Team AT&T

Sep 15, 2000 12:00 PM, By Chris Goldman, Staff Writer

Playing veteran and rookie in the same season is a tall order for AT&T Wireless.

The road to riches has not been without bumps for the executive team of AT&T Wireless. From a picturesque corporate campus in Redmond, WA, John Zeglis, Mohan Gyani, and the rest of the team, have been carefully trying to remold the image and direction of AT&T Wireless from that of old-school stalwart to new economy player. One engineer, while leading a tour of the company's fixed wireless ("Project Angel") research and development facility in Redmond, said, "We operate more like an Internet company than a phone company."

Later in the tour, that same engineer said something more telling of the company's profile: "Most Silicon Valley companies outsource everything. But start-ups don't have our resources."

And that's the key. While AT&T is trying to move faster to capitalize on wireless Internet access, new markets and a growing trend toward globalization, it is simultaneously strengthened and burdened by vast corporate resources and the image that accompanies those resources.

With the most successful tracking stock IPOW all Street has ever seen, AT&T Wireless in April raised the capital to expand rapidly — using the infusion to expand network capacity, increase its footprint and raise service quality within existing markets. Simultaneously, it is rolling out fixed wireless in second-tier cities, launching new products with British Telecom (BT) and focusing on Pocket Net wireless Internet services.

"We've been building, building and building. You can just see it in our capital plan," said Zeglis, chairman & CEO of the Wireless Group, in a July interview with Wireless Review." Two years ago, we spent $1 billion. Last year, we spent $2 billion. This year, we're going to spend close to $4 billion in the mobility business. Two thirds of that is going to capacity expansion, and quality improvement in the markets where we are already present. The other third is going essentially to expand the footprint by building out on our own spectrum."

The last quarter saw AT&T Wireless buying into the Houston, San Diego and San Francisco markets for a collective $3.3 billion. (These opportunities were a direct result of industry mergers and federal regulations.)

But as with any new corporate vision, or refocused approach, AT&T Wireless has taken its licks from industry analysts, financial gurus and the press. Its tracking-stock share price is anything but stellar; however, many respected financial firms now rate AWE a "buy" based on projected performance and positive second-quarter results.

And then there's the perpetual U.S.-wireless-industry debate between CDMA and TDMA adherents. AT&T Wireless is one of a few North American providers using TDMA; while many more have selected CDMA. Gyani, AT&T Wireless president & CEO has seen the debate from both sides.

"When I worked with Air-Touch, the challenge always used to be trying to defend our choice of CDMA as a technology," Gyani said. "So I find it ironic that now when I move over here (to AT&T Wireless), I'm having to defend TDMA over CDMA. I have come to the conclusion that as long as what you're working with is one of the main stream technologies...they all kind of get you to the same place, maybe within a short time frame of each other, both in terms of cost, capacity and functionality."

In the less-recent past, the company has taken some punches on network capacity. The introduction of Digital One Rate (DOR) was so popular that service interruptions occurred.

This problem became a valuable lesson, executives said. The company now promises capital improvements to networks and coverage that should forestall any future service interruptions like the ones experienced after the DOR rush.

What remains unclear, however, is what product or service will herald the next monumental growth spurt for AT&T Wireless. At DOR's launch in 1998, the company served about eight million subscribers; at the end of 2Q00, the company had nearly 14 million wireless subscribers, including partnership markets. But to make it back on top (Verizon tops 20 million subs, and other providers are growing fast, too) AT&T Wireless will have to grow faster.

Zeglis ticks off his top three near-term goals for AT&T Wireless. They are all the same: "Growth, growth and more growth." More specifically, Zeglis aims to grow core mobility, fixed wireless, international and wireless data. The wireless Internet was determined to be so important that launching Pocket Net service was the Wireless Group's first major campaign following its April IPO. Although it can claim are spectable 100,000 subscribers, Pocket-Net has not yet proved to be AT&T Wireless' next big play.

