September 24, 1998

Former execs 'walk all over' AT&T

By Kevin Maney, USA TODAY

At the high-voltage Telecosm conference here last week, nothing was more anticipated than a session called The Walkin' Man Panel. The packed house wanted the panelists to open up AT&T like a rib spreader, hopefully revealing diseased and rotting innards so everyone in the audience could shake their heads and "tsk tsk tsk." Instead, the panelists made nice.

Still, it was so extraordinary a reunion, I have to tell you about it. Sitting in stuffed chairs spread across the stage inside the Resort at Squaw Creek was the AT&T Exodus. Some could barely stand each other when they worked together at the company, say those who know them.

The moderator was David Isenberg, an AT&T scientist who had been the company's Paul Revere, running through the halls saying: "The Internet is coming! The Internet is coming!" Except AT&T didn't really want to hear it, he says. A year ago, Isenberg was pressured to leave. He's now a consultant.

Panelist Alex Mandl seemed the likely successor to previous AT&T chief executive Robert Allen. But Allen dithered. Mandl got frustrated. He jumped at a $20 million offer to run a wireless communication start-up now called Teligent.

Joseph Nacchio once reported to Mandl as head of AT&T's consumer business. Nacchio is blunt, daring and cocky. He was known for butting heads with AT&T's more genteel top layer, which included Mandl. The past couple of years, he's been building a high-profile competitor to AT&T, Qwest.

Tom Evslin was brought from Microsoft to AT&T and also reported to Mandl. He started AT&T WorldNet, an Internet service provider. But, culturally, going from Microsoft to AT&T would've been like going from a frat house to a lawn bowling club. Evslin left to run IXTC, which carries voice traffic over a network based on Internet technology.

The last panelist was Bob Bailey, CEO of PMC-Sierra and former head of AT&T Microelectronics. Compared with the others, he's barely known.

The usually brash Isenberg was expected to stir those boys into a frenzy. Instead, he began by saying: "There's really no reason to bash AT&T." Several in the audience groaned.

You keep samein' when you oughta be changin' Now what's right is right, but you ain't been right yet.

They didn't rip into each other. They didn't slam old or new AT&T executives by name. But once they got going, they let loose a few insider insights into why the company has had a tough few years.

Mandl hired Evslin to launch an Internet offering. From the start, Evslin said: "There were people who said it would take us four to five years to do it because we had to be up to AT&T standards." In Internet circles, four to five years is the equivalent of the time between now and the day the sun burns out. Evslin launched WorldNet in seven months.

Serious obstacles only popped up once WorldNet became a raging success. First, because of the pricing, WorldNet lost money on every customer. So if it had more customers, it would lose more money. AT&T couldn't see the logic there, even if it was building a future business.

On top of that, once AT&T officials saw the possibilities of Internet phone calls, "the threat of success was much more than losing money. It was stealing minutes" from the AT&T phone network, Evslin said. WorldNet was told essentially to stop growing.

Evslin added one telling comment: "AT&T's mantra was 'execute flawlessly." They meant well, but there were punishments if you didn't. I had to explain to people that you couldn't execute fast and flawlessly.''

These boots were made for walkin'
And that's just what they'll do

Mandl talked of seeing AT&T from his new perspective. Too many layers of management meant that cool projects never bubbled up from lower levels. "Taking risks was not rewarded. It might get you in trouble or fired or lead to your situation," he said, indicating Isenberg and getting laughs.

Nacchio, true to form, flung the sharpest barbs -- presumably aimed at Allen and possibly Mandl, though he named neither. "If you're going to step out boldly, you better have the senior guy believe in it," he said, implying that the senior guy never believed in boldness. "There were a lot of good ideas, but they couldn't get corporate traction."

Nacchio added: "If you're the CEO, whether you're going to have a good vision or not, you've got to have one."

The question left hanging was whether AT&T has changed under new CEO C. Michael Armstrong. The panelists said they didn't know. AT&T says it has changed. "This is a new AT&T, and the bold moves we're making speak for themselves," says spokeswoman Adele Ambrose. "Each of these panelists has his own agenda and his own version of revisionist history. I won't engage in a 'he said, she said' rebuttal of their specific comments about the past."

Another question is whether the panel was just a bunch of whining has-beens. But since leaving, they've built some of the hottest companies in communications. At one time, the guys on stage would've been hailed as the future of AT&T. Now they'll probably make AT&T's future more difficult.

One of these days these boots
Are gonna walk all over you.

Date last modified: 9 Oct 98