AT&T Plans Its UC Future

At this week’s event for industry analysts, AT&T emphasized that after a prolonged absence, innovation is back (and I’d add, hopefully here to stay). But this isn’t the mode of innovation that propelled AT&T into the business voice and data services leadership position between 1985-1995. it’s clearly a (1) more focused, (2) significantly more modest, and (3) less proprietary model. The first two are fairly self-explanatory—the spinoffs of Lucent Technologies and Avaya from AT&T tore Bell Labs asunder, and its level of commitment to basic R&D plummeted. But in addition to engineers who are focused on specific platform or product-related projects, there are about 200 engineers who follow in the Labs’ tradition of working on long term basic research. I’ll get back to the third point in a bit.

 But what does this mean for UC? Actually, a lot of things. Over the next few months, there will be some product announcements in Fixed Mobile Convergence and Telepresence that I’ll analyze as AT&T introduces them. What I want to talk about now is the company’s UC as a service (UCaaS) platform. Core UCaaS functions include desktop and mobile clients, presence, UM, IM, conferencing, telephony and FMC.

AT&T’s UCaaS platform can support a number of managed and hosted IPT/UC applications. Current incarnations include managed IP PBX services (Cisco and Avaya), and managed or hosted Microsoft OCS. Beginning this summer, AT&T will trial a service designed to support enterprise requirements for hybrid connectivity. For instance, many companies still have legacy PBXs but would like to begin using UC services and features now. UCaaS is designed to help these customers—this is especially important for companies with Nortel assets. Other customers want to make sure their Cisco/Avaya and OCS products ‘play well’ together.  Or, some companies need to extend the benefits of UC to smaller sites, or to mobile users, and to have their experience seamlessly interwork with other UC vendor products. UCaaS is designed for these types of hybrid applications. AT&T’s recent Royal Dutch Shell announcement is a case in point-hosted OCS R2 coupled with Cisco and Nortel IPT, and HP Halo and Tandberg videoconferencing products. Not surprisingly, UCaaS (under the AT&T DNA banner) is also available as a stand-alone service—to use UC, companies need not have sunk considerable resources into any of the UC vendors named. In the future, UCaaS will be able to be used on a federated basis—between AT&T customers, and over time, we could see UCaaS elements in third party platforms.

People who are familiar with the UC landscape will point out that AT&T is not the first company whose UC platform can claim the type of functionality I just described. True enough. But AT&T has a huge installed local and LD voice base, and so UCaaS is of significance to all of them, and to anyone else who might be interested in using their services going forward. Over time, the potential margin upside for AT&T is tens of billions of dollars.

Returning to my point of ‘not invented here’, a condition AT&T and its offspring suffered from for decades. The void in internal innovation forced AT&T to look outside. For instance, UCaaS is the brainchild of Interwise, the same company whose web/IP voice conferencing system is the foundation of AT&T Connect (AT&T acquired Interwise in 2008).  And AT&T has plans for UCaaS-to expose its APIs to customers and third party developers—this is one of the great lessons AT&T learned from its 3G experience.

Directionally, everything I’ve discussed is good news. Robust competition is always good for customers. Here are a few things that temper my immediate enthusiasm:

Limited vendor set. From a productized offer perspective, UCaaS’ focus is on several specific UC vendors Avaya, Cisco, Microsoft), not all UC vendors. The pool of prospective legacy vendors is larger (UCaaS and SIP trunking service running into a managed premises gateway), but not all legacy vendor products—it all depends on what the gateway will support (apart from AT&T’s stated focus on supporting Nortel PBXs still covered by maintenance contracts).

Long trial. AT&T plans for the UCaaS platform to be in trial for a year, with GA 2Q 2011. Given the size of the Royal Dutch Shell agreement (150,000 stations), that is not a complete surprise, but it does mean that any company who can’t get on the trial list and who wants to implement this solution soon should look elsewhere. One hundred companies have made inquiries about participating in the trial.

MNC focus. Although UCaaS can be used by customers of any size, initial target customers are large multinationals. I expect this focus will linger at least through mid-2012. Companies who are interested in using UC services within the next two years (or UC hybrid models) and who don’t meet AT&T’s initial target market criteria also should look elsewhere.

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