When asked what that play will be, Zeglis understandably declined to give a specific answer, instead referring back to his aforementioned four are as of growth. However, he did hint at the importance of the wireless Internet for the company.

And industry statistics support the intelligence of this strategy. According to the Yankee Group, there will be 21.3 million mobile-data users in the United States by the end of 2001. In 2000 and 2001, most providers will have moved toward implementing high-speed-data services via GPRS, EDGE, 1XRTT, W-CDMA and WAP. AT&T is implementing EDGE, and has said that it will skip GPRS as an interim step, at least commercially.

"Fundamentally, you'll be able to chart our progress by those four growth priorities," Zeglis said. "Watch us expand the core footprint, what we do in mobile IP, fixed wireless and global. We are off and running out of the gates very quickly on each of those four points. But, obviously, you'll see more happening in the mobile Internet for us. We'll be working on location-specific services, voice interfaces to the portal and the like."

`Boy, Do I Like Having Packets!'
The enabling technology for PocketNet and all data services offered by AT&T is its CDPD network. As of 2Q00, more than 99% of the company's network is digital.

AT&T Wireless recently demonstrated its EDGE network for reporters and analysts in Redmond. The testing went well, and Zeglis is overjoyed by the next-generation network's potential.

"We just started data-transfer testing in the core EDGE-GPRS radios with the devices and the apps that are going to be supported when we get to deployment. I like where we are," he said. "We have something other people don't have right now. We've got packets. And to be successful, you've got to have packets. What else do you need? You need higher speed and a path to the third generation. But we've already got packets, so we don't have to stop at 2.5G. We can leapfrog right into full 3G. We can use the spectrum we're already built on — that's EDGE — so we've got a graceful migration path. And we'll be in deployment, vendors permitting, in the second half of '01. And we'll be able to deploy broadly in the market by the end of '02. I like having packets. Boy, do I like having packets!"

With a circuit-switch network, Zeglis said, next-generation services will "bankrupt anybody that has to go out there and do all-you-can-eat by nailing up a circuit for every minute you're on your session. With packets, it's a whole different ball game."

All of this bravado should, of course, be tempered by other providers' equally ambitious 3G-deployment schedules, market fluctuations and subscriber response — none of which is entirely predictable.

Moving Forward
A relative newcomer to the AT&T executive team is championing many of these initiatives — including wireless data.

But Mohan Gyani is anything but a newcomer to the wireless industry. At the end of January, AT&T Wireless hired Gyani as its CFO. By March, he had been promoted to president & CEO of AT&T Wireless after Dan Hesse left. Prior to joining AT&T, he was executive vice president and CFO of AirTouch Communications.

Meeting and understanding the leaders of AT&T Wireless was one of Gyani's initial goals. But he was focused first and foremost on the bottom line, which, after second-quarter earnings reports, looked rather good to many financial analysts.

"First and foremost was wanting to make sure we kept the organization focused operationally," Gyani said, listing his personal goals in order of importance. "These condone was to get us through the IPO, which was happening just about the same time. The third goal was for me to come up to speed with understanding what the AT&T Wireless business strategy was, what our objective was and for me to get to know people and for them to get to know me — in essence build trust and build a team."

Gyani said he's feeling good about the results. And from a management standpoint, he said, AT&T Wireless has "one of the best teams" in the industry.

Having worked at AirTouch Communications from 1995 to 1999, as well as for Bell Atlantic, Pacific Telesis Group and Pacific Bell, Gyani is an industry veteran who knows the value of a focused executive bench.

"It's a very good team," Gyani said. "It's as good a team as any out there in the wireless industry. I think I have a special ability to assess that, given that I used to work with AirTouch and therefore knew (AT&T) as a competitor."

Coast to Coast
With Zeglis moving from corporate AT&T headquarters in New Jersey to AT&T Wireless headquarters in Redmond, some observers speculated wireless was seeking more independence from its parent company. Zeglis indicated there location was simply pragmatic.

