Groups like San Francisco Beautiful fear AT&T's U-verse cabinets will succumb to graffiti, like this one in nearby Oakland. For the group, U-verse cabinets on the sidewalk promote urban blight.

Construction of the first of nearly 500 four-foot-tall utility cabinets is scheduled to begin this morning by AT&T, eager to expand its U-verse fiber-to-the-neighborhood service in the city of San Francisco.

San Francisco’s Board of Supervisors voted 6-5 last Tuesday to allow AT&T to begin building the metal cabinets, which hold the interface between the company’s fiber optic network and individual subscribers’ copper phone lines.

Mark Blakeman, AT&T’s vice president of external affairs, wasted no time announcing the location for the first box, to be situated on La Playa in Outer Richmond.  AT&T promises to launch U-verse service in the area within six months.

Most of the company’s initially-proposed 495 cabinets will be located on public sidewalks or other nearby rights-of-way.  Unlike San Francisco’s other utilities, AT&T will be able to install its boxes above-ground.  That has brought years of criticism from neighborhood groups who decry the cabinets are ugly, block the view of pedestrians and vehicle traffic, and are magnets for graffiti.

For groups like San Francisco Beautiful, it’s just the beginning.  AT&T’s longstanding goal is to install more than 700 boxes across the city’s landscape.

“It is going to put the blight of 726 utility boxes on our streets,” San Francisco Beautiful spokesperson Milo Hanke said. “Utility boxes from AT&T that are ugly and in most instances we still believe they are unnecessary; they should be on private property.”

AT&T will roll out its U-verse service in different parts of the city in segments, starting with the Richmond and Sunset Districts.

AT&T anticipates taking at least two years to complete the project across the city, but claims it remains open to bypassing neighborhoods that simply refuse to accept its boxes.  AT&T might not have a choice, considering the agreement they have with city officials.

Neighborhoods must be given time to provide input to city officials before permits are issued to AT&T.  If a city supervisor in a particular district doesn’t like the boxes, the “memorandum of understanding” grants the politician ultimate veto power over AT&T’s permit requests.  That means AT&T will be forced to do a lot of hand-holding public relations throughout the city to win support for their equipment.

That’s something AT&T is not used to in other states, where the company has won the right through deregulation to install its equipment cabinets anywhere it pleases, so long as they are located in a public right of way.  That has left a series of 4-6 foot tall boxes in the front yards of consumers in states like North Carolina, with absolutely no recourse.

AT&T will install its "compact model" cabinet within city limits, not the 6' tall boxes some homeowners in other states contend with.

In California, regulators can require utilities screen equipment with plants, maintain boxes to remove graffiti and correct noisy cabinet fans, and give property owners some input about where the often-unsightly boxes end up.  But those regulations are only as good as those willing to enforce them.

San Francisco Beautiful notes AT&T boxes in nearly Oakland are often covered in graffiti for extended periods, reducing property values and promoting neighborhood blight.

Hanke claims last week’s agreement violates a 2005 city order from the Department of Public Works mandating utilities put their equipment underground wherever possible.

“The supervisors fell victim to AT&T’s bluster,” said Hanke. “This benefits a private company at the public’s expense.”

AT&T’s Lance Kasselman told the San Francisco Chronicle it won’t go where it isn’t wanted.

“Obviously, those who clearly want it will get it first,” Kasselman told the newspaper. “People who want it or don’t want it, or have questions and concerns, should tell us on our website. We’ll meet with whoever wants to talk about it.”

With a close 6-5 vote, some city supervisors are well aware of the public minefield that awaits them in neighborhoods that despise AT&T’s equipment.  With opponents calling on citizens to complain, Supervisor Scott Wiener (Castro/Noe Valley/Diamond Heights) knew he needed to prepare.

“This morning, I did a yoga class to clear my head before writing a letter to neighborhood associations in my district,” Wiener told the Chronicle.  “I’m trying to make sure people understand what (Tuesday’s Board of Supervisors) vote means.”

[flv width=”600″ height=”358″]http://www.phillipdampier.com/video/KGO San Francisco ATT Utility Boxes 7-19-11.flv[/flv]

KGO-TV in San Francisco covers the AT&T U-verse box controversy, and the Board of Supervisors’ decision to approve their installation.  (2 minutes)

Netflix knows many customers are upset over the company’s recent decision to raise prices up to 60 percent, but company officials are shrugging their shoulders, suspecting the vast majority won’t actually follow through on their threats to cancel service. But Netflix is preparing investors for a possible third quarter decline in revenue, just in case.

CEO Reed Hastings downplayed the vocal protests with shareholders on an investor conference call.

“Believe it or not, the noise level was actually less than we expected,” Hastings said. “Given a 60% increase, we knew what we were getting into.”

Netflix expects revenue will decline temporarily in the third quarter as customers drop either the streaming or mailed DVD component from their rental plans.  The company effectively separated the two options into individual plans, and suspects many customers won’t retain both under the new pricing that takes effect next month.

Company officials also sent letters to major investors defending the new pricing as still reasonable when compared with the alternatives.

“We expect most to stay with us. We hate making our subscribers upset with us, but we feel like we provide a fantastic service,” the letter read.

Dan Rayburn, an analyst at Frost & Sullivan, believes the price changes are part of a master plan for Netflix to get out of DVD rental business altogether to save costs.

