AT&T looks to communication future

January 19, 1994|By Andrew Leckey | Andrew Leckey,Tribune Media Services

The main AT&T network operations center looks like a darkened war room, with a wall of 75 projection screens featuring maps of the United States and the world. Colored lines depict the flow of incoming and outgoing calls, while sophisticated alert systems automatically pop onto the screen any exceptions to the norm.

To handle calls better through the trunk lines connecting AT&T offices, specialists sit at computers typing in commands to assist trouble spots or reroute telephone calls for areas with heavy call volume. On the wall is a photo of a map that depicts calls into the San Francisco area on the day of the 1989 earthquake, the heavy lines indicating call volume after the disaster was double usual levels.

Sophisticated, yes. But on the road leading to the information superhighway, this sort of behind-the-scenes technology is a given. In fact, it's almost old hat.

People are being led to expect more and more, in particular the pocket video phones of the future, which also instantly will provide all the information you could want to know about anything. Voice, electronic mail and video are envisioned as part of a digital system connected to phones, computers, TVs, cellular handsets and new wireless devices.

No one knows those great expectations better than Robert Allen, chairman and chief executive of American Telephone & Telegraph Co., lately thrust into the role of spokesman for all things modern.

"We'll have low-cost video phone service within the next five years, but in the next century it will be more prevalent," the slim, gray-haired Allen said in his soft-spoken but confident manner, using his hands to punctuate thoughts as he eased back into a chair in his Morristown, N.J., headquarters office.

"Now, I'm not a crystal-ball gazer and you can let technology run away with you, but we can expect a world that will give people the capability to access virtually any information from any place they want to be."

One unanswered question, as Allen sees it, is how much people really need to get together to see each other in person. Because, if video conversations will suffice, travel will be revolutionized in the future. Of course, a more crucial unanswered question is what people will be willing to pay for the enhanced ability to communicate.

AT&T's dramatic agreement in principle to buy McCaw Cellular for $12.6 billion in new stock, coming on the heels of its $7.5 billion buyout of computer firm NCR Corp., put AT&T's money where its mouth is. Both are key to new "any time, anywhere" communications, even though NCR has been a drag on earnings and is going through a shake-up. Meanwhile, AT&T has bought or invested in a dozen start-up companies to obtain hardware and software for the new communications.

There's undeniable risk. When asked whether the new wireless system called personal communications services, or PCS, which uses inexpensive handsets and low-powered transmitters, will become a major rival to cellular technology, Allen measured his words carefully: "It has a different cost structure and could be a competitor for various levels of service, but we'll just have to see how it works out."

Another question he believes already has been answered is how international communications really is. The company recently set up foreign units, each with its own chief executive, to go after promising markets of Asia, Europe and Latin America.

"I've never seen anything occur so quickly as what has happened in the past two years with everyone suddenly talking about globalization," said Allen, who wants to see AT&T's overseas revenues rise to more than 40 percent by the turn of the century from the current 24 percent.

"This is entwined with the democratization of the world, because people know more through greater communications, so events such as (China's crackdown on demonstrators in) Tiananmen Square don't go unnoticed."

The market value of AT&T stock ranks fourth in the world, which means an immense investor following. While Wall Street has embraced Allen's moves, recent slippage in share price from its highs resulted in widespread anguish.

Long-distance service is a concern, for AT&T's 90 percent share of the $39 billion-a-year market of a decade ago has eroded. It's true that its recent 62 percent share now is part of a long-distance market of $60 billion, yet long-distance remains a dog-eat-dog business with aggressive advertising and pricing.

Thanks to its Universal Card business, AT&T's financial-services division is providing strong profits. Besides operating interstate and international toll networks and portions of intrastate networks, AT&T owns local on-premises equipment, Western Electric and Bell Laboratories. It's the only big telecommunications service firm that makes telephones, computers and private branch exchanges that route calls within a company.

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