Would you like Caller ID with that?: AT&T may become the McDonald's of telecom through franchising

AT&T Corp. is considering licensing its most important asset--its name--to other businesses to expand its wireless and local phone service offerings, according to published reports last week.

If successful, the plan, reportedly proposed by Vice Chairman John D. Zeglis, would cut AT&T's capital spending and costs during the next year and keep the giant carrier competitive in the constantly evolving telecommunications industry.

Zeglis reportedly unveiled the plan to company directors at an annual weekend retreat. The directors must approve the strategy, which is risky but smart, industry analysts said late last week.

"AT&T's name stands for trust, quality, reliability and value, and people will trust that if a company has a contract with AT&T to use its name, then it must be good,' said Jeffrey Grill, senior vice president of N.W. Ayer & Partners, New York. "If it fails, then [AT&T] trashes the very thing they were trying to preserve.'

A study presented last week by International Data Corp. of Framingham, Mass., revealed that while the AT&T brand is the predominant U.S. telecom trademark, it is weak in several regions compared with those of the Bell regional holding companies, particularly Pacific Telesis, U S West and Southwestern Bell.

AT&T officials did not comment on reports of the new plan. Earlier last week, company officials stated they would not make any decisions during the retreat about AT&T's search for a new chief executive officer, a job for which Zeglis is being considered along with several CEOs from other companies.

Long-distance competitor MCI also had no comment, but a Sprint spokesman said that such a plan just shows what Sprint already knows.

"No matter how big you are, you have to partner if you want to do all the things AT&T wants to do,' the spokesman said. "We have many successful partnerships that allow us to enter certain markets without building all the needed networks ourselves. What we're seeing is a realization on their part that, to have breadth of service, you have to have partnerships.'

Under the plan, AT&T would hand out wireless licenses to companies, connect their networks to its own network of switches and billing systems, and allow the franchises to sell services under the AT&T name. Possible affiliates include Wireless One of Naples, Fla., and Telecorp Inc. of Arlington, Va.

Similarly, to offer local phone services, AT&T could partner with Independent phone companies, electric utilities or cable TV companies.

"We welcome [AT&T] in,' said a spokeswoman for Ameritech. "The sooner there are more players in the local market, the sooner we can move forward into long-distance.'

Grill also believes the plan could put Zeglis, who in July assumed the responsibilities of ousted John Walter, at the top of the list of candidates to lead AT&T into the next century. Allen is supposed to retire in the first quarter of 1998.

"He is well-respected there, but his marketing skills have yet to be proved,' said Grill, who used to advertise for AT&T. "Given my sense of mixed morale at AT&T, it would be good to have an insider lead the troops forward. If they go with this plan, though, they must remember the AT&T name is where the equity is--with or without him.'