AT&T: THE CARRIER COLOSSUS

By Frank Dzubeck, Industry Commentary

AT&T keeps getting bigger but still is managing to execute on all cylinders. It is earning accolades from financial analysts and seeing its stock price rise (buoyed by a potential 10% dividend increase and a $10 billion stock buyback).

During the last nine months, AT&T's wireline business revenue exceeded $43 billion. The last nine months' revenue for Cingular Wireless, which AT&T expects to own fully after it acquires BellSouth, exceeded $27 billion. Projecting revenue for this last calendar quarter at $16 billion for AT&T and $10 billion for Cingular results in a staggering $96 billion annual run-rate. Voice revenues (54.5%) still drive AT&T's balance sheet, but data revenue (28.5%) is growing from quarter to quarter.

Look at these statistics for perspective on AT&T's stature: Its global backbone network comprises more than 535,000 fiber route-miles handling 7.6 petabytes of data traffic per business day; it hosts 30 Internet data centers on four continents, five global network operations centers and 10 global customer-support centers; and it has almost 100,000 access points in 150 countries, as well as strategic relationships with 190 carriers.

Throughout its divestitures, mergers and acquisitions, AT&T never lost its corporate-customer focus. During 2006, AT&T expanded its security portfolio to more than 10 services and launched 24 services directed at corporations. Among the carriers, AT&T now has one of the broadest portfolios for corporate-customer services, with options for everything from application management to managed security. Particularly noteworthy for 2006 was the extension to 23 cities of its Opt-E-MAN virtual private LAN service, which has received Cisco QoS certification.

During 2006, AT&T acquired USinternetworking, an application service provider. In 2007, AT&T intends to focus the wholly owned subsidiaries of Sterling Commerce and USi at the corporate service-oriented architecture marketplace.

Although the future looks rosy, one key issue stands in the way of even bigger success -- the BellSouth acquisition. AT&T still awaits approval from the FCC, which opted not to discuss the issue at its Dec. 20 meeting. Presuming the deal gets the OK after the new year, integrating the BellSouth operation will be a dominant challenge for 2007.

Regardless, AT&T is well positioned with management, resources, services and strategy to make 2007 an even bigger and more successful year.

Dzubeck, president of Communications Network Architects, can be reached at fdzubeck@commnetarch.com.