"And God knows, nobody has more ties back into this company in New Jersey than I do," said Zeglis, a 16-year AT&T veteran. "(AT&T chairman & CEO) Mike (Armstrong) and I are in good rhythm. We'll have a wireless strategy. And when it makes sense, we will be bundling and using AT&T platforms. It's kind of the best of both worlds, still."

With all of the top players in sync, the next question is: What does their playbook look like?

Without tipping their hand too much, both Gyani and Zeglis indicated strong interest in future applications and features of Digital PocketNet.

During the second quarter announcement, Zeglis noted that most PocketNet subscribers chose the individual service plan and more than predicted picked the plus or premium plans, which include AOL e-mail and wireless portal access for an additional $7 or $15 per month, respectively.

Gyani, who still is relatively new to the Redmond area, used PocketNet recently to locate restaurants in his neighborhood. In terms of importance, he calls the service "a mini version of the Digital One Rate plan on the wireless data side." If PocketNet can generate half the subscribers DOR did, AT&T Wireless would rise in industry ranking.

"Two months ago, we introduced our consumer PocketNet data service, which is on a normal phone. I was sitting around earlier, and started looking for some restaurants in my neighborhood, since I'm new here, that I can go eat at. SoI was browsing around the Kirkland/Redmond area. The unique thing is we offer this ability on a flat-rate, all-you-can use pricing," Gyani said. "You can browse the Internet, go to different locations, buy books, check weather. I even do my office e-mails with this device. The key here, though, is the way we priced it. The way we priced it was on three tiers. If you're a Digital One Rate voice customer, you get basic data access for free — all day long."

As many experts have noted, the Internet took off because it was essentially free. When wireless-Internet access is free as well, usage will increase. AT&T Wireless, and other service providers, realize this theoretically. In practice, they charge for their wireless Internet-access services.

On the back end, providers are partnering for content and services and leveraging their involvement in m-commerce transactions to create revenue that eventually will eliminate the need to charge for wireless Internet access. During its second-quarter earnings report, AT&T said it currently was collecting non-subscriber revenue of less than $1 per PocketNet subscriber per month.

"We are bringing the EDGE technology in, which we think will be very competitive in terms of timing," Gyani said. "And there are unique things we can do as wireless operators with location based services. Today, to find restaurants, I have to tell it first where I am. It should know."

Stock Stumble
Though AT&T Wireless executives understandably defend the value of its tracking stock (AWE), its relative decline has raised a few skeptical eyebrows in the investment community since it hit the market in April.

Despite the fact that it raised more capital than any previous IPO, the per-share price dropped below the initial offering price of $30 to $29.50 on May 8 and has yet to climb back over the top.

Zeglis admitted the stock had not performed as well as expected, but said he remains up beat about the future.

"We've kind of moved side-ways, or once in a while a little worse than that since the IPO," he said. "But, nonetheless, it doesn't take any of the sheen off the IPO. We raised a lot of money, and that's been able to fund our strategic investment program as we get fast out of the block shere. And in the long term, as we grow this company and prove our track record of growth in all four of those arenas I mentioned, the market will respond and give us the value we deserve."

The structure of a tracking stock such as AT&T's had some observers worried at the outset. For example, just following the IPO, Business Week pointed out that instead of selling straight stock, parent company AT&T offered shares designed to reflect the performance of the Wireless Group. Investors actually are buying equity in the parent, not the wireless unit. The article noted that, "Among other dangers, tracking stock nearly precludes thechance AT&T Wireless will get bought out without AT&T's consent. With telecoms merging constantly, why short yourself on that route to a capital gain?"

Gyani addressed a primary supply-and-demand issue affecting the company's tracking stock.