Many analysts predict Netflix will eventually adopt streaming video exclusively, but some are asking at what cost.  Predictions are widespread that Netflix will be forced to raise prices on streaming, perhaps by double, just to remain profitable in light of growing rights fees.  Sacrificing the labor-intensive DVD rental business, with associated warehousing and postage costs, could provide a savings cushion to protect subscribers from sticker shock should streaming rights fees get out of hand.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Williams Says Netflix Future Is Streaming Based 7-26-11.mp4[/flv]

Netflix stock is falling fast after consumer dissatisfaction over Netflix’s new pricing plans.  Bloomberg covers who wins and who loses after the price changes.  (2 minutes)

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Chaplin Says ATT Margins Punished by IPhone Discounts 7-22-11.mp4[/flv]

Jonathan Chaplin, a director at Credit Suisse Holdings USA Inc., talks about competition between Verizon Communications Inc. and AT&T Inc. for customers for Apple Inc.’s iPhone. AT&T spent much of the last quarter discounting new iPhones down to as little as $50 to keep customers from heading to Verizon Wireless. Chaplin also discusses incoming Verizon Chief Executive Officer Lowell McAdam. He speaks with Emily Chang and Jon Erlichman on Bloomberg Television’s “Bloomberg West.” (5 minutes)

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/ATT T Mobile Merger.flv[/flv]

Free Press has some fun at AT&T and T-Mobile’s expense with these four video ads opposing the merger.  Of course, the expense is all yours if the merger succeeds in further reducing wireless competition and allowing the all-new AT&T to raise prices even higher.  (3 minutes)

Welcome to the unemployment network.

Cisco announced this week the imminent layoff of some 6,500 of its employees in a desperate bid to boost the company’s stock price and get back on the good side of Wall Street, angered by a series of acquisition blunders by the company’s management and a growing loss of confidence in the future of some of the company’s legacy broadband products.

The cuts at Cisco, which include 2,100 employees who took a voluntary early-retirement program, were announced July 18th, with tepid applause from many investors who don’t believe the company slashed nearly enough positions to get the company’s cash on hand up (although it currently amounts to nearly $30 billion, much of it stashed in overseas accounts).  They wanted at least 10,000 members of Cisco’s “human network” to be cashiered.

While thousands of employees pay the ultimate price for the company’s low stock price, the executives that steered Cisco’s enormous business networking ship onto the rocks are still firmly at the helm.  In fact, Cisco CEO John Chambers received compensation valued at $18.9 million in fiscal 2010, according to documents filed with the U.S. Securities and Exchange Commission. His total package is up 33% from 2009, when he received compensation valued at $14.2 million.  That’s quite a reward for what Wall Street perceives as utter failure.

Under Chambers’ watch, Cisco overspent top dollar for Pure Digital Technologies, the San Francisco company responsible for the Flip handheld video camera.  You know, the one now discontinued by Cisco less than two years after acquiring the company for $590 million (and up to $15 million in retention bonuses for key executives.)  In fact, Cisco may still be paying off a deal for a product consumers have now long-since forgotten.

Chambers (AP)

Currently, there is no indication Chambers will be significantly punished for the various blunders under his watch.  But his latest decision to jettison thousands of workers has thrown a high-pressure, well-funded lobbying campaign on behalf of large corporations trying to get a tax break repatriating billions stashed in overseas bank accounts, into chaos.

Cisco’s CEO was among the loudest supporters of the tax slash for corporate entities who have parked much of their free cash overseas to avoid Uncle Sam’s tax bite.  Chambers has publicly said he wants to bring $30 billion in company profits back to the States, but only if he can do so at a discount.  Ironically, Chambers promoted the tax holiday as a job creator, claiming Cisco would add as much as 10 percent to his workforce if the deal was approved.

That promise doesn’t mean much after this week’s employee clear-cutting by the networking company.

It’s certainly upsetting the lobbying apple cart in Washington, potentially ruining the Money Party for other super-sized corporations looking for a tax break handout.

Companies like Duke Energy said the $1.3 billion it wants to repatriate to the U.S. would create 15,000 to 20,000 jobs.  But many Democrats remain skeptical the promised jobs will ever materialize.

Rep. Lloyd Doggett from Texas notes we’ve been here before.  Back in 2004, HP got a tax break to bring back almost $15 billion with the promise the company would create jobs.  Instead, it slashed its workforce by 14,500 employees in a year.

“As a leading proponent of this corporate tax giveaway, Cisco is announcing massive layoffs instead of investing in American job creation with the billions it already has available,” Doggett said. “Once again, it is clear that large multinational corporations have no intention of using any repatriation tax windfall to create jobs.”

This left the WinAmerica Campaign, a corporate-funded group promoting the tax cut, scrambling to deliver an adjusted message to Congress.

Oops... we need a new message.

Doug Thornell, a spokesman for the group, told Bloomberg News the effort “isn’t about just one company.”

“It’s about the benefit to the broader economy,” he said. “It’s whether we continue a failed policy that lets a trillion dollars languish overseas when our economy desperately needs the help.”

With up to 6,500 former employees about to join unemployment lines, Cisco isn’t doing much to help, especially when those responsible are not held accountable for the mistakes that left the company in its ultimate predicament.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg Henderson Says Job Cuts Not Enough for Cisco’s Problems 7-18-11.mp4[/flv]

Bloomberg News talks to a Wall Street analyst who doesn’t think Cisco has cut nearly enough jobs to get the company worthwhile for investors again.  (5 minutes)