AT&T was good at seeing the future, not at executing on it...

A few weeks back at the Alcatel Lucent analyst event, author Douglas Coupland treated us to a post-dinner speech on visions of the future. It was an interesting moment, but the highlight for me was these video adverts that he showed from AT&T back in 1993.

What's really interesting to me is that if you project back, it took a fair bit of vision to actually anticipate some of these changes, and if you look closely, every single one of them came true. What's even more interesting to me is that AT&T (or more generally telcos) have virtually no stake in any of those. I've compiled a table to look at who is the key player for each of these. 

What's fascinating to me is that the common view of why telcos are not part of these ecosystems is that they didn't have the vision, others (google, skype, etc.) were more visionary, etc. That's clearly not the case: if AT&T was bold enough in 1993 to advertised for services they could clearly see were being worked on in Bell Labs at the time, it's because they felt they would be services they could deliver. 

So why couldn't they? My guess is because of vertical integration. These services, for the most part, needed an open network to access a broad market, and that's the one thing that the internet brought to us not because of telcos role but despite telcos resistence and reluctance. This (to me) is a great way to drive home the point that the incumbent's push (through ITU) to end openness in the name of control (and perceived revenue) is not only misguided, it's suicidal. For the companies themselves, and for our modern societies. I'll write more about that later this week, but I thought these ads were a great illustration of that. 

In conclusion, one could say: "And the company that'll bring it to you? Not a telco..."

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28 Jun 2012, 1:47 p.m.

This all assumes Telco's are in some position to deliver the products listed. What's missed in the above analysis is that a Telco has only their customers to work with. O2 cant sensibly market an O2 service to AT&T. For Bell labs products to deliver what Apple and Google do requires Bell Labs to think beyond AT&T... i.e. outside of the carrier vertical they are in. Just about possible for a quasi-independent or like the labs team, impossible for most telco R&D teams.

A much better place to look for telco innovation is where the service is delivered to one or one group of end users who do not need cross telco interaction. BT in the UK is making inroads with IP TV, AT&T will deliver M2M for major firms.

Telco’s can’t build Gmail any more than Google can own air interface immediately creating channel conflicts for what are network agnostic products.


28 Jun 2012, 2:45 p.m.

The author is right on but leaves out the main reason for AT&T's failure. The government, namely the courts and FCC were hell bent on bringing down AT&T. So many times during the 80's and 90's T initiated efforts to move forward but was blocked. I was there. In the end, the open market brought about by T's being blocked from vertical integration produced the world we live in. Good for us, bad for T.


28 Jun 2012, 4:14 p.m.

It is not that AT&T could not. If left alone under monopoly, probably AT&T would have done it also, charging whatever fees that were necessary. However, after the breakup, AT&T has to survive through making profit in this competitive world. That is where AT&T fails, not in the technical world, but in the business world. After breakup, funding to basic research dried up in Bell Labs. Note that many successful companies mentioned above used VC funding to fund their R&D.


28 Jun 2012, 4:44 p.m.

Love this article. I think this an artifact of the Bell Labs era where AT&T viewed themselves, and with some merit, as innovators and drivers of technology. These weren't the only missteps in their history. At one time AT&T was the second largest cable company in the country. 10 years later they have spent $7B to be number 8


28 Jun 2012, 6:02 p.m.

Good table. Good review. I think the reasons are slightly different: Telcos certainly had the vision and they had the cash to execute on any of these. However, if you notice, each of them requires a dedicated focus on executing "that plan" thinking ONLY about that service and making it perfect for the end users - including, possibly, significant long term investment in that focused direction. The market shakes out many players striving to target the same vision. A Telco can only afford 1 (perhaps 2) teams trying to do it. Each of the above certainly had (and I'm familiar with a few of them) internal efforts to try to bring them to market. But they too, were unable to execute. Some of it has to do with the mere law of numbers. Others, to the approach taken by the Telco team. Often they try to leverage synergies within their enterprise and to use them in an almost compulsory manner. Also, they are absolutely unfamiliar with free/freemium services. There are many other reasons, but I believe that these, and not merely their geographically limited nature, are the key to their lack of success in doing any of these. Most of the barriers are also in their attempt to pursue new services...


28 Jun 2012, 6:08 p.m.

What this blog missed was all the technology was developed by AT&T Labs. But in when they were bought by SW Bell, they gave up the ability to own equipment, and only sell services. So they own all the data traffic these devices use, but cannot sell physical products. They do license out their name,and still create products via creating new ways to administer data bandwidth. But they generally have always relied on other venders to sell the physical equipment to consumers. What it also does not take into account is that SW Bell, is now the principle owner of AT&T. They were never in the business of selling future goods and services. It now shows in that they are trying to maintain and grow a given set of skills, not create new ones.


