AT&T chief trusts old pros and new technology

Telecommunications companies are making the leap from simply providing networks to providing services and systems integration. No one yet knows how successful that jump will be.

“Until now, carriers have been infrastructure players,” said Warren Suss, president of Suss Consulting Inc. “But as agencies move into cloud computing and Web 2.0 technologies, they place more intelligence in their networks, and it gives carriers an opportunity to own more of the market.

Ten years ago, agencies might have bought capabilities associated with Web 2.0 — such as collaboration, call centers, messaging and content discovery — individually, but they are now available on the General Services Administration’s Networx contract as end-to-end services, he said. However, services such as managed security, storage, land mobile radio, hosted voice over IP and teleworking have not reached their potential on Networx, Suss said. “These are all big new opportunity areas” that are still evolving, he added.

Don Herring, president of AT&T Government Solutions, recently discussed the evolving telecommunications business with Washington Technology contributing editor Sami Lais.

WT: Do you see any difference between government needs in general and Networx customers in particular?

Herring: Not really. Networx has 50 different services on it, and we can modify it to add new things, so it’s all-encompassing in terms of technology.

What we try to add is the customization. You can’t just go out and offer a package to agencies. You have to sit down and understand what agencies want, understand what they’re really looking for. That comes out in general conversations.

I would say that Networx is seen as the telecom or network contract vehicle. We want it to be more than that. Agencies can buy professional services and systems integration capabilities off Networx, but I don’t know that all agencies always recognize that.

WT: What are the hot trends you’re tracking for Networx customers this year?

Herring: One is the concept of transition vs. transformation. How far does an agency want to go? At the moment, you see some agencies trying to transform the way they do things. Others are simply trying to get off FTS 2001 in a short period of time and are looking at like-for-like services to transition. As the deadline gets closer, we see more of that, which may not be a bad thing; they’ve got to get onto a new vehicle.

The second trend is a continuing one: the huge demand for IP networks. Whether you’re transitioning or transforming, eventually you need that basic infrastructure. [There's] lots of demand for lots of bandwidth, IP networks, ability to communicate around the globe in a quick, cost-effective way.

The third trend is security and disaster recovery. We’ve spent $500 million in the last couple of years on our disaster recovery plans for agencies.

I think the fourth trend we’re seeing is enabling agency workers to work remotely as they would in their own office.

WT: Are agencies actually doing these things under Networx? GSA figures show only about 15 percent have completed their transitions.

Herring: One of the problems right now is the administration change. With budgets the way they are at the moment, agencies are still trying to figure out what they have for this year. We haven’t seen a lot of awards come out under Networx in the past couple months, but there are a lot of things waiting to be awarded, some because agencies want their statements of work to be complete and cleared.

There’s also just change in general inside of agencies; that will work itself out in the next few months.

WT: Here’s a two-part question: What has AT&T gotten just right — what’s the big win?

Herring: Other than a specific agency win, the strategy that we have around professional services and systems integration and network capabilities — what we call network-centric solutions. When you combine the people we have with the products we have, you get a strategy that’s become more and more valuable in the years since we started it and helps differentiate us from other carriers.

WT: Part two: What keeps you up at night?

Herring: Making sure we continue to keep pushing the technology envelope — not necessarily in a bleeding edge way but offering new capabilities and making sure we don’t miss something. [Apple’s] iPhone and [Cisco Systems Inc.’s] TelePresence are technologies we think will change the way people work. But you have to keep it up, make sure we have people thinking about what comes next. The technology and the way networking is done change so rapidly you’ve got to be on it every hour of every day. It’s an ongoing journey that we have to get right every day.

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WT: With voice so commoditized, has AT&T become a systems integrator as well as a telecom company?

Herring: Convergence is a journey. I’m not sure it’s ever a destination because as new technologies come in, the definition of convergence — in technology and business — will change.

Our principal reason in growing [our] professional services unit goes to the customization requirements that many agencies have. Most commonly, agencies will need a customized solution to solve a business need. To do that, you need really smart people who have a lot of expertise and a lot of experience.

But are we competing head-to-head with the systems integrators? That depends. Sometimes we compete with folks around the Beltway; sometimes we partner with them. That’s the typical systems integrator model around the Beltway, and we feel we’re an active participant in that.

