Armstrong decrees a new network for AT&T

New York

Someone in the telecommunications industry does believe in Moore's Law after all. And of all people, it turns out to be the chairman of AT&T.

The carrier's new CEO, C. Michael Armstrong, last week announced a radical change in AT&T's network, which will provide hundreds of new user access points for IP, wireless and local telephone services. Combined with a new effort to slash the company's head count and overhead, Armstrong indicated in public - and even more empha-tically in private - that the plan is designed to bring down the cost of both voice and data networking for business users.

Armstrong told a crowd of Wall Street and technical analysts here that AT&T will move to an edge switch architecture that terminates dedicated access lines on local telephone switches instead of AT&T's heavily taxed long-distance circuit switches. According to analysts and AT&T insiders, Armstrong and his deputies also are committed to installing a substantial number of new data switches at the edge of the network to provide a transparent IP user interface.

The idea, they say, is to beef up AT&T's WorldNet IP services with economically attractive offers that utilize frame relay or ATM trunking in the carrier backbone without forcing users to actually subscribe to frame or ATM service.

Armstrong gave the clearest statement yet by a major telecom executive that some variant of Moore's Law - the dictum that computer processing power doubles every 18 months for the same cost - might eventually apply to telecom, as well. AT&T could count on selling more services to business and residential users as price stops being a barrier, Armstrong said.

A major partner in AT&T's plan is expected to be Ascend Communications Corp., which last year purchased ATM switch vendor Cascade Communications Corp. Frank Ianna, AT&T's executive vice president for network and computing services, confirmed that AT&T this year plans to purchase 112 of Ascend's CBX 500 multiservice ATM backbone switches from the former Cascade family, plus 50 B-STDX 9000 edge switches with IP interfaces, largely to provide a transparent ATM backbone for what users will simply view as IP services. Ianna added that AT&T also has a rapidly growing demand for native ATM user services as big users max out their T-1 frame relay links.

To pay for these and other investments, AT&T said it will cut 18,000 more jobs and reduce overhead to an industry standard 22% of revenues. It also has canceled a project to build a new proprietary superswitch for the network backbone as a follow-up to the companys 4ESS switches. Through it all, Armstrong gave some conservative projections for AT&T profit growth. That worried Wall Street, but gladdened IT analysts such as Frank Dzubeck, president of Communications Network Architects, Inc., a Washington, D.C. consultancy.

"What he was saying is: Don't expect `the savings' to be returned to the shareholders," Dzubeck said. It's going to be returned to the customers."

Armstrong's plan is not guaranteed to succeed. An indication of the work remaining for AT&T was on display later in the week at ComNet '98, where an an-nouncement of AT&T's first set of standard frame relay service-level agreements (SLA) drew a lukewarm response.

For example, AT&T said it will guarantee that 99.99% of packets up to the users subscribed-to committed information rate (CIR) will pass through the network. Unlike existing offers from MCI Communications Corp. and Sprint Corp., AT&T offered no guarantee for packets above CIR - the ones most at risk of loss.

Analysts attributed the gaps in AT&T's frame relay SLAs to Cisco Systems, Inc.'s Stratacom switches, on which AT&T's frame relay network is based.

"They can't do much more than this with the Stratacom platform, Dzubeck said. Dzubeck also predicted that by next year, AT&T will de-emphasize new frame relay service and beef up end-to-end latency guarantees for its recently introduced WorldNet VPN service.

Ianna confirmed that AT&T is continuing to add to the Stratacom frame relay network, with a planned addition this year of 62 broadband switches to the existing 125-switch network, plus several hundred new access nodes.

Senior Editor Tim Greene contributed to this story.