28 Jun 2012, 7 p.m.

Telcos view these services as requiring excessive amount of regulatory hoop-jumping. Perhaps they need to set up the separate subsidiaries that would allow them to enter and compete. They would still have to deal with their inherent lack of creativity, however.


28 Jun 2012, 11:11 p.m.

Interesting analysis and fun movie.I agree to your conclusions Benoit.

Some things that I beleave play a part in why things went this way;
- telcos had/have in general high margins
- telcos are partly pushed by regulatoric demands from governments
- telcos owners in general require margin to be defended (stock market) or reluctant to openness (state).
This is totally different from the companies that play the service delivery roles. They have had owners with much more openness to big ideas and growth and being innovative have been more important than short term wins and stable income.

But you could on other hand also add that telcos still add the following very crucial properties to the services;
- the pipe
- mobility
These would not exist without extensive investments in networks. The high margins have paid those investments.

So telcos was necessary to create this ecosystem. And still are. But probably not well suited to take the lead due to the reluctance they face.

But how will it change coming 20 years?


28 Jun 2012, 11:49 p.m.

Telco's are not innovators, merely deployers of others equipment. They have no ability, other than being able to connet equipment together and create a network.

Essentially they are trolls that collect tolls, for the use of their network.


29 Jun 2012, 4:52 a.m.

Major telcos don't like cannibalising their existing revenue streams, and this often stops them launching innovative products (or even just modern products) even when they have the ideas and the technical capability (for exmple in the UK one telco was very slow to introduce ADSL, and some believe this was due to fears that it would damage ISDN revenue).
Additionally they prefer to layer new products on top of existing capabilities/infrastructure to leverage that infrastructure and also the systems that provision/bill for it. This can be seen with one Telco's IPTV service in N.America, which some believe to be an inferior service because it is layered on older capabilities.
These factors seem reasonable to many leaders at the time, but in retrospect are clearly poor decisions.
The inverse may be true with smaller telcos, (and startups, and new entrants) who have less to lose and less to leverage, thus innovate more quickly and dramatically.
I believe Apple demonstrated that not being afraid to cannibalise one revenue stream (iPod) when launching a new product (iPhone) can be a savvy move.
I dont know if these factors were at play at AT&T, but I wouldn't be surprised.


BeverlyMaddalone MBA
29 Jun 2012, 5:27 a.m.

Yes, agreed! I remember those ads all too well, and continue to lament the fact that AT&T and the other telcos have pretty much been disintermediated from the communications transformation. However, very few people realize how much of their current communications would not be possible without the constant innovation going on in the telco networks. The PIPE is still a very critical element of the end-to-end connection.


5 Jul 2012, 3:28 p.m.

I was there in '93 - the big push had been ISDN - which didn't go anywhere (It Still Does Nothing). Massively expensive pipe dream. I think the main problem was the technology had not caught up with the vision.

For a while, I had an honest to goodness ISDN connection in my home so I could do system support from there - a whopping 9600 baud connection that connected to my phone line at work, which was tied my Sun workstation using SLIP. Much better than a modem, but a far cry from anything that would have supported what they were proposing in their advertising.

And by the time the technology was available, AT&T had splintered and was in no position to deliver.


21 Jul 2012, 6:16 p.m.

Good posting. And good comments too. I was also at AT&T during this period and was tangentially involved in the development of the "You Will" commercials. I can attest that they were all based on discussions with Bell Labs researchers and carefully vetted for appropriateness to the company's business plans. I believe the real reason AT&T didn't deliver on these promises is that the company was a slave to its stock price, which was a function of continually rising earnings per share. In those days, the consumer long distance business (remember that?) accounted for more than 100% of earnings. Every other business lost money, because it was still in an investment phase. As competition from the likes of MCI and Sprint forced prices down, the company cut back on the new businesses that might have introduced these innovation in order to meet its earnings goals. In 1999, AT&T introduced a new wireless plan called Digital One Rate that essentially made wireless long distance calls "free." The company's principal competitor -- MCI -- didn't have a wireless unit so it resorted to cooking its books, forcing prices down even further. In MCI's case, below its actual costs. The net result was a major liquidity crisis at AT&T, and it had to unwind all the acquisitions it had made in an effort to diversify from long distance. One could argue that the company made other mistakes -- e.g., over-paying for cable companies, taking on too much debt, etc. But the root problem was a dependence on financial engineering that had little to do with actually serving customers. The company was so focused on investors (especially a small subset of analysts and money managers) that it took its eye off what really counts -- customers. I told this sad story in greater length in my book, Tough Calls (AMACOM 2004). Dick Martin