless option is our prepaid service that allows purchase of $100 worth of airtime that is good for one year; that works out to an effective rate of $8.33 per month.

EL: How are taxes for communications services regulated in Kentucky?

MR: Pass-throughs of federal or state levies are governed either by the Federal Communications Commission or the Kentucky PSC. AT&T is not considered a utility. Probably the biggest misconception is that AT&T is a utility, and it is not. The communications market is highly competitive.

The PSC does not regulate wireless service, but consumer protections still apply. The PSC has jurisdiction over 15 percent of the landlines that are left. AT&T was first unregulated in 2004, then again further in 2006 (by the Kentucky Emerging Technology and Consumer Choice Act).

AT&T can set its own rates without getting PSC approval, but the market really drives the price.

EL: Recent Kentucky Senate Bill 12 (formerly SB135) to further deregulate AT&T’s telecommunication services did not pass the Kentucky General Assembly. What were the key issues regarding AT&T’s proposal to modify its basic services?

MR: The goal of the bill was to modernize telecom law. There are existing laws and requirements that only apply to telecommunications companies and don’t make sense in the world we are living in today. AT&T wants a basically level playing field and the ability to take investments into products and services that people want. Consumers are looking for wireless broadband voice service. AT&T’s goal is to invest in both broadband and wireless in the rural communities and give people in rural areas the same opportunities that are available in urban areas.

I think there was confusion about SB12 because the legislation was originally proposed under one number, but that bill was not officially rolled out. AT&T worked with the Kentucky Resource Council, the League of Cities, the PSC, AARP and other groups to get their input on the first language, and also with legislators on issues they may have considered to be problematic. The original bill as it was first written wasn’t the same as SB12; there was confusion about the bill. Basically, we just ran out of time.

I believe there was concern that AT&T was going to take phone service away from people. If our customers have phone service today, they will have it tomorrow. Look at any other state that has passed this legislation, and no one has lost phone service.

Our Kentucky team definitely wants to bring more investment and jobs to Kentucky. What concerns me is that AT&T Kentucky has to compete for (company) capital against 50 other states (in which AT&T does business). Telecom modernization bills passed in Indiana, North Carolina and Tennessee. When I go to compete for capital investment in Kentucky, it may instead be invested in states where there is a positive business climate and AT&T can invest with certainty. It really gets down to: Do you really want to keep investing

in a network that people don’t want, or do you want to invest in the future – wireless broadband phones, what consumers are demanding.

EL: Last June, AT&T announced plans to invest $525 million into its land lines and wireless networks over the next three years. How will these funds be used?

MR: Actually the updated amount is $600 million, and it’s not only for maintenance of landlines but also for bringing 3G and 4G (network services), expanding broadband in rural areas and building cell towers.

The $600 million capital investment is not enough to keep up with the demand for faster data speeds. In 2006, when the telecom law was updated, the iPhone (whose apps generate high data usage) hadn’t even been rolled out yet. So that’s the kind of data explosion telecom is experiencing.

EL: How significant was AT&T’s strategic relationship with Apple to introduce the iPhone and iPad to its customer base?

MR: Apple has been a fantastic product, but no one could have predicted at the time how many people would use it to download movies, books and applications. The explosion has created an 8,000 percent increase in data usage during the last couple of years. AT&T has kept building more infrastructure to boost its service capacity. (The company invested $20 billion in 2011.) That’s why the T-Mobile merger was so critical to AT&T, because there’s only a limited amount of (wireless data) spectrum, and we need that spectrum to be able to provide the speeds that people want. Data growth is just going to keep escalating. Unfortunately, the T-Mobile merger went sideways. (AT&T officially terminated its $39 billion plan to buy T-Mobile on Dec. 19, 2011.)

EL: Do you see a future merger?

MR: I’m not privy to that, but I anticipate as a corporation AT&T will be looking at ways of gaining spectrum because it has to have it. But as far as a merger, no new deals have been announced.

EL: When AT&T builds a cell tower, will it share the structure with a competitor?

MR: It depends. There are areas where it makes financial sense for AT&T to share the cost, and other competitors may use our facilities. And there are other areas where it makes sense for us to exclusively own our tower.

EL: How does AT&T manage day-to-day technical operations in Kentucky?

MR: There are different AT&T organizations, and each one reports up to a different manager. I report up into our Washington, D.C., office. My boss’s boss is also in D.C., and he reports to Randal Stephenson (chairman, CEO and president of AT&T Inc.) in Dallas. The (telephone and data) network team reports up through Dallas. The head of each AT&T management group is either located in Dallas, Connecticut or Washington, D.C.

