New AT&T president talks telecom

William Hannigan on the carrier’s advantages, disadvantages, revenue-growing strategies and more.

Faced with declining sales, AT&T last week announced the resignation of President Betsy Bernard and the appointment of her replacement, William Hannigan, chairman and CEO of travel company Sabre Holdings. After 36 hours on the job, Hannigan, a former SBC and Sprint executive, shared a few thoughts with Network World Managing Editor of the Edge Jim Duffy.

What attracted you to AT&T?

I’ve been in the telecom industry 22 years, 16 of those from a [carrier] perspective. You’re not in the industry for more than a day without recognizing AT&T as the gold standard. I always regarded AT&T as a fierce but classy competitor. [AT&T Chairman and CEO] Dave Dorman was on our board [at Sabre Holdings, along with] Royce Caldwell, the vice-chairman and COO at SBC for years. We could have sold tickets to our board dinners from a telecommunications discussion perspective. A few weeks ago, Dave and I started talking about some possibilities, and it became intriguing pretty quickly, especially because I thought the time was right from a succession perspective at Sabre.

Coming in from a different industry, how do you view the state of AT&T’s business and consumer services operations?

The entire industry is challenged from overcapacity and price-erosion perspectives. I like our position relative to our competitors, but the industry has always been fierce, and that hasn’t changed. If anything, it’s accelerated. For us, it’s all about competing aggressively to make sure that we are competitive from a price perspective. There’s also a little bit of, ‘Oh, I didn’t know you guys did that.’ So we need to be a heck of a lot more aggressive talking about what we bring to the table, not just from a long-distance perspective but in local, LAN and systems integration as we go further into the customer’s network.

What do you view as AT&T’s competitive advantages and challenges?

Some of our competitors are just going to have to go away from an overcapacity perspective. Even with the turnaround in the economy, there’s just a lot of capacity out there. Our strength is our capability, our portfolio. That goes to making sure that we’re spending a great deal of time with our customers. I was with customers for hours yesterday and will be again today ensuring that we are telling the story and bending the revenue line [upward].

So your priority is to generate top-line growth in business services?

Correct. But first things first. Flattening the rate of decline is Step 1, and then we go from there. [Other priorities are] new capabilities and products. Voice over IP, [for example,] is disruptive technology, and there aren’t that many times in life where the big guy – the company with $34 billion in revenue – actually has the opportunity to use disruptive technology to its advantage. We’ll start with VoIP aggressively in the consumer and small-business space.

What are your strategies for growing business service revenue?

It goes to getting deeper into our customers’ networks. I’m talking about our application-aware network and making sure that we’re working at the application layer with our customers. It’s really important for us that we are way beyond ports and pipes. The network integration suite is really important to us.

Betsy Bernard was viewed as a cost-cutter, a business stabilizer. Are you the growth generator?

Certainly, that’s Job 1, and I’ve had the opportunity over the years with terrific teams to be able to do that at both Sprint and SBC. At the same time, some important work has been done from a cost structure perspective at AT&T. It will continue to be incumbent upon us to make sure that we have the best cost structure in the industry, and it’s incumbent upon us because we have the scale. [But] we are all about offense, about taking share, expanding our product set – particularly in the growth areas, the data areas.

What capabilities from Sabre can you map to AT&T?

We were a technology pioneer similar to AT&T. You could argue it was the first network-based application, the first electronic exchange in the computer reservations systems space. And certainly from a Travelocity perspective, it was all about the functionality to the consumer and leaping the chasm. Not that many years ago, 95% of travel was transacted through traditional travel agents. That number’s now more like 55% in a more self-serve environment with billing that capability right to the consumer. Sabre Holdings was the largest privately held data center in North America for decades . . . driving down costs, increasing our ability to roll out feature/functionality faster – all the things that the AT&T guys have been doing for years as well.

But the fun part was being a customer. When you’re connecting 66,000 travel agents in a computer reservation service business and 120 countries, you are a big user of the network.