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Steering AT&T Wireless' multimedia ship

November/December 2001

On the job less than five months, Andre Dahan relies heavily on his expertise in the computer and consumer electronics industries to steer the fledgling ship known as AT&T Wireless' Mobile Multimedia Services. And well he should. As the wireless industry converges ever