Now amid cutthroat pricing, rival MCI's emergence from bankruptcy, and a regulatory climate that led AT&T to step away from consumer telephone service, the company is relying on voice over Internet Protocol, or VoIP, as one of the tools to accelerate growth in its business segment.
That segment, which comprises about 75 percent of AT&T's approximately $30bn (£16.8) in annual revenue, may not receive a huge windfall in revenue from Net telephony. But VoIP, which allows businesses and consumers to make inexpensive phone calls via the Internet, plays a significant role in AT&T's long-term strategy of being the next HBO-like service to cable companies and the Baby Bells.
Dorman, who recently met with reporters and editors from ZDNet UK sister site CNET News.com, talked about his company's views and strategy on VoIP and AT&T's CallVantage program.
Q: How would you describe the competitive landscape for VoIP?
A: It's a battle between the cable guys and the Bells. People talk about it being a duopoly. It's not a duopoly. It's asymmetrical. The cable guys are focused on video and the Bell guys are focused on VoIP, and they're converging at the broadband level.
In our view -- and we can argue about the timing, three, five, eight years -- the broadband pipe will be the high-value piece. That's because applications will run on that broadband pipe and VoIP -- as much as the Bell guys don't like to hear this, VoIP is an application.
The cable guys look at VoIP and are really in a dilemma now. Is VoIP a feature of a broadband network like email? And we all know where email went; it got free really quickly. Or is it a business itself that they can enter into incrementally to add value to their broadband business? My bet is VoIP is becoming a feature that's going to be chargeable, but it's not going to be $40 (£22) per subscriber. It's going to be $15 or $20 a subscriber with a lot of features.
