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WisBusiness: AT&T Wisconsin's New President Ready To Lead A Changing Company

By Brian E. Clark

AT&T is evolving and so, too, is Scott VanderSanden.

During his tenure with the phone company, VanderSanden has been deeply immersed in the minutia of the Telecommunications Act of 1996. His most recent position was as vice president for regulatory affairs, working primarily with the Wisconsin’s Public Service Commission.

He led the company’s successful efforts to offer long-distance phone service. And he directed a major wholesale pricing review before the PSC that resulted in the firm getting more money for the lines it rents to competitors.

But VanderSanden, who became president of AT&T Wisconsin last month, now has broader concerns. Among them will be overseeing the launch of U-verse, the company’s new Internet-protocol video service that he says will help “morph” AT&T into an entertainment company. He also will be in charge of the Badger State implementation of Project Lightspeed, a multi-billion dollar, three-year investment in the company’s network across 13 states.

WisBusiness editor Brian Clark talked recently with the soft-spoken, 42-year-old VanderSanden about his work with AT&T and changes coming to the company. An avid cyclist, hockey player, golfer and skier, VanderSanden replaced Paul La Schiazza, who became president of AT&T Illinois.

Clark: How many years have you worked for AT&T and what all have you done in your career with AT&T?

VanderSanden: It’s been 17 years. I started with the company in 1989 (five years after the original AT&T was broken up into seven regional Baby Bells). Back then it was known as Ameritech. I worked in Chicago and my very first job was as a financial analyst. I’d graduated in 1987 from UW-Eau Claire, worked for a small insurance firm in Illinois for about 18 months and then moved on to Ameritech.

After doing the analyst job for awhile, I moved into a position in the regulatory department where I was responsible for working with a team that set the prices for what we call access service, which we sell to the long-distance providers. I did that for a number of years and after that my career morphed into a position where I spent more and more time working on policy.

For a period of time there, I lobbied the FCC. I was working on issues like access reform – which was connected to what I had been doing – as well as the early stages of what ultimately would became the Telecommunications Act of 1996. I came to Wisconsin in 1997 where I lobbied the state’s Public Service Commission on any number of issues. But the bulk of my activity at the PSC has been dealing with our wholesale customers, who are also our competitors, which is an interesting dynamic. I did that job for a number of years and now I have this position, which effectively began Nov. 1.

Clark: You are from Illinois originally?

VanderSanden: I was born and raised in Tinley Park, which is about 20 miles or so southwest of Chicago.

Clark: How did you choose UW-Eau Claire?

VanderSanden: My linkage up here is that my father was born and raised in north central Wisconsin east of Tomahawk. He was one of nine kids, so I spent many, many days vacationing in Wisconsin and I have all sorts of relatives across this state. I actually did my first two years of college in Illinois, but finished up at Eau Claire with a degree in business finance. And I have my MBA from UW-Madison, which I received in 2000.

Clark: What would say are some of your successes to date?

VanderSanden: Well, success is an interesting word in regulatory terms. Most of what we deal with are complaints or disputes or things like that. I think the thing that is most noteworthy in Wisconsin is that I was responsible for getting our regulatory authority or freedom to get into the long distance market. This is something we achieved in October of 2003.

Prior to that there were years spent basically interpreting and working through the implementation of the Telecommunications Act. That was where we got the ability to get into the long-distance market. I shepherded that here in Wisconsin. That probably was my biggest overall success since 1997.

Clark: Did you find yourself dreaming about the Telecommunications Act?

VanderSanden: No (chuckle) I have not dreamt about it. The truth of the matter is that many policy makers have a very clear vision of what they want to achieve. But the devil is almost always in the details. I’ve watched the details get ironed out. They were completed by about October of 2003 sufficiently enough to let us into the long-distance market and that was the carrot for the local phone companies – which our company was.

Clark: Have there been any defeats you’ve suffered, or at least frustrations?

VanderSanden: Not defeats, but certainly there were frustrations. And it goes back to that same topic I mentioned earlier of getting into the long-distance market. It was a function of dealing with what amounted to wholesale customers and our retail competitors. There were frustrations there in trying to make sure they were given the best service they could in the evolution of the Telecommunications Act of ’96. I’m sure if they were sitting here, they would say they were frustrated as well. ...

Clark: What do you see as your greatest challenges going forward?

VanderSanden: The biggest challenge right now for the company in Wisconsin is frankly the same as across our 13-state footprint. And that is to provide the best service we can to customers. The most immediate way we are going to try to do that is to move into the video market. In the near term, that is our biggest challenge. We have to do it in a way that meets our customer needs and honors all the necessary requirements.