"Our stock is being affected by the fact that the market knows there is a substantial amount of shareholder equity that is currently at AT&T, the parent, that AT&T has said it will distribute out to its shareholders," he said. "So there is a concern about the overhang of that. When all of this liquidity comes in the marketplace, it will take a little time for it to settle and get to its natural home. So that may be one of the things holding us back. That's something time will solve. It's not a real value issue. It's a temporary supply-and-demand issue people are worried about."

Stocks perform based on perceived value, which can be built in many ways. But growth potential is huge on that list. And gaining economies of scale through consolidation is a growing trend in today's wireless industry.

But looking at competitors Verizon (the result of a huge merger) and Sprint (shaken after a failed merger with WorldCom), the benefits of consolidation are not boldly apparent. AT&T Wireless has widened its options internationally through its relationship with BT, leaving behind the regulatory hurdles of a formal merger or acquisition.

"I think the alliance is working just fine right now," Gyani said. "Sometimes, when you try to formalize things, they actually get in the way of what you're trying to do, which is to simply execute out in the market place."

Zeglis took the subject a step further, noting recent reports of Deutsche Telekom's proposed acquisition of VoiceStream.

"We're actually able to provide these economies of scale and scope and these seamless advantages (with BT) to our customers without having to spend $50 billion for a North American footprint like the Germans are," he said. "The point I'm making is that we have a real comfortable working relationship with BT.

Although AT&T has not formalized its relationship with BT, rumors that a merger was in the works emerged in mid-August. But Ken Woo, AT&T Wireless spokesman said it was company policy not to comment on rumor and speculation.

Core Mobility
Just like any business, wireless providers work to project a certain image. And AT&T Wireless, with its high ARPU ($71.50 in 2Q00) and business-customer base typically has not conjured up visions of hip teens dancing in the street. Recognizing untapped markets, the company said it is aiming new programs at the youth market, prepaid and mid price consumers.

"AT&T Wireless is best known for its introduction of DigitalOne Rate plan into the marketplace, which was clearly originally targeted at the high-value, high-usage, traveling business customer," Gyani said. "That doesn't mean that we've neglected other segments of the market place, but we probably were not as competitive in some of those segments as we could have been. I think you'll clearly see, and already are seeing, a broadening of that focus."

During its second-quarter announcement, company executives indicated they intend to go after subs who generate ARPUs in the $50-per-month range. To this end, AT&T Wireless introduced Digital Advantage (subs get an extended "local" calling area with prices from $29.99 for 250 minutes to $199.99 for 3,000 minutes) and Regional Advantage (subs get a multistate calling area with prices from $29.99 for 120 minutes to $149.99 for 1,600 minutes, including long distance and additional charges for roaming).

And these new service offerings will be available to larger segments of the population, due to new markets and a widening footprint.

"There is a lot of runway left in (core mobility). This country is under penetrated. And we are going to ride up higher usage, and, importantly, we are going to extend our footprint," Zeglis said. "So, here we are in our first quarter of public existence, and we've signed on to acquire five major new markets (Houston, Indianapolis, San Francisco and San Diego). And we closed Wireless One in southwest Florida, which is a hugely strategic market because all the snowbirds go down there with their DOR phones. There's a lot of growth in this core both in penetration, in usage, and in extending our footprint. We are out of the gates very quickly on strategic priority No. 1, which is extend that footprint."

Angel in the Outfield
By Marcia Martinek, Managing Editor

As a fledgling member of the AT&T Wireless Group (AWG), the fixed-wireless division has nowhere to go but up.

"If I can aspire to be 20% of the AWG portfolio in three years, it would be fantastic," said Michael Keith, AT&T Wireless Broadband president & CEO.

Speaking in mid-July, after his late-March launch in Dallas-Ft. Worth, Keith described the service as "ramping nicely." With an installed base of 2,400 customers, he was selling an average 1 degree lines per customer and had 70% of the customers taking data in addition to the voice service. He is looking for 20,000 customers, about a 4% penetration rate, after 12 months.

