<A> WSJ: Why Ma Bell Called Teleport CEO
By Stephanie N. Mehta
Staff Reporter of The Wall Street Journal
Robert Annunziata has taken a long, indirect route to power-hitter status at AT&T Corp. He joined Ma Bell out of high school and put in 17 years, but he quit in 1983, frustrated by the old AT&T's sluggish bureaucracy and eager for entrepreneurial opportunities.
Now Mr. Annunziata, 49 years old, is set to play a pivotal role at his old employer, helping chart AT&T's efforts to expand into the local-phone business of the Baby Bells. The company he heads, Teleport Communications Group Inc., agreed yesterday to be acquired by AT&T for about $11.3 billion. Having built up this powerhouse, which provides local and long-distance service to lucrative business accounts, Mr. Annunziata will become an executive vice president for AT&T and lead a new local-services unit.
Returning to AT&T is "a great feeling," he said yesterday. "This is a new AT&T."
Indeed, the AT&T he rejoins is vastly different. After spinning off the original seven Bells under an antitrust settlement in 1984, AT&T went through a self-imposed three-way breakup two years ago, shedding equipment-making and computers and holding onto only the long-distance business. Meanwhile, AT&T has gone from invulnerable monopoly empire to beleaguered competitor.
Now, AT&T needs to re-enter the local business it left so long ago. The construction costs are huge, the Bells' monopolies look nearly impenetrable, and the company has been casting about for ways to gain a foothold in the local market. It is turning to Teleport and Mr. Annunziata for answers.
But Mr. Annunziata wasn't always so comfortable at AT&T. When he was a salesman for the old AT&T, former colleagues say, he constantly questioned authority in a monopoly that didn't take free thinking all that well. "Why can't we do it this way?" he would demand.
A native of Long Island, Mr. Annunziata joined AT&T right out of high school, forgoing college and working his way up from technician to posts in marketing, operations and sales. He proved to be a tireless worker, toiling past 9 p.m. some nights. "I always knew he would be successful," recalls Paula Gavin, a former AT&T manager who was Mr. Annunziata's boss.
When he left in 1983, Mr. Annunziata took on the job that he eventually made into his current top slot at Teleport. He quit to oversee part of Merrill Lynch & Co.'s internal satellite-communications business. Three weeks later he told his new bosses, essentially, that their strategy was wrong. Dump the satellite push, he advised, and build your own fiber-optic network to bypass the Bell monopolies, saving a fortune on phone bills.
Mr. Annunziata's bosses were smart enough to heed his advice, and the effort evolved into Teleport, a provider of similar telecom services to business customers. From its headquarters in Staten Island, N.Y., the carrier began building private fiber lines to business customers in major cities, quickly signing up the United Nations and several banking behemoths.
It was a pioneer, offering new local services long before telecom deregulation in 1996 mandated that the Bell operating companies open their markets to such competition. The Teleport formula was simple: Sign up with us, and we'll discount your bill. Analysts credit Mr. Annunziata with building Teleport into the nation's largest independent, competitive local carrier.
He assembled a sales team every bit as aggressive as himself. "Ex-professional athletes. Nobody competes better," he explained in a recent interview.
In the early 1990s, cable companies realized that they could team their pipelines with Teleport's. Thus the upstart was able to expand into new markets easily and cheaply by getting cable carriers to install a fiber cable for it. In 1992, Comcast Corp., Continental Cablevision Inc., Cox Communications Inc. and Tele-Communications Inc. joined up to acquire Teleport. (Continental Cablevision later was acquired by U S West Inc. and sold its Teleport shares in a public offering in order to get federal approval for the accord.)
After the new cable owners came in, Mr. Annunziata stayed on, just as he plans to rejoin AT&T after Teleport again changes hands. He steered his company into a public offering in 1996, and won praise for maintaining good relations with the cable companies, which are notoriously tough partners.
"He has been very, very protective of the cable owners, and he has their respect," says Linda Meltzer, an analyst with UBS Securities Inc.
Mr. Annunziata isn't afraid to get his hands dirty. When the World Trade Center was rocked by a bomb in 1993, flooding in a basement of one of the buildings threatened to disable Teleport equipment. Friends say Mr. Annunziata was on the scene, ankle-deep in water, helping technicians and engineers.
In some ways, he faces an even tougher and more urgent challenge now. AT&T has learned that cracking the local-phone market is far more expensive and more difficult than it had originally anticipated. The company has looked at options including building its own local networks, allying with the very Bells it wants to challenge, merging with SBC Communications Inc., trying wireless-bypass schemes to sidestep the Bell lines -- and now will rely on Mr. Annunziata and Teleport.
Not that Mr. Annunziata is a veteran in selling local service to residential customers: He isn't and those customers comprise AT&T's biggest revenue base. And he will have to make sure AT&T's big bureaucracy doesn't stifle the scrappy, competitive style he fostered at Teleport.
But he has always said he values the "great education" he received at AT&T about the telecom business and how to manage people. Yesterday, he signed up for a refresher course. |
