TELECOM Digest OnLine - Sorted: Re: AT&T Inventions Fueled Tech Boom, And Its Own Fall

Re: AT&T Inventions Fueled Tech Boom, And Its Own Fall

Lou Jahn (
Sat, 5 Feb 2005 17:53:25 -0500

In Vol 2 Issue 50:

From: sufaud <>
Subject: AT&T Inventions Fueled Tech Boom, And Its Own Fall
Date: Wed, 02 Feb 2005 06:15:55 +0000

The referenced article stated:

"When I run into old Bell Labs people the first thing they say is,
'Can you believe what has happened?' " says Robert Lucky, a scientist
and executive who worked at Bell Labs for 31 years until 1992. Even at
the time of the breakup in 1984, he says, "the feeling was that we had
a network that was the envy of the world. No one could duplicate it."

I was basically a lobbyist for IBM covering Network Products (mostly
ROLM issues) when IBM announced that is was selling off their ROLM PBX
operation. The following factual history will position AT&T's
problems and why they failed themselves and stockholders.

A good friend who then jointly owned a market research firm named
Northern Business Information (NBI) told me he received numerous calls
from AT&T senior executives about his prior research reports upon
IBM's sell-off announcement. Why you ask? Well when IBM announced the
Siemens deal they stated the total ROLM operations included Sales,
Support and HQs operations contained 12,000 employees. Well at that
point in time AT&T had a "staff headcount" of slightly over 17,000
covering their then three major PBX brands. Of course, they had more
many when counting Sales, Manufacturing and Field support. What ticked
off the senior executives in regard to NBI reports was the fact that
internal AT&T staff managers always told the senior folks that NBI had
missed this function and that function when issuing a referenced
report. The simple fact was AT&T spent more on planning than IBM/ROLM
did on running their operation. It was a headquarter operation that
allowed inflated staff headcount and the lack of truthful internal
presentation of the marketplace dynamics that lead to AT&Ts actual

Those readers who lived in New Jersey may remember the "many" AT&T
headcount reduction announcements for the 3-5 years after the 1984
deregulation. Most were coupled with rifts of 50,000 to 100,000 at a
time. Just think of the disruption such consistent headquarters
turnover has on any business operation. I was always amazed the NJ's
economy did not fall to the ground, but no, in spite of such job
shedding NJs economy continued to grow until the late 1990's.

Another factoid: AT&T as a total corporation had about 990,000
employees in 1981-82. In 1987 the seven ROBCs and AT&T had only about
725,000 employees. While one might argue firms like MCI and SPRINT
were doing some of the former AT&T effort. That total headcount of the
RBOCs and AT&T continued to fall well into the 1990s.

So while AT&T did indeed have a magnificent network, AT&T's inflated
cost structure due to HQ overhead, simply brought it to its knees. It
just took time for the real problems to register.

Lou Jahn
Info Partners Corp
609-823-2202 Fax

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