Keith's service is the long-awaited Project Angel. In fall 1999, Keith got his marching orders to take it from a last-mile technology and turn it into a business consistent with the AT&T corporate strategy of having facilities-based access.

"Mike Armstrong said, `I have my cable play ... Let's really go strong on the fixed-wireless play,"' Keith related.

In AT&T's quest to serve the local telephone market, cable and fixed-wireless are complementary in an overall service area of about 103 million homes. AT&T, through its acquisition of TCI, has 28 million homes passed by cable, Keith said. Deals with Time Warner and other cable companies add 25 million more homes for a total of 53 million. The 50 million homes remaining are the ones to which he can potentially market fixed wireless.

However, "it doesn't pay to put up a tower with only 500 homes under it," Keith noted. The practical issue of density narrows the 50 million to about 33 million.

"Those are mine," Keith said.

Grouping fixed with mobile wireless makes sense, he said.

"We have so many common assets," Keith explained, with spectrum being the most obvious.

The same towers can serve both businesses; in Dallas, only five additional towers were erected to serve the fixed-wireless customers. Backhaul is similar, and the same technicians are used for maintenance.

In Dallas and San Diego, its second fixed-wireless market, AT&T is using the PCS spectrum. Its point-to-multipoint technology is placed on shorter towers and does not require line-of-sight. You draw a mile-wide circle around the tower, and the 3,000 to 4,000 homes within the circle can be served. An added benefit: frequency reuse is much better than with mobile.

"My homes don't roam," Keith said.

The best part is the capital deployment. It doesn't cost all that much to put the antennas on the towers.

"If there are one million homes in a marketplace, it costs me about $80 a home to ensure that I can sell to those homes," Keith said.

Seventy-five percent of the capital is spent at the customer premises, with most of the electronics in the angel box that goes on the home. (The per-home cost is $750, and it is expected to drop.) Customers can receive up to four phone lines along with high-speed (1Mb/s by year-end) Internet.

Following Dallas and San Diego, AT&T will install fixed wireless in Anchorage, AK, Houston and Los Angeles in the last quarter of the year. This time it'll use WCS spectrum at 2.3GHz, which will involve some modification of the radios, but basically the same electronics. By the end of this year, Keith should be selling to 1 degree million homes; by the end of 2002, he'll have 40 markets and be selling to 15 million homes.

Fixed-wireless also has global implications for AT&T. In July it announced a collaboration with Motorola, which will use the AT&T fixed-wireless platform to develop equipment for international markets. AT&T always is assessing whether it wants to be a service provider in another country.

"We don't just use the mobility business case," Keith said. "I can add onto it an additional return with the use of fixed-wireless that no one else can bring."

EDGE Over the Competition
By Nikki Swartz, Staff Writer

When Rod Nelson, senior vice president & CTO, said that AT&T Wireless would like to be perceived as a technology leader, it's apparent that he personally wants to lead the resurgence.

AT&T was the leader when it was the first provider to introduce national roaming in the early 1990s.

"Our vision was broader in terms of the need customers would have for roaming and national service," he said. "Our vision was t here long before other carriers got to the same viewpoint."

On the data front, however, the widely held perception is that AT&T has lost that leadership position. Nelson wants to win it back by focusing on a technology brand — TDMA/EDGE — that will provide great customer benefits, broad deployment, ubiquitous availability and high-speed services that competitors will not be able to match.

And he's convinced EDGE will enable the applications that consumers will clamor for in the future.

"Applications are what will draw customers in, and we want to focus on great applications that will draw customers in and exploit the characteristics of our network," Nelson said.

He knows that although the industry will talk about which technology is the best, the Internet is the great equalizer in the marketplace. Consumers don't really want to know the details. They just want the technology that will enable them to use their devices anytime, anywhere. Nelson believes EDGE will get AT&T there faster.

"When we introduced Digital One Rate, we took the cost of roaming down and made it feasible for people to carry their phone everywhere," he said. "That's what mattered. It was the user experience. EDGE is just a tool to get to the next set of user experiences we want to provide people. It works well for us, fits into our spectrum assets and so on."

