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Tony Werner, outgoing chief technical officer of AT&T Broadband, sent shock waves through the cable business last month by announcing his departure from the post. Werner, a home-grown engineer, joined AT&T in 1994 from Rogers Cablesystems, an MSO renowned for its engineering excellence. At the time, Werner worried about being the youngest among cable's top CTOs and unabashedly described himself as a "junior" in that community. But it was that kind of honest humility, and keen attention to the craft, that earned Werner immediate and lasting respect among his peers, the vendor community, and the industry. Leslie Ellis, technology analyst for Broadband Week, caught up with Werner shortly before he left, to discuss his plans and the industry, as it enters the fourth quarter. An edited transcript follows:
BBW: Your fan group is reeling. Can you say yet where you're headed?
Werner: What I know for sure is that I want to do something entrepreneurial, and take a bit of a risk. I definitely want to move away from big corporations, because that's where I've spent the last 20-plus years.
BBW: Why are you leaving? Too much corporate BS?
Werner: I wouldn't characterize it that way, exactly (laughs). AT&T is obviously a very large corporation. With that comes things that are good, and things that are frustrating. Being CTO has been a great position that's gotten me lots of visibility outside the company, in the industry. It allowed me to influence standards, because we had such large purchasing power. And it allowed me to interact with quite a lot of people, which was very positive.
What becomes hard is, in a large corporation, you have to have certain processes in place. In a small company, you may have one or two meetings to get through something. Here, you have twice, three times the number of meetings. It's not that its unneeded bureaucracy, or necessarily corporate bullshit. But it does add to the task.
I like to move things ahead. Quickly. That's sort of my style. So after 20 years of working for big companies I just came to a personal decision this summer that I was going to do something with a smaller company.
BBW: Staying in cable? Staying in Denver?
Werner: Yes to both.
BBW: For the industry's, and AT&T's, progression into advanced services, what's going the best right now?
Werner: High-speed data. The numbers that are going up are absolutely incredible. It is a great service. Even though we've had some growing pains, Consumer Reports just gave cable modems a much higher rating than they did DSL.
And the biggest piece is the part that hasn't even been harvested yet. We've built this huge, broadband Intranet across the country, that will serve for just tons of new applications. Today, it's just faster and always on. But I think a lot of the stuff we've dreamed of will start to become a reality here fairly soon.
But overall, high-speed data is the industry's biggest accomplishment. Digital video continues to go very well. I think the real trick going forward is to launch all these new broadband services, and at the same time, grow cash flow. All that while you're in a competitive environment, up against a satellite provider that's a pretty good competitor.
BBW: Telephony? Thoughts on the migration from circuit switched to IP?
Werner: We're starting with primary line services, using constant bit rate (technology). We will migrate that to IP when it's ready to provide primary-line quality.
There's another business model where you start with IP for second-line services. That way, it doesn't have to work when the power goes out, and you can use a less expensive terminal adapter. Then, as voice-over-IP starts to get better, you shift over and start to pick up primary line.
Both strategies end at the same point. It depends on your appetite to get into the business. Obviously, AT&T's appetite was huge. Some other MSOs, those without phone or long distance background, may have a smaller appetite to start. But if you look out five or six years, I think we'll all be lined up at the same spot.
BBW: Which brings up this theory: AT&T and AOL/Time Warner, should the merger proceed, wind up as heated competitors for voice, video and data. You both offer bundles of services to the same customers. Possible?
Werner: I don't think we'll compete against one another. I think we'll be strong competitors, but it'll be us versus the incumbent LECs.
BBW: The ILECs become the collective enemy of cable, in that view.
Werner: I think every major market will have two networks. One will use fiber to copper pair. One will use fiber to coaxial cable. Time Warner/AOL will probably start with secondary line phone service and move to primary, and we'll start at primary line and move to add secondary lines. We'll both converge at the same end point. But I don't think we'll go into their markets to overbuild them, nor do I think they'll come into our markets and overbuild us.
BBW: I was talking about open access. Where AOL/Time Warner rents spectrum from you, then comes at your customers with a voice/video/data bundle.
Werner: I think you'll start to see more of that. I still think network providers will have the primary interface with the customers, though. There will always be someone who tries to tunnel through you to offer a variety of things. Like Net2Phone does with voice services. But my belief is, to be the most effective and provide a quality, end-to-end service, you have to get the network provider and the service provider in alignment.
BBW: AT&T finally made a video-on-demand move, with Diva last month. What was the driver there?
Werner: First of all, we believe VOD is a real strategic play in the future. There's also a growing angst that we've been talking about it for too long, and we better start doing something. Our situation is that we've got 3.5 million digital boxes deployed. Of that about 2.75 million are capable of doing VOD. We want to get it going this year.
BBW: You mean from the (Motorola) DCT-2000 level and up?
Werner: Yeah. The DCT-1200 theoretically could do VOD. It's a two-way box, but it's a little short on memory. The (DCT-) 2000s for sure, on up, are VOD-ready. That means we've got a couple million boxes that are VOD-ready.
The issue is, whomever we use for VOD servers and clients we need to integrate with TV Guide. It's a serial process, based on resources. And they're the furthest along with Diva, as it turns out.
BBW: How does that play against any designs for personal video recorder-style services, where the storage is local? In the house?
Werner: I think you'll see a mixture of both VOD and PVR services from cable. It won't be a celebrity death match between the two. We can add a hard drive to our (advanced digital) boxes at any time. That's why I think there may be a mixture of VOD and PVRs, over time.
BBW: There's a lot of vendor movement around ganging things together, both in the headend and in the home. For example, having one box in the home, a gateway, that does voice, video, data. The set-top, cable modem and telephony vendors all want to produce that one box, and they each think their box is it. Ditto in the headend. What's your stance on this?
Werner: I think this is the tough piece. If you're going from a green field today, you'd clearly love to have a single device in the headend that will do multimedia and packetized content. You'd clearly love to have a single gateway device in the home. You can get the best economics, the most sound engineering approach, the lowest maintenance.
There are several problems if you're not in a green-field situation. One, there's a lot of stuff already installed in headends. The decision point will come where we have to say, gosh, here's my options. I can knock out a wall and add another 10,000 square feet of space, or I can take all this stuff out and give it to another system where I've got space, and start integrating all this stuff.
Technology is coming into place to do an integrated solution in the headend and hubs. And it's getting it where there's also certain opportunities for integration in the home. I think you'll start to see the DOCSIS modem combined with four lines of telephony, which is what we call "BTI," for broadband telephony interface. That'll be among the first. But you'll still see standalone DOCSIS modems. It won't be a flash cut. It'll be gradual. But an integrated approach is the most elegant end game, if we can get there.
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