AT&T took a real good look at ACTV during the Western Show. I think that when the merger with TCI closes, AT&T will do something with ACTV. Here is some worthwhile reading on the new AT&T:
"By the way, if you use any three of our other services, we
would be happy to add HBO and the Disney Channel to your basic
cable package for no additional charge....."
At Last, a New Strategy for AT&T
The future of AT&T is not hard to find -- if you can read a floor
plan. It is in Room 4430G2 at AT&T's sprawling headquarters in
Basking Ridge, N.J.
There are five PCs in Room 4430G2, a big-screen television and a
bunch of phones. Nothing special in any of that. What distinguishes
the setup is what's missing: telephone wires. All the key equipment
links to the outside world through a single cable television line.
And the line is providing lightning-quick Internet connections,
crisp video images and, of course, a dial tone.
Simple as it seems, that ribbon of coaxial cable represents what
may prove to be the most important strategic shift in decades at
AT&T, the nation's biggest communications company and its most
widely owned stock.
Fifteen years after the break-up of the Bell System severed
AT&T's hard-wire link to U.S. consumers, its pending acquisition of
Tele-Communications Inc., the No. 2 cable operator, will allow AT&T
to again reach out and directly touch millions of homes.
And trying to re-create AT&T's glory days, the company's new
chairman and chief executive, C. Michael Armstrong, wants AT&T to
be the only communications provider its customers need.
Is that a pipe dream in an arena teeming with competition --
wireless companies, long-distance companies and local phone
companies, not to mention Internet providers and satellite TV
services?
Maybe not. Three thousand miles from Basking Ridge, dozens of
technicians in Fremont, Calif., are preparing to move Armstrong's
vision out of Room 4430G2 and into the living rooms of paying
customers. Soon after the merger closes, as soon as this spring,
the TCI brand will start to disappear in Fremont, a middle-class
suburb of San Francisco, and Armstrong's operators will be calling
consumers to offer AT&T's new wares.
The pitch will go something like this:
"Hi, this is AT&T. Did you know that we can now offer not only
long-distance phone service but also four lines of local service
with call-waiting and Caller ID? And may we interest you in our
high-speed Internet service, called At Home? It lets you download
from the Internet at speeds as much as 100 times faster than you
can today -- and at prices comparable to what you're already
paying."
The salesperson will pause to catch a breath, and then continue:
"If you don't want high-speed access, how about a more
traditional Internet service, like AT&T Worldnet? And a wireless
phone that includes nationwide calling for as little as 10 cents a
minute? Oh, yes, we can provide all of these services on a single
bill with one number to call if you have questions."
But AT&T's proposition to consumers will be about more than a
simple variety of services; it will be about the extra perks that
come from becoming a full member of the AT&T family. So the closer
will be along these lines:
"By the way, if you use any three of our other services, we
would be happy to add HBO and the Disney Channel to your basic
cable package for no additional charge."
By the end of 1999, AT&T intends to offer this integrated
package of communications services not only in Fremont but also in
another, undisclosed community in the San Francisco area as well as
in Chicago, Dallas, Pittsburgh, Seattle, Denver, Salt Lake City,
Portland, Ore., and St. Louis.
By the end of 2000, the company intends to expand its
competition against its progeny, the Baby Bells, by offering local
phone service in most of TCI's other markets.
It is one of the biggest gambles in AT&T's 114-year history -- a
test of technology, of financial might and of regulatory
flexibility. For Armstrong, it is the ultimate test of managerial
prowess: whether he can reshape one of the country's most hidebound
corporations to his vision of a lithe competitor in some of
technology's fastest-moving sectors.
If he succeeds, AT&T will again be not just big, but also
dominant, a mantle it lost because of competition from the likes of
MCI Worldcom, Sprint, SBC Communications and Bell Atlantic.
If he fails? The critics will say he failed to gauge adequately
the difficulty and cost of upgrading TCI's somewhat antiquated
cable systems. That he did not understand the complexity of the
local phone business. That he reached too far, too fast.