With EDGE, AT&T won't have to wait for a new generation of technology to mature and come down the cost curves before offering killer applications.

"We're committed to this strategy because there are very real advantages," Nelson said "That being said, we're not hard and fast on CDMA vs. TDMA — it's all just a tool. Meanwhile, we've got a plan that we can get to market without uncertainty."

AT&T also is focusing on simplicity and out-of-box experience, ensuring that when consumers leave the store and open the box, the service is simple and intuitive and works across different vendor products. In fact, what will grab the consumers will be the devices.

"One thing that I find interesting is you're going to have convergence between a communications device with the business tool with an entertainment device," Nelson said.

He cited the radio attachment for the Ericsson R280 as an early example. Coming soon is an MP3 attachment for the phone. Streaming applications such as condensed news and sports, he said, will be another reason to have your phone with you all of the time.

Nelson said the provider's future philosophy will be "IP, IP, IP."

"We really want to follow the Internet and base it on IP protocols and IP applications," he explained. "Secondly, we want to be pragmatic and search for low-cost, high-performance, readily available solutions that we can spend more time building applications for than worrying about developing a unique technology."

All this future talk leads to a big question: Will voice still be AT&T Wireless' primary offering say, 10 years from now?

"The urge to talk to people is going to persist for a long, long time, but I do think that the classifications we have now of `voice service' and `data service' are going to go away," Nelson said. "I believe in the combined device where you're almost unaware that you're moving between voice and data. It's all going to become one."

He envisions a wireless world where consumers easily can browse with their network-based address books and converse with the person at the other end without dialing a phone the way we do today.

"A lot is going to be dictated by what consumers want," he continued, "and, of course, you don't know what that is."

Almost Money-Back Guarantee
By Nikki Swartz, Staff Writer

You can't blame Tom Trinneer, vice president of data product development, for being a little excited at AT&T Wireless' recent data-service success.

"We finished the second quarter with more than 80,000 PocketNet subscribers," he said. "We launched the individual offer in mid-May and the quarter ended in June, so things have been going pretty well."

Trinneer also was speaking for Kendra Vander Meulen, currently on leave, who heads the wireless-data initiative.

PocketNet's success shows that unlimited, flat-rate pricing is a winner in this space, he said. The service is broken into three offers: basic (free with any voice plan), plus (add e-mail) and premium ($14.99 on top of voice allows you to personalize portals and access calendar, e-mail and any Web site).

"That free offer, because we've got a packet-data network, is something no one else can really do," he said. "Some thought it was a way to drive adoption and get people to buy the new phone, but it's a very carefully designed offer that's about as low-priced as you can get without giving money back."

Trinneer celebrates AT&T's Pocket-Net home run today, but he has bigger, better plays in his book that he thinks will place AT&T alone atop the standings tomorrow. Most analysts predict that data revenues will soon cross over voice revenues, and he is not unaware.

"This is really, from our perspective, a very meaningful point in time for a wireless provider and in particular for AT&T," he said.

ISPs missed a big opportunity, he explained. They didn't deliver all the value that they could have. They simply provided Internet connectivity, and companies such as AOL and Yahoo filled that void and offered that value instead.

"As a result, ISPs are in that tough position of trying to move themselves beyond a pipe, given that these other companies have jumped in and sucked up huge numbers of their subscribers and advertising revenues," Trinneer said. "In the wireless Internet space, it's sort of like turning back the clock in the Internet world."

Today, wireless providers are positioned to offer consumers not only awesome applications, but also services that can improve their lives.

"It sounds trite but it really does make their lives better to have this information with them all of the time, and it's a tremendous business opportunity for us," he explained. "We really honestly believe that we can do mobile portals better than the Internet and wire-based portal folks can."