Voice, by the way, is still a very important piece. Toll-free service is how many citizens still communicate with agencies.

WT: But the margin on voice isn’t what it once was. Where's the profit of the future likely to come from?

Herring: Voice pricing has gone down significantly over the past 20 years. And that’s a great thing for business and government and consumers.

But when you can offer a broad portfolio of other solutions and services — like the [Multiprotocol Label Switching] IP networks, telepresence, hosting, data-center work — it helps from a profitability standpoint for the company. More important, the customer can then buy from a single provider.

WT: Nine years ago, after AT&T lost out on FTS 2001, SBC Communications went on a spending spree, with AT&T, BellSouth, Cingular and SBC now integrated under the AT&T name. You helped plan that integration. Was that acquisition a strategy to grow the company’s infrastructure?

Herring: Yes, to grow the infrastructure in general. That broad product portfolio is why we’ve been successful with some agencies. Think about the traditional voice, data, now IP. Then you couple that with the wireless services that were brought in from Cingular, the application services and other things we got from some smaller acquisitions like [USinternetworking], add BellSouth and SBC’s footprint in the local services market, and we have a lot of reach across the country as well as a broad product portfolio. It certainly helps us as we go in and talk to agencies.

WT: Your acquisition pace has slowed since then, but how else has your strategy changed?

Herring: I think we have the portfolio now to serve almost any need that the government may have. So we’re not necessarily looking at external acquisitions for Government Solutions, although we’re always keeping our eye out for something that may be able to fit a particular product issue that we may have or one that gets to forward-looking technology that we can buy rather than build quickly. But going forward, you’ll see more of a partnership strategy for us in Government Solutions.

WT: Such as your partnership with Cisco Systems Inc. on TelePresence videoconferencing?

Herring: Yes, that kind of technology, [which runs real-time video on high-definition screens that display people at full size], has to be built on the foundation of a strong MPLS network as well as the technology from Cisco. We signed an exclusive agreement with Cisco for both government and commercial use. The use of TelePresence at agencies is going to take off in a big way in the next year or two. It’s literally like you’re in the same room having a conversation with them.

WT: Are you seeing much interest by government in video traffic outside videoconferencing?

Herring: We’re seeing a lot of interest in video traffic. We’re seeing a huge demand for IP traffic and specifically video traffic for use in agencies for training and education and for collaboration purposes. We’re the primary on the Networx contract for IP data services at [the Veterans Affairs Department]. We’re proud to have won that, given the demands they had.

WT: Because medicine and health care have such specific and varied communications needs?

Herring: Yes. First, you need a flexible network — not only in terms of the amount of bandwidth that will be required but also you need to be able to surge that bandwidth where you need to run a significant amount of video. That infrastructure we’re putting in for them will allow them to communicate not only with all the hospitals and doctors and offices they have around the country but also they will be able to do all the applications they want to do: telemedicine, tele-education and training. You couple that network with capabilities like telepresence, and that’s a transformation that will really let them change their business model.

We’re seeing that demand not only on the wired network but also on the wireless network. Inside a hospital or clinical facility, you have to be able to move things around quickly. Hospital workers today are hampered in doing their jobs because they’re tethered by the existing technology to a particular area in the hospital. We think the convergence of wireless and wireline inside a facility will help.

We’re also seeing demand for video on wireless devices. Smart phones — specifically the iPhone from Apple and 3G phones from Research in Motion — combined with our wireless network enable people and agencies to collaborate much as they would at their desks but on a handheld device. We’ve done a lot of work with [the Federal Emergency Management Agency] there. Smart phones coupled with a great network we think will drive more demand for video as well as data applications.

WT: We’ve been hearing about telework for years without much happening, but suddenly it seems more serious.

Herring: I may be biased, but I think it’s that the technology is just catching up to that now. Think about the amount of bandwidth that can go to a home now, cards you can put in laptops — we see a lot of that now — so you can work virtually anywhere. And it’s not just the technology catching up; standardization so people can plug and play on a network helps a lot. It’s all about, no matter where you are, being able to communicate on a single network. We’re seeing that in a lot of agencies, it not only helps with communications but it helps to drive down costs, too.