AT&T Separates Services Into Four Areas

AT&T Corp. last week began formalizing the restructuring plan that it initiated in October, and for consumers of high-end business services, the process holds the potential for more responsive, efficient service.

AT&T maintains that end users will not be affected by the separation of the giant company into four independent units: business, wireless, cable TV and broadband, and residential long distance.

“Nothing will change,” said June Rochford, an AT&T spokeswoman in Basking Ridge, N.J. “Its business as usual. Its a restructuring, but the businesses stay intact.”

Designed primarily to capture the fancy of investors by separating low-margin residential long-distance voice service from services with more growth potential, the restructuring will put the business unit at the corporations core, retaining the well-known “T” ticker symbol.

Analysts say the business unit could receive improved attention, once resources are no longer diverted to lagging units.

“To a large extent, this is a Wall Street thing,” said Marc Liggio, an analyst at Allied Business Intelligence Inc., in Oyster Bay, N.Y. “But the advantage to enterprise users probably is that the resulting core company will be focused on them.”

During the past decade, as the former telephone monopoly forged into cable TV and other diverse services, the business unit experienced considerable personnel turnover and loss in the sales force, according to Liggio. “Just because youre good at one thing doesnt mean youre going to be good at another,” he said.

The business services unit had already begun an internal restructuring prior to the official corporate make-over, according to Rochford. In addition to consolidating related sales efforts under a single management team, the unit eliminated redundant service initiatives. For example, all hosting offerings were brought together under one manager, she said.

Whether the corporate realignment will result in more tangible benefits for enterprise customers—lower prices, more innovation and faster service, for example—depends on how much infrastructure the business unit retains and whether the slower-growth consumer unit operates independently, according to Liggio. There is the potential for more business revenues to be reinvested into business services, but less so if the business unit has to support the consumer division, Liggio said.

As AT&T itself noted, there are also risks involved in operating the units as independent entities rather than as part of an integrated telecommunications provider. Each group will no longer be able to depend on the financial and operational resources of the others.