Clark: Who are your competitors in that arena?

VanderSanden: Obviously, one of the competitors will be cable. There is also satellite dish TV. They are in the marketplace. What we will really be doing is adding video to the bundle of services that we offer. Every piece of research that we have suggests that customers want bundles and they like the concept of getting all their communications needs met by one company.

We obviously offer voice today and high-speed Internet and cellular service, so video would be the last piece of that puzzle. That’s what we plan to do and we think we will be doing it as soon as we can.

Clark: In 2007?

VanderSanden: Hopefully.

Clark: You are now in 13 states. Do you anticipate growing any further?

VanderSanden: We stood at 13 states after the SBC merger. We have pending before the FCC right now a potential deal with Bell South that would add nine states. So we would then be 22. ...

Clark: Will you be working in Milwaukee?

VanderSanden: The way it will go is that the AT&T Wisconsin headquarters will be in Milwaukee. I will commute as needed from my home in Oregon. I will have two offices. One in Madison and one in the Broadway building in Milwaukee. ...

Clark: How many employees does AT&T have in Wisconsin?

VanderSanden: They are scattered all over the state and there are about 5,000 – down from a little north of 6,000 in 2001. Our most common measure of our presence in the market is access lines, the number of lines going into homes that we provide service to. That number has declined from roughly 2.1 million to about 1.4 million in about the same time period.

Clark: Where did those customers go?

VanderSanden: Well, there are three places they went. The first would have been to our competitive local exchange providers like a TDS Metrocom, US Exchange or McLeod or an MCI. That evolution has been going on since late 1996. The other two places they have been going most recently is cable providers like Time Warner and Charter, who have been very aggressive in entering the local phone market and certainly they have taken customers from us. Lastly, there is a segment of consumers out there who no longer have a land-line phone. They are exclusively cellular or wireless.

Clark: How do you hope to win back consumers?

VanderSanden: We hope to get them back with our video product. We are doing everything we can to convince consumers to come to us because we have better service or a better product at a competitive or better price. We will do everything in our power to convince customers to come back.

Clark: Can you talk a little about how you are getting into entertainment, with people like former NFL football star Deion Sanders interviewing Green Bay Packer A.J. Hawk?

VanderSanden: That is something called the “Blue Room,” which is one component of a shift in how we are trying to position our company in the marketplace. By that I mean that we aren’t just the local phone company anymore. We believe most consumers will want us to provide to them many other services. And much of it will be linked to entertainment service.

The Blue Room, which is on the Internet, will allow anyone to go to it and seek out exclusive content like excerpts of concerts that would not be elsewhere on the Internet. With Deion Sanders and A.J. Hawk, football players have cameras placed in their homes so you can follow them around as if you are living their lifestyle. That is very attractive, I’m certain, to a big segment of our potential customers.

I believe it also will have gaming on it and that is incredibly popular with a large segment of the population. That is one component of the shift to becoming an entertainment company. The other thing we are trying to be sure we don’t lose sight of as we go through this evolution of continuing to merge with other companies is our local service. Clearly a big part of my responsibility is to make sure Wisconsin is seen – as it is today – a very viable component of our overall footprint.

Clark: Can you describe Project Lightspeed?

VanderSanden: It is the latest evolution of our network, which has been around for a long time. It was wires originally that connected to a central office and allowed you to make calls to whomever you were trying to call. What we are doing with Project Lightspeed is continuing on with what we started back in 1999, which is a plan to move a fiber-optic connection closer and closer to the end user.

The reason for doing that is rather straight-forward: It allows us to provide a larger amount of bandwidth to wherever that fiber ends up going. We will be getting to within about 3,000 feet of the end users. The obvious benefit to me, and, frankly, consumers, is that it allows us to offer more products.

We would be able to offer for our land-line service, or our voice service, a voice-over-IP or Internet Protocol somewhere down the road. We can offer more consistent, higher speed broadband connections as folks move more and more toward sharing pictures with their friends and families.

That all can be done better if you have higher speed connections. And then we will offer a video product. The connection of those two is Project Lightspeed, the network configuration that allows us to sell that set of products. The bundle of video and those other products will be called U-verse. Lightspeed is the network, U-verse is the product.

Clark: How far along is Lightspeed?

VanderSanden: What we have committed to is an investment of $4.6 billion over our 13 states over the next three years. What that will do is allow the U-verse product to get before 19 million households in that same three-year period. It’s not done, but we started it in earnest in ’06. This is pretty much the first year of the three.

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