But that bold statement doesn't mean AT&T will stop partnering with portal providers such as Excite and AOL.

"Strategically, you'll see us climbing that value curve," Trinneer said. "We re-invented wireless Internet with what we've done with PocketNet and really, that's just a start. We are going to be far, far more than a wireless pipe. We're going to be a wireless application service provider."

What will differentiate AT&T, he explained, extends beyond content deals and applications because everyone will have the same content, every wireless network will have location and the same software and tools.

"It's really about how you approach the market and whether your philosophy is on relative to where the marketplace is going," he said. "We understand this, not only better than the other providers, but also better than the people that are classically in the Internet space, which is where we add value and we help them."

According to Trinneer, the wireless Internet is about speed, your openness to partner and the way you integrate solutions and engage in partnerships.

And Trinneer is betting that AT&T's experience, leadership and network will allow it to tap into additional new-media markets and services.

"A lot of the folks in the industry are looking at wireless Internet as just being a vehicle to re-purpose Internet content and applications," he said. "But honestly, this is a new medium and you have to approach it like a new medium in the way you do the deals, the way you build the applications, the way you think about the user experience. And if you're just re-purposing — cramming Internet content into a wireless device — that will cease to be interesting rather quickly."

Pitching the Promise
By Nikki Swartz, Staff Writer

There's no sarcasm in Kim Whitehead's voice when she extols the virtues of wireless connectivity for shepherds.

Yep, shepherds, the focus of AT&T Wireless' new marketing campaign for its PocketNet service. In the ads, a shepherd stands over his flock with a PocketNet phone in hand. One caption reads: "The distance between you and everything you care about is no greater than the distance between you and your wireless phone."

This is the future of AT&T Wireless' marketing campaigns, although one may argue t hat shepherding is hardly the future of anything. Spotlighting Pocket-Net as the provider's premier offer, the campaign shows that even the most seemingly isolated person can always be "connected" to family, business and information.

"It's really a very simple message of connectivity," said Whitehead, senior vice president, marketing. "Being able to deliver on that promise that no matter what you do in life, wireless can help you stay connected and make your life easier."

Advertising Age recently endorsed the campaign by saying, "The shepherd will quickly be understood as the quintessential beneficiary of connectivity. What it is is clear and simple communication - not a bad approach to selling AT&T's promise of clear, simple communication."

According to Whitehead, simplicity and ease of use is the subtext, the underlying theme behind AT&T's marketing and advertising. But that's not all.

"We're creating a brand positioning for AT&T Wireless," she said.

"Historically, we've been very product-oriented in our advertising, and we wanted something that helped position what AT&T Wireless stands for and how that could be the foundation moving forward."

The promise that AT&T likes to convey in its radio, TV and print ads is that it has changed the rules of the game, and its competitors must follow AT&T or lose. Digital One Rate and Pocket-Net are recent examples, but even industry-innovating offers must be marketed correctly in order to get the correct response.

Often, brand says more than anything else. Whitehead is well-aware of how critically important brand is and, particularly, a brand such as AT&T's.

"We did research around the shepherd and when you look at the advertising, there's sort of an epic proportion to (it)," she explained. "When we tested, we asked how important the AT&T brand is. What we found is that we could do this because we are AT&T. If we created an advertisement of epic proportions, and we were the new kid on the block, they wouldn't believe it. The promise wouldn't be there."

But equally important are the products, how they're packaged and whether or not they meet customers' needs.

"Your brand is your legacy and your history and what is behind all of this," Whitehead said "But any company cannot depend solely on its brand, and that is why we're targeting segments based on customers' needs versus just saying `we're AT&T and we have everything.'"

AT&T seemingly does have everything for everyone, and its plan is to market and package services differently according to the needs of each segment.

"When you're marketing to segments, you do what meets the needs of those," she said. "Young adults are going to use PocketNet very differently than the small business person is going to use it."

And clearly, this strategy is effective. AT&T already has a lock on the shepherd market.