Giving innovation

When Hossein Eslambolchi became president of AT&T Laboratories in August 2001, his first goal was to hasten the pace of delivering new technology.

By Janet Forgrieve, Rocky Mountain News

Much of the innovation going on at AT&T Corp.’s technology development arm wasn’t focused on meeting customers’ immediate needs, Eslambolchi said in an interview with the Rocky Mountain News during a break from visiting customers in Colorado Springs last week.

"Too much of it was academic research," he said, research focused on futuristic solutions.

"That’s good, but not at 100 percent."

Even the technology that would help customers do business better was taking too long to get to them.

So now the inventors, some with decades of experience in areas such as voice recognition technology and artificial intelligence, have turned their talents to inventions that can be turned quickly.

Today, 80 percent of the invention at the company’s labs in Basking Ridge, N.J., and Menlo Park, Calif., is focused on "direct research," he said. That’s new technology created after input from customers and aimed at quickly meeting their business needs.

Much of the innovation under way is aimed at improving network reliability and adding Web-based services.

One of the goals is to improve the speed at which network services can be restored. Ultimately, he said, the plan is to shield customers from any type of outage by fixing any network failure before it hits the customer.

New technology from the labs will be part of customer initiatives aimed at consolidating legacy systems for customers, thus cutting time and money and improving return on investment, he said.

It also will focus on providing more and more services on the Web, in real time, also to cut costs and time.

Scientists are working on voice-over IP, natural language, text-to-speech and artificial intelligence technologies, all aimed at improving business for customers.

For example, call center customers can buy AT&T’s "How May I Help You," a natural language understanding system that cuts the time customers wait on the line and, about 26 percent of the time, handles problems without an employee, he said.

The next version will have even more problem-solving ability, he said, with the goal of eliminating the need for human intervention altogether.

The first implementation of the system took about 15 months from start to finish. Employees have that down to about 16 weeks, and the aim is one to two weeks by next fall, he said.

Eslambolchi also talked about his belief that IP and IP networks are the future.

"They’re like Pac-Man, they’re going to eat up everything that comes before them," he said.

Increasingly, data and IP have to be AT&T’s focus if it is to grow.

Once the sale of Arapahoe County-based AT&T Broadband to Philadelphia-based Comcast Corp. closes later this year, the remaining company will need to build its future on voice telephony and the network.

And the voice portion is shrinking.

At the end of 1997, 66 percent of the company’s revenue came from voice telephony services. By the end of last year, that percentage had fallen to 50, with the other half coming from data transmission and Internet traffic, he said. That’s still shifting: At the end of the second quarter, it was 52 percent data vs. 48 percent voice.

"That’s why it’s so important to grow and scale the network," he said.

Increased data and IP sales partially offset lower revenue from long-distance service in the first half of 2002, according to AT&T’s most recent filings with the Securities and Exchange Commission.

But the company still saw sales fall by $1.2 billion and reported a $12.7 billion net loss in the second quarter, as revenue from business and consumer telephone services dropped.

AT&T is vying for network customers with the likes of WorldCom’s UUNET, which has longed billed itself as the busiest network. Currently, the two are tied for first place, Eslambolchi said.

AT&T’s network traffic has been growing at about 300 percent per year during the past four years, he said, and he expects that growth to continue.

Communications applications, including e-mail, peer-to-peer services, the Internet and data-intensive video will drive increased network traffic and broadband usage in the next few years, he believes.

Although Eslambolchi’s reign has, of necessity, focused on quickly turning new inventions into salable inventory, his company’s scientists have a long history of creating world-changing technology.

AT&T Labs began as part of Bell Labs in 1925. During the next 70 years, scientists at Bell Labs invented a long list of new technology, including the transistor, the solar cell and the communications satellite.

In 1984, AT&T Labs became AT&T Bell Labs. In 1996, AT&T spun off Lucent Technologies and the Bell Labs part of the company went with it. But some of the researchers and scientists stayed to form a new AT&T Labs.

Today, the division employs about 6,900 people.

Eslambolchi joined AT&T Bell Labs in 1985, working on metropolitan network applications and ultra-reliable communications systems.

He was the program manager for the Fast Automated Restoration, or FASTAR, system, which helps restore service after high-capacity fiber optic cables are damaged. AT&T deployed FASTAR in 1992.

An inventor who also has experience in operations and management, Eslambolchi was tagged in 2000 to run the struggling Excite@Home’s Internet services.

AT&T, which owned 23 percent of the now defunct ISP and controlled 74 percent of the votes, put him in charge to try to turn around its foundering investment.

Under Eslambolchi’s watch, it increased its network uptime from 66 percent to 99.99 percent, and scaled the network so that it could have accommodated millions of new users.

He enjoys his current role, he said, because it gives him a chance to keep a foot in the labs where he started, while also stepping into the world of customers, watching as inventions are implemented.

To the criticism that perhaps the focus on inventions aimed at bettering the bottom line limits long-term innovation, Eslambolchi points to academia.

Much of the work on futuristic technology is taking place in university labs already, he said, some of it supported by AT&T and other big companies that stand to benefit from it down the road.

"That still does not mean there’s no innovation going on here," he said. "We file about 500 patents a year. When you see the number of patents go down as a total, then you’ll know the innovation’s not there."

Hossein Eslambolchi

• Titles: President, AT&T Laboratories; chief technology officer, AT&T Corp.; chief information officer, AT&T Business Unit

• Age: 44

• At AT&T: Since 1985

• Patents held: 106

• Education: Bachelor’s, master’s and doctorate, all in electrical engineering, all from the University of California at San Diego

• Home: California, with offices in Menlo Park, Calif., and Basking Ridge, N.J.

[email protected] or (303) 892-5191

http://www.rockymountainnews.com/drmn/technology/article/0,1299,DRMN_49_1477718,00.html