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Rich Tehrani

[February 23, 2005]

Rich Tehrani Interviews AT&T's Cathy Martine

BY RICH TEHRANI


Cathy Martine, Senior Vice President at AT&T, is a keynote speaker at this week's Internet Telephony Conference and Expo in Miami.

Below is an interview with Martine conducted by TMC's Rich Tehrani in preparation for the event.

For more information about Cathy Martine, see David Sims's profile of her, " Know Thy Keynoters – AT&T's Cathy Martine."


Q1. You announced aggressive customer acquisition numbers when you rolled out AT&T CallVantage Service. Can you tell me if you are on track? Can you release customer numbers at this point?

I’m sorry Rich, but we have not disclosed any subscriber data to date. I will say however that consumer acceptance has been quite gratifying, but to compete at the mass market level would require considerable marketing dollars. We don’t think that would be a wise investment for us and is not consistent with our strategic intent to focus on enterprises. I would also remind you that AT&T has undergone a sea change in strategy since Dave Dorman made those first proclamations back in December 2003; most dramatically the FCC decisions of last June. I’m fairly confident that with SBC’s impending acquisition of AT&T, we haven’t seen the last of our strategic shifts.

Q2. In past conversations with AT&T, I have heard mention of the cable companies and ILECs being bigger AT&T CallVantage competitors than p2p networks and others. Do you take Vonage and Skype seriously? Are they a threat?

We take all of our competitors seriously, but the overwhelming opportunity is with those companies serving the majority of telephone lines, not the small minority of businesses and consumers that have already made the leap in technology. While I don’t dismiss the innovations being delivered by the peer-to-peer market, it isn’t much of a business model for companies looking for a return on their investment. AT&T is a public company with stock holders that we answer to.

Q3. How is your exporting of VoIP outside the country going? Are customers overseas receptive? Where are the biggest opportunities for CallVantage internationally?

As you know, we have a remote worker pilot up and running in four countries presently serving more than 40 top global multi-nationals that is going extremely well. With a strategic eye towards serving businesses, our primary international priority is to turn this into a commercial global offer. We’re finding that remote worker needs are a perfect fit for our AT&T CallVantage platform capabilities.

Q4. Are customers using the advance features you provide in your VoIP service such as Find Me, Follow Me, dial from the Web browser, etc? How does customer usage of these features meet up against your expectations?

That’s an intriguing area that we keep probing. While many of the early VoIP adopters made the decision on price alone, we are finding a number of features quite sticky. Without disclosing too much competitive information, one of the stickiest is Locate Me and its ability to ring up to five lines at once, or sequentially. It’s also one of our competitive differentiators. Consumers also like the overall Phone Manager (Web portal) experience and its Click-to-Dial capabilities. And not surprisingly, one of the most often used features is the ability for voicemail message notification and delivery.

Customers have really discovered the convenience of getting their voicemail message delivered right to them with the ability to forward it on as an e-mail attachment to others. And as you might guess, home office workers like the Conference Calling capabilities and the nominal per minute rate we introduced late last year hasn’t dampened enthusiasm for it. When it comes to features, you either use them all the time, or not at all.

Q5. The SBC merger has the industry talking. What does this mean for CallVantage? Do you believe the sheer size of your new company will be an advantage or disadvantage in selling VoIP service and why?

Rich, I would prefer not to speculate about what the acquisition may hold. However, I will say that AT&T’s IP network and innovative VoIP solutions will have a positive impact on any VoIP service that the merged company will offer. The strength and scope of the combined company can only help the sales effort.

Q6. Does branding count when we talk about VoIP service? Do customers care about brand or is telephony (even over IP) commoditized?

I strongly believe they do and think entirely too much is made by commoditization of any product or service. Soda is basically sugarflavored water, but I’ll bet you and your readers have brand preferences that don’t include the generic house brand sold at your local supermarket. The telecommunications market is no different. AT&T has remained the premiere brand when faced by overwhelming competition for the past 20 years. Consumers know it and trust and many give AT&T CallVantage Service preference when trying broadband phone services for the first time.

Q7. Are there new and interesting features we can look forward to in your VoIP service? What are they?

Have you looked at AT&T CallVantage Plus yet? Introduced in mid-December, it’s the industry’s first sub-account capability. This is truly a unique capability that can provide as many as nine individual numbers a distinctive experience while sharing the same line. It enables each account the ability to configure features like ‘Voicemail’ with linespecific messages, or to program 'Do Not Disturb' and 'Locate Me' to receive calls when and where directed by number. This means that up to 10 people can actively have inbound calls routed where they want, however, only one user can place an outbound call through the TA at any one time. It also provides a discrete 'Call Log' for each number. The monthly charge is $7.49 per account.

Q8. Are you concerned about ILECs/and or cable companies using packet filtering on your calls or in some way giving an advantage to their own VoIP offerings?

While it would be foolish to dismiss this premise out of hand, I don’t believe the intentional blocking of broadband calling is a likely scenario. As you already know, there have been documented instances of this activity resulting from an earnest effort by some to secure their networks against malicious intrusions. In each instance that impacted AT&T, we were able to work with the carrier in question to continue completing our calls. Due to the interdependencies of networks, is in everyone’s best interests to ensure data flows freely from network to network.

Q9. Is there a conflict of interest in selling a worldwide VoIP service and at the same time being an ILEC? Just as other ILECs can hinder your traffic, you can do the same to other VoIP services? How will this shake out? Are you concerned about this issue at all?

These type of conflicts have existed since the beginning of modern day telecommunications, but the industry has found a certain basic level of co-opetition is necessary. After all, no one carrier can connect all end points without relying on the assistance of others who are often its competitors. VoIP and the IP networks it travels have the same cross dependencies. The marketplace will help level-set these competing priorities so everyone can survive.

Q10. Where do you envision the combined SBC/AT&T VoIP market share being in 5 years? Ten?

It’s a little early to speculate on our combined success, but we believe our two companies have complementary strengths, product sets and customer bases to create a premier, global provider for a new era of communications. Together, SBC and AT&T will be better positioned for success and leadership within a rapidly changing industry, setting the standard for the transition from legacy technologies to advanced, next-generation IP networks and services.

Q11. Worldwide, are the incumbents and cable companies your largest competitors? Anyone else?

Yes.


Rich Tehrani is TMC's president. He welcomes your comments. Participate in our forums.

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