Sunday, December 10, 2006

You Will and They Didn't

Empty promises someone else.  Back in 1993, just before I left the company, AT&T released a series of advertisements narrated by Tom Seleck dubbed the "You Will" campaign.  These commercials described great things that AT&T will bring to consumers in the future from vast remote electronic libraries, to automated toll taking, to video on demand.  All most every innovation described in these commercials was successfully brought to market but not by AT&T.

Other companies capitalized on these innovations that frequently began in Bell Labs.  AT&T was unable to execute or capitalize successfully on a single innovation mentioned under its own name.  Although the Labs housed some of the greatest minds in science and engineering, management did not have the skills to harness probably the greatest pooling of IP in history.  One arguable exception is video on demand that the "new" AT&T is delivering with Uverse.

These failings are indicative of a company that orchestrated one of the biggest breakups in history only to completely decimate the resulting organization.  Divestiture was orchestrated by the top executives and lawyers of AT&T to maximize what they thought were its greatest opportunities:  long distance phone service, computers, and international reach.  The operating companies were perceived as a burden with their capital and labor intensive operations.  Besides the AT&T management assumed that they would still dictate the operating companies' future because they would be their biggest customers and exclusive equipment supplier.  WRONG!

What the DOJ, Judge Green, and Bob Allen and Company took apart, the free market put back together.  Last week Lucent was reunited with its distant offspring Alcatel.  If FCC Commissioner Robert McDowell is allowed to vote on the AT&T/BellSouth merger, then the U.S. will be down to three strong regional, full-service telephone companies. 

At the trivestiture that separated AT&T, Lucent, and NCR, Bell Labs was divided up among the three companies.  Neither AT&T nor Lucent Technologies was able to successfully capitalize on the innovations from their respective laboratories as described in the "You Will" advertisements.  Now that the new AT&T is being managed by old SBC executives and Alcatel-Lucent by Alcatel executives, the innovations have a better chance of materializing into profitable business opportunities. Maybe it is time for AT&T to dust off the "You Will" campaign and spruce it up.  This time they may be right.


  1. I agree with some of your musings about AT&T's ability to see into the future, but I disagree with your assertion that they are better prepared to deal with it now.

    I worked at AT&T for 23 years, leaving in 1996. My last role there was in the emerging technologies group within their ISDN organization. The internal resistance to change was staggering. There were advances in technology waiting to be exploited all around me...but management would not seriously consider anything that had the potential to canibalize existing revenue streams. They seemed incapable of understanding that new sources of revenue are always emerging, and as soon and one is mature, it is on the way to extinction and must be replaced by a new one. After a century of controlling the evolution of communications technology in the United States, AT&T could not adapt to a scenario where more and more customer's had choices AT&T could not control.

    The recent mergers of former Ma Bell siblings are the last throes to remain relevant in a market they still have not been able to adapt to. When competition first started, the company mentality thought the game was the same...there were just more players on the field. Management there never understood the game had changed and they no longer controlled the rulebook. I haven't seen any changes in their behavior to show this attitude is different now. Think about it...the old AT&T held onto long distance as their primary revenue stream long after cell phone companies we giving away hundreds of minutes per month as part of a basic services package. What business model that tries to sell what others are giving away almost for free can survive?

  2. The stories told by you, me, and others are the same from different departments throughout the company. At divestiture my department showed management how fiber optics was going to make long distance transport cheap-almost free-and management chose to cling to the LD cash cow believing that they could charge premium prices forever. MCI and Sprint were just a nuisance. ISDN was a feeble attempt to give customers some new features but keep control in the network. It didn't work. I saw some great technology demonstrations of ISDN out of probably your department. Management was just to risk adverse to cannibalize their current business to find larger revenue streams.

    The recent mergers of the RBOC and Lucent are just organizing the companies the way they should have been organized at divestiture. I think that they will have a better chance of doing well with this structure, but they are far from nimble or guaranteed success. The 800 lb. gorilla still thinks he is the alpha male. They are not innovators. They are market leaders in size alone. It is this size that gives them the arrogance to let the competition sneak up on them. As long as Bellheads are still managing these companies, they will still act defensively, but they can act defensively in a grand way that will adopt technologies that other companies are threatening them. This continued behavior just gives the competition a chance to grow.

  3. I get what you are saying...but execution matters. I currently work for a company that dominates a technology it did not invent. To stay on top requires a healthy dose of paranoia about the strength of your competition and your own vulnerability in a marketplace where new ideas are the norm. Neither of these were traits of the old Bell System management. At times it felt more like the department of motor vehicles than a technology company. From what I have heard from friends still there, things have not changed much since I left over 10 years ago. I wish it were different. I started my career with the Bell System and have many fond memories of my time there. But things move at a faster pace than Ma Bell can keep up with. Its hard to stay relevant with a time to market measured in years in a sector where change occurs monthly. I suspect that one day my grandchildren will read about the glories of the Bell System the same way my generation read about how the telegraph transformed America.

  4. Our children will look back on the history of the Bell System and the tremendous accomplishments that were made in its first century, and how the institution of Bell Telephone Laboratories contributed to many facets of our lives. Business students will study how it disintegrated during the 80's and 90's. I look back on my tenure with awe of the resources, innovative, and great people in the company. I doubt that we will ever see anything like it again.