C. Michael Armstrong
Newspaper Op-Ed Publication
November 14, 2000
Last week's announcement of AT&T's restructuring caused surprise and
questions in several quarters. It shouldn't have - especially not to people who
understand the trends and forces of our industry. When I arrived at AT&T three
years ago, we all realized that it was a business in major need of
transformation.
In the fall of 1997, we began defining what we were and why we had to
change. We were in the voice business; the world was turning to data. We were a
domestic company; commerce was going global. We were long distance; technology,
regulation, and competition were turning long distance into a commodity. We had
an inflated cost structure; our competitors didn't.
But makeovers don't come easy. We cut nearly $4 billion in costs out of
our core long-distance business over the last three years. We invested billions
in new fiber-optic systems to increase our network's speed and capacity. We
began kicking our addiction to long-distance voice and ramped up our network
services and data communications business.
Today, data and IP services represent about a third of our revenue from
business customers. And they're growing 20 percent a year.
We built a network-management and outsourcing business from the ground
up that generates more than $3 billion a year in revenue. We turned a patchwork
of analog wireless cellular systems into a unified digital system that can
provide service to customers across most of the U.S.
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We bought two of the nation's largest cable TV companies. Then we began
overhauling their facilities so they could provide interactive voice, video, and
data communications, with better quality and customer service. We turned them
into one of the only viable facilities-based competitors to the local telephone
monopolies.
Those rebuilds worked. Today more than 70 percent of our systems are
digital and interactive. We have nearly 900,000 high-speed cable Internet
customers, and more than 2.5 million digital video customers. We've gone from a
few thousand cable telephony customers early last year to more than 400,000
today. And the numbers continue to climb - we added more than 50,000 customers
just last month.
Then last week we took another step in our transformation. We announced
plans to re-organize AT&T into four new businesses, each of which is already a
leader in its industry:
AT&T Broadband - the nation's largest cable TV and broadband services
business; AT&T Business Services - one of the leading providers of
communications and networking for businesses; AT&T Consumer - the
nation's top consumer communications business; And AT&T Wireless, among
the largest and fastest growing wireless businesses in the U.S.
Why did we do it? Because, in the communications industry, technology
is moving so fast that only the most nimble companies will survive. In the
future, the most successful companies will be those that have mastered three
skills.
First, they will be extremely close to their customers. They will
understand and satisfy their customers' needs, or even better, understand and
satisfy their customers' customers' needs.
Second, they will capture - rather than be captured by - new
technologies. They will be able to deliver at the intersection of the technology
development curve and their customers' needs.
And third, they will move faster than their competitors in turning
their insight and knowledge into new products or services.
In other words, they will be focused, fast, and flexible. But the truth
is that "focused," "fast," and "flexible" are hard to achieve in a $65-billion
company spread out across different businesses. And that's why we are
restructuring.
Each of the new AT&T businesses will be closer to its customers. Each
will more quickly anticipate and respond to changes in technology and the
marketplace. Each will bring its customers a new generation of broadband
communications and information services.
Each of these new businesses will carry the AT&T name and offer
"bundles" of services over their own facilities. And I believe they will do it
better than anyone else. In fact, they already are.
More than 700,000 AT&T Broadband video customers also subscribe to
other high-speed Internet access or telephony services.
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AT&T Business offers innovative solutions through IP, data, web
hosting, network management, and voice services to nearly 6 million businesses
worldwide. And more than 6.5 million customers have signed up for a combination
of wireless local, long-distance, and roaming services in bundled pricing plans.
That's bundling.
AT&T has been an American icon for over a century, delivering a service
and an image that were part of our lives, our families, and our society. But it
can no longer be what it used to be. AT&T had to change - from a voice
long-distance company to four communications businesses offering bundled
services, at any distance, over state-of-the-art technology.
Yet even in the face of churning technology, deregulation, and
competition, we will ensure that AT&T will be more than an American memory. It
will be a vital part of our families' and our country's future. A future that
the 160,000 people of AT&T are determined to deliver.
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