AT&T is fighting back on federal service

'You bid very low rates for local service under the Metropolitan Area Acquisition contracts. How did you cut rates so much? We were very pleased about the MAA wins. I think the current holders of that business have been charging high rates, so you could argue not so much that we're charging low rates but that they're charging high ones.I think it demonstrates the benefits of bringing competition to a marketplace that is just really starting to see competing businesses.'Dennis J. Fischer, commissioner of the Federal Technology Service, has made references'probably joking, but maybe not'to free telephone service. Is voice service becoming such a commodity that it can be given away or offered for a flat rate to sell other services? The technology is changing so much that we're seeing a convergence of voice and data, which is an enabler for value-added services. When I think of our customers and the mission-critical services that AT&T Corp. provides'certainly some of our 800-number services are mission-critical'I can't really separate the transport from the value-added.'Is local telephone service becoming as data-centric as long-haul service has become? I think what you're going to see, and certainly the MAA contracts allow for it, is the addition of data-centric services. They may not be there initially, but we are going to see all sorts of things potentially added to the MAAs'local asynchronous transfer mode, local frame relay, local types of data services.It's an exciting time in the industry. When you look at the tremendous growth, not only in voice traffic but in data traffic and the availability of bandwidth and the applications we can bring to our customers, it's phenomenal.AT&T chairman Mike Armstrong has taken a number of steps in the two years he's been chairman to allow AT&T to provide end-to-end services to our customers, which is something we know they want.'What specific types of services do you expect to add to the MAA contracts in the future? If you take a look at local services, AT&T's deployment of assets as well as its acquisitions give it a big footprint in the United States. By the end of this year we will be in 100 cities. That is a very powerful thing, in addition to long-distance services. The merger with cable company Tele-Communications Inc. will give us broadband services, and our wireless footprint is a powerful way for the customer to take advantage of the services.'So you are providing local service with your own equipment in those 100 cities where you'll have a presence by the end of the year, rather than leasing from incumbent local providers? We have substantial assets on the ground in New York, Chicago and San Francisco. If needed, and only if needed, we'll use leased equipment from another carrier. But for the most part we intend to use our own AT&T facilities.'Were these facilities put in with an eye toward the MAAs? Or did it turn out to be just good fortune that the contracts were awarded for cities where you had invested in the assets? In New York, for example, local provider Teleport Communications Group had a strong presence there. Certainly it is a very important geographic location for AT&T. Same thing for Chicago and San Francisco. I don't know if that is just serendipity or good planning.'Into what other major cities are you putting assets? Quite a few. We know that the General Services Administration is going to release requests for proposals for additional MAA cities. We know we're going to participate in the GSA program called Local Storm. We're making sure that we have a presence in those cities, to make sure that we're able to offer competition.'Overall, how important is the government's local market to AT&T? We are very committed to the market. AT&T has been in this marketplace, and we like it. Obviously, winning the MAAs demonstrates that. We are here for the long term.'Local telephone service competition is still in its early stages. How difficult has it been to break in? From a government perspective, we have a little bit of business in the local marketplace now in New York and some in Chicago. The MAAs obviously will increase that. Have we experienced problems firsthand? Not to a great extent. The larger corporation has, though.In New York, Chicago and San Francisco, I would expect the full cooperation of current carriers as traffic is migrated. As to the larger AT&T, I would say it has not been without some difficulty.'Where are your plans for wireless local access in the Washington area? We're very interested in the wireless market. AT&T has demonstrated tremendous capabilities in that arena. I can't talk about specific deployment plans for Washington, but I can tell you that it is AT&T's intent to offer the whole spectrum of services in the wireless arena, even including wireless office services. In fact, we are implementing one of those for GSA.'When you say you will offer the whole spectrum of services, does that mean you will bundle local, long-distance, cable and Internet services? The long-term vision is to give customers the opportunity to take advantage of all the technological breakthroughs, and I think that will include broadband via cable.'How has the FTS 2001 loss affected your business? We would have preferred to have won. We were very competitive. At the end of the day, it was close. We are committed to the market, and I think we've demonstrated that with the MAAs. Obviously, we would like to be able to offer local and long-distance services, and we will show that we are more than capable of doing that.'What kinds of new services can you foresee being offered, aside from combinations of existing services? It's such an exciting time. The pace at which technology is changing is dramatic. Broadband applications such as video and electronic commerce are going to be huge. Information assurance is going to play an important part. Professional services, to the extent a customer might want to outsource services to a third party, will be an area of growth, too.'The big challenge now is getting that broadband access to the user. What is going to be the medium for it? Do you see anything emerging as the one solution to the bottleneck? AT&T has certainly made a cable play, and there are a host of other solutions.