AT&T declined to comment, citing a "quiet period" mandated by
regulators before shareholders vote next month on the TCI merger.
And for now, the critics are lying low. That is because Armstrong
has already seemed to make a huge change in an organization that
long had seemed to be inertia's captive.
Though it lost its monopoly on phone service in 1984, AT&T never
seemed able to shake off its monopoly mindset. Well into the 1990s,
under Armstrong's predecessor, Robert E. Allen -- whose entire
career was spent at AT&T -- the company continued to rely on the
regulatory process to protect its core long-distance business and
to keep potential competitors off balance.
"The shared belief in the company was that the single most
important entity that affected their future was the federal
government and the regulators," said Richard Bodman, who was
AT&T's chief of strategy and business development for most of the
'90s and who is now managing general partner of AT&T Ventures, a
venture capital firm backed by AT&T. "That was a contest that
maybe they couldn't win, but it was a contest in which they felt
they had pretty good skills and tools to play the game adequately
well."
Arriving in November 1997, after Allen's choice as heir, John
Walter, quickly lost the board's confidence, Armstrong saw things
differently. At Hughes Electronics, he had presided over the
transformation of a military contractor into an entrepreneurial
dynamo, building its Direct TV satellite business. And under him,
AT&T has begun to shed its reputation as a company that would
rather lobby than compete.
"From the time that MCI was created in the '60s until Mike
Armstrong, AT&T was essentially a defensive and reactive company,"
said Reed Hundt, who stepped down as chairman of the Federal
Communications Commission just as Armstrong joined AT&T. "Since he
arrived, the company has been pro-active, creative and
aggressive."
John Nakahata, who resigned as chief of staff for Hundt's
successor at the FCC, William Kennard, late last year, said: "It
seems that AT&T has realized that they need a business solution,
not a regulatory solution, to their business problem, which is that
they have not had a way to touch the customer in the local
market."
Of course, even as its share of the long-distance business slid
and its earnings gains came to rely mostly on cost-cutting, the
company always had ideas about how to grow.
Some proved disastrous, like its $7.4 billion foray into the
computer business by buying NCR Corp. in 1991, a debacle reversed
five years later at an additional cost of $2 billion. Others were
inspired, like the acquisition of McCaw Cellular for $12.6 billion
in 1993, making AT&T a national player in wireless communications,
and the spinoff of AT&T's equipment operation as Lucent
Technologies in 1996.
Indeed, the seeds of every major move that AT&T has made in
Armstrong's 14-month tenure were planted long before his arrival.
His achievement has been in getting those plans off the drawing
board -- or out of the dust bin -- and into the marketplace.
Following is a partial rundown of those efforts:
TCI ACQUISITION -- The most important strategic move of
Armstrong's tenure, the TCI deal is meant to give AT&T a
high-capacity pipe into millions of homes and a leg up in striking
deals with other cable companies.
AT&T had been talking to cable operators, including TCI, about
various sorts of joint ventures since at least 1991. But for years
those talks never went anywhere, partly because, in its arrogance,
AT&T refused to promise that it would not go into competition with
the cable companies by jumping into the "content" business,
whether by buying cable television networks, for instance, or even
a movie studio.
It was not until 1997 that AT&T agreed to curb its media
ambitions, thereby bringing the cable companies back to the table.
Around Christmas that year, AT&T began having serious joint-venture
discussions with carriers including TCI, Comcast, Cablevision, Cox
and Time-Warner, the No. 1 cable company.
Boldly, Armstrong made the key decision to acquire TCI rather
than simply form a joint venture. AT&T is now close to
joint-venture deals with Time Warner and wants to sign agreements
with the other big cable carriers by midyear. Together, these deals
could give AT&T a line into more than half the nation's homes.
TELEPORT ACQUISITION -- Just as the TCI deal gives AT&T a wire
into homes, the $11.3 billion deal for Teleport Communications last
January gave AT&T entry into the business of providing local voice
and data communications to corporate customers.
This deal was loaded when Armstrong arrived. But he pulled the
trigger, adding a unit that is expected to provided billions of
dollars in revenue. |
