AT&T sees government shining in the marketplace

ATLANTA?In a shrinking telecommunications market, AT&T Corp. sees the government as a growing customer, chairman and chief executive officer David W. Dorman said.

"Large customers have continued to cut IT spending," Dorman said. "We believe total business telecom spending will be down 3 percent to 5 percent across the board" this year.

On the other hand, "government budgets for IT are expanding, with telecommunications being a component of that," he said. "We had growth in 2002 in that sector and we will have growth in 2003."

Dorman, speaking today at the SuperComm telecom trade show, predicted another two years of turbulence, shakeouts and consolidation before the telecom industry gets back on an even keel. He said AT&T would use that time to improve its competitive position.

He announced a new customer service initiative. AT&T hopes to gain ground on competitors such as Qwest Communications and WorldCom Inc., which are struggling to emerge from bankruptcy, by investing $500 million this year on customer service. The emphasis will be on improved ordering, providing and billing.

The initiative will be supported by a single IP infrastructure with Multi Protocol Label Switching over an intelligent optical core. AT&T has teamed up with Cisco Systems to develop a multiservice device that will support several customer services on a single infrastructure. The company expects to have the system fully deployed by 2005.

Some of the new programs, such as a master services agreement to simplify contracts and a new billing system, might not be fully applicable to the government market, which has its own contract vehicles and billing structures, said Cindy Jordan, vice president of government sales for the Southeast region.

"But we will integrate as much of that as possible into the government sector," Jordan said. She said the government is becoming more amenable to standard business practices.

AT&T, which lost a large chunk of government long-distance business when the FTS 2001 contracts were awarded, is moving back into that market.

"Part of our growth [in the government segment] has been in recapturing market segment," Dorman said. "Part has been in new programs."

He said the character of AT&T's government business also is evolving. Almost half of the company's government revenues come from managed services and programs in which it is a prime contractor, rather than a subcontractor providing only long-distance connections.