Agency - AT&T Says Restructuring Won't Affect Channels

Posted: 03/2001

Agency

AT&T Says Restructuring Won’t Affect
Channels
By Josh Long

AT&T Business Services, the crown jewel generating more than 50 percent
of the corporation’s revenue, says it expects the announced AT&T Corp. (www.att.com)
restructuring plan will have no effect on its agent and resale programs.

AT&T announced in October it will restructure into a family of four
companies, which include business, broadband, consumer and wireless.

"We don’t anticipate the spinoffs will impact us at all," says
Trudy Van Kirk, vice president of the AT&T Independent Sales Channel.

Agents in the division sell local and long-distance voice products and must
sign a separate contract to sell wireless, unless they sell an AT&T Business
Network product to bundle local, long-distance and wireless services on one
bill, Van Kirk explains.

When the restructuring plan was announced, AT&T executives said the
companies would bundle each other’s services through intercompany agreements.

"There are agreements in place for all AT&T spinoff companies to
work together," Van Kirk says. "There would be no reason why we still
would not bundle products as we do today."

But how long can that last?

"If [AT&T] also says they are going to compete with each other, how
willingly are they going to bundle?" asks Lynda Starr, vice president of
U.S. Carrier Research for New Jersey-based Probe Research Inc. (www.proberesearch.com).

For instance, with AT&T selling DSL within the consumer company and
separately marketing cable services within broadband, executives are putting
"the two companies almost in conflict," says Bruce Wootton, vice
president of communications services and technologies of the Hurwitz Group Inc.
(www.hurwitz.com), a Massachusetts-based
consulting firm that focuses on e-business and issued a report on the AT&T
restructuring.

At the resale level, AT&T’s Alliance Channel, which has approximately
1,400 partners, should not be affected by the restructuring, according to
spokeswoman Joyce Van Duzer.

"Our alliance channel members are going to continue to sell our data and
IP services," which remain a part of the AT&T Business Unit, Van Duzer
says.

In the broadband and consumer divisions, AT&T sells products and services
through third-party retail channels such as Best Buy Co. Inc. (www.bestbuy.com)
and Sam’s West Inc. (www.samsclub.com).
But there are no alternative programs by which outside agents sell broadband and
consumer services on behalf of AT&T, or purchase the products and services
for resale.

However, AT&T Wireless does offer such programs.

"I do not foresee that many changes," says AT&T Wireless
spokesman Ritch Blasi.

Keith Ferris, president and CEO of Massachusetts-based Ferris Communications
(www.ferriscom.com), says if his agents
representing AT&T Wireless want to sell other AT&T services, they must
sign a separate contract.

One agent affiliate says she hopes the restructured companies would offer
more aggressive programs.

"We could only hope that AT&T spinoff companies would offer more
aggressive agent programs to keep in line with AT&T’s biggest competitor,
MCI/ WorlCom," says Ilene Goldschmidt, director of agent marketing for
Global Systems Telecommunications Inc. (www.theglobalzone.com).
"Considering current AT&T rate structures, commissioning and support,
there is definitely room for improvement."

A positive prediction: The restructuring could allow the separate companies
to reanalyze their costs and perhaps become more competitive within their
respective businesses, says ATLANTIC-ACM Inc. (www.atlantic-acm.com)
analyst Nick Regas.

If AT&T could decrease its costs in consumer long distance, for instance,
and pass that savings along to its end users, that might benefit AT&T
distributors.

Other developments could emerge in the AT&T camp subsequent to the
complete restructuring. For example, AT&T reportedly has considered mergers
and other business deals within its wireless and broadband divisions.