AT&T has just announced an aggressive — and critically strategic — move to offer Voice over Internet Protocol
By early in 2004, the carrier will offer IP-enabled local and long-distance, plus enhanced features such as call forwarding in some cities, all for customers with high-speed Internet connections.
The offering is fraught with risk. In recent years, the company’s long-distance revenues have dropped sharply as customers switched to regional telecoms and national wireless providers. By embracing the new technology, which promises lower network management costs and long-distance bills, AT&T could win them back, albeit at reduced prices.
But with other service providers ranging from startups (Vonage) to Baby Bells (Qwest) to cable giants (Time Warner Cable) pursuing large-scale VoIP services, AT&T is well aware of the competitive threats it has to meet.
Now, AT&T has created a new senior executive position with the mandate to spearhead VoIP efforts across AT&T’s Labs, consumer and business divisions. Cathy Martine, currently a senior vice president in the consumer division, has been tapped for the job.
She recently spoke with internetnews.com about AT&T’s VoIP plans and the market as a whole.
Q: AT&T has offered VoIP service to a limited number of business customers for several years. Why the major push now?
One thing that motivated us was the emergence of the tele-worker. More companies are looking to establish the virtual office model. VoiP allows unlimited long distance, and services such as conference calling and call logs.
We also wanted to provide an alternative to customers, access fees are a huge part of the expense, so the economics (of VoIP) improve the cost structure. Finally, the technology has been tested throughout the 1990s and has come to a point where it hadn’t been able to reach before.
Q: What steps must AT&T take — in regards to technology or sales and marketing — to roll out the service in the first quarter?
Most of the technology exists already. We have an IP backbone that we’ve invested billions in over the last few years. There are a few incremental upgrades that are in proccess or done, so we’ll be able to reach our first-quarter [timeline]. Technologically, we’re in good shape. For marketing, it’s going to depend where we choose to offer [the service] and how fast the subscribers ramp.
Q: An unanswered question for AT&T, and all other VoiP providers, is regulation. What’s AT&T impression of the regulatory climate and how might that affect the rollout?
We’ve been very encouraged by (FCC Chairman) Michael Powell’s statements on VoIP. It appears that he is supportive he doesn’t want to handicap the development of new technology. We applauad that. We hope he will maintain that message. Sure, he will be challeged; there will be lobbying for the contraty. But (VoIP) does provide better value . . . You don’t regulate the Internet today, so why would you regulate VoIP?
Q: You managed AT&T’s VoIP trial this spring with AT&T employees, and this fall with test customers? What did you learn from that?
It helped us determine which features were most in demand. It helps us evaluate what should be standard and premium, whether it’s do-not-disturb, locate-me or conferencing. It also gave us ideas about how to appeal to a customer set, [such as] in a college MBA environment for example, where you have five graduate students working on a team project.
Q: Shortly before AT&T announced its plan, Time Warner Cable, in partnership with Sprint and MCI, announced its own VoIP initiative. What’s your take on the offering?
First, we have a national footprint, compared to the limited footprint of some of cable providers. We also have a relationship with large enterprise customers and our experience has been telephony-based. The cable providers haven’t been known for their price sensitivity, customer service or technology.
Q: Other VoIP offerings in the market range from about $35 to $65 per month for unliminted local, in-state and long-distance service, plus basic telecom services such as voicemail. What will AT&T charge?
We’re are evaluating competitive price points. But we will be competitive.
Q: What about smaller specialized VoIP providers such as Vonage?
Vonage has done a great job in a year of establishing a brand. They’ve done a ton of mass marketing in terms of, “Who is Vonage?” They’ve also done a good job of raising awareness of VoIP. There’s also Net2phone, which is not so much in the consumer market. They are more on the business application and offshore VoIP. We are trying to learn from others so we don’t make unecessary mistakes.
Q: Does AT&T plan to acquire any VoIP specialists to enable its rollout?
We evaluated a lot of companies when we began this, we’re in much be we were much better shape. All of our features were developed in At&T’s lab, so we don’t need to go out (and acquire technology).
