AT&T; BREAKUP II : OUTLOOK: THE COMMUNICATIONS COMPANY : Will New Firm Find Its True Voice?
Liberated from its ill-fated attempt to merge computers and communications, a newly focused AT&T; Corp. will be far better positioned to take advantage of the recent round of industry convergence that is spawning new markets and opportunities for telecommunications and technology firms, analysts and industry observers said Wednesday.
AT&T;’s core communications service business could take any number of actions to change the face of the communications industry, from expanding its Internet service to hooking up with an entertainment or information provider, as rival MCI Communications Corp. has done with Rupert Murdoch’s News Corp., these analysts said.
“One of the reasons they [AT&T;] did this was so they could focus better on infrastructure and transmission rather than being anchored to trying to create a business for these computer systems,” said Bruce Ryon, multimedia analyst at Dataquest, a San Jose-based consulting firm. “And as traffic going down their pipes increases, any way you look at it, they’re going to be in a good position.”
For example, Pacific Bell President David Dorman anticipates a swift move by the long-distance company into his business--the local phone market.
“Now they’ll be totally focused on exploitation of entry into the local marketplace. They’ll immediately begin promoting and bundling local wireless services with long-distance services and will sell them as substitutes for basic local exchange services,” he said.
AT&T; should enjoy decent growth in its basic phone service business without doing anything fancy: Businesses such as wireless communications are booming, long-distance has grown steadily as more and more businesses and consumers send more and more different kinds of information over phone lines.
But in developing new businesses, analysts expect AT&T; to take a different tack than MCI, perhaps partnering with a range of “content” providers rather than entering into an exclusive relationship with one.
So far, AT&T; has stayed away from the high-profile relationships with Hollywood studios and publishing companies. And at a news conference Tuesday morning, AT&T; Chairman Robert E. Allen reiterated that the firm has no plans to get into the entertainment business. But he did not rule out seeking new alliances in that world.
“They’re keeping their powder dry and learning,” said Robert Kavner, AT&T;’s former multimedia chief who is now working as a consultant to Tele-TV, the interactive television venture formed by three Baby Bells. “My own guess is that their orientation is not to own a set of assets in the creative world but rather to position [themselves] as a company that is there to serve all content companies.”
Indeed, the company already has started ventures on the Internet that industry experts expect will expand dramatically under the new company structure. This summer AT&T; introduced a new Internet service that is aimed at enabling customers to use their personal computers to reach AT&T;’s vast network of toll-free numbers--involving catalogue-shopping companies, airline reservation systems and others.
And in its first foray as a provider of on-line information, AT&T; this week unveiled a service aimed at small businesses and self-employed professionals.
The AT&T; Business Network initially will edit and package news from two dozen publishers, including the Bureau of National Affairs, Nightly Business Report and Dow Jones & Co.
“Their brand is unexcelled and I think they’re going to exploit that,” said Gary Arlen, an analyst with Arlen Communications.
“They know an awful lot about their customers and they want to leverage those relationships.”
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More AT&T; Coverage
* AT&T; breaking itself up. A1
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* CEO seeks to reinvent firm. D4
* How move affects consumers. D4
* Equipment firm a strong player. D4
* Cuts unlikely at Bell Labs. D4
* Tough future for computer firm. D5
* A look at AT&T;’s storied history. D5
* Action helps AT&T; investors. D5