EL: How many people work for AT&T in Kentucky?

MR: In June 2011, AT&T Kentucky employed over 3,200 employees. In 2010, AT&T’s Kentucky payroll exceeded $194 million and its operations generated more than $197 million in Kentucky taxes. We also operate 23 company-operated retail locations in the state.

EL: How many customers does AT&T serve in Kentucky, and what is the company’s share of the state’s telecommunications services?

MR: That information is proprietary.

EL: There are time periods when customers experience dropped calls or weak signals. What are the primary factors that cause dropped service, and what is AT&T doing to resolve this issue?

MR: A cell tower’s capacity could be an issue or a cell tower’s signal may not extend to the next tower. I know for a fact while driving back and forth from Lexington to Louisville there are areas where there’s a drop. We’re identifying areas where the network needs improvement. Part of the capital investment plan is to reduce dropped calls. I am happy to report you can now drive the Bluegrass Parkway (Versailles to Elizabethtown) pretty much the whole way without a dropped call.

EL: How can wireless users help AT&T identify cell phone dead spots in Kentucky?

MR: They can call into the customer service center or call into our offices in Louisville. There’s also a free app to identify AT&T’s poor service areas. When you get on the app, it will record the spot where the call was dropped and advise AT&T.

EL: How does the wireless network accommodate communities that have large seasonal increases in wireless demand due to educational facilities, venues for special sports and entertainment events, or seasonal tourism?

MR: AT&T brings in COWs (cell towers on wheels), or we can bring in other equipment. We work with the mobility team on special events to provide adequate services. I’m sure in New Orleans at the NCAA tournament, AT&T positioned COWs and generators to boost capacity. AT&T can mobilize where it needs to. If a tornado hits one of our towers, we can bring in a mobile tower while the damaged one is being repaired. AT&T can do that all over the world. The past year has been the worst weather in the South, and we’ve been mobilizing people and technicians all over.

AT&T was the first private company to be certified for the Federal Emergency Preparedness Program. We’ve done a couple demonstrations: The last one was in Atlanta, and it’s very impressive how the program can maintain or recover communications services following natural or man-made disasters.

EL: Who are AT&T’s major wireless and landline competitors in Kentucky?

MR: Insight (recently purchased by and now converting to Time Warner), Verizon, Windstream, Bluegrass Cellular and the rural carriers. The marketplace is very competitive.

EL: You are active in Greater Louisville Inc., the Kentucky Chamber of Commerce and the Bluegrass Economic Advancement Movement (BEAM) as well as a number of not-for-profit and educational entities. How do you rate the performance of GLI and the Kentucky Chamber?

MR: I would say that both organizations are really doing a great job. GLI has been very effective with its 55,000 Degrees program in education, the Ohio River Bridges Project, logistics, and bringing in new Ford and GE product lines. The Kentucky Chamber has been very effective in Frankfort. (President/CEO) Dave Adkisson has done a fabulous job leading the Kentucky Chamber. Both organizations have a focus on recruiting jobs and investment, and creating a pro-growth business environment throughout the state.

EL: The BEAM mission is to create a super region comprised of the Greater Louisville and Lexington trade areas (and counties located in between) in which to provide advanced manufacturing opportunities for companies from around the world. When will this initiative become more formalized and active?

MR: I attended my first BEAM meeting the other day at the Kentucky Historical Society (office in Frankfort), and one of the issues people focused on is that Kentucky doesn’t have enough people with the skill sets needed to attract advanced manufacturing. So it’s important to communicate to students that it’s critical to get a postsecondary degree.

A BEAM report will be coming out later this summer, and there are going to be additional meetings with small groups.

EL: AT&T’s Kentucky headquarters are located in Louisville. Do you have a comment about Louisville Mayor Greg Fischer’s performance?

MR: Mayor Fischer is doing a fantastic job. He’s very pro-business, inclusive of everyone in the community, and very focused on compassion and giving back to the city.

EL: Do you have a closing comment?

MR: Kentucky is using all the right tools to grow its economy. There’s a great public-private partnership effort throughout the state. Kentucky business and political leaders all have the same goal: to move Kentucky forward. They may not agree on how to get there, but everyone’s focused in the right direction. Kentucky is a great state. I’ve only been here three years, and I call it home.

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One-On-One: Mary Pat Regan
AT&T Kentucky President Mary Pat Regan discusses the company’s services, future growth and planned capital investment in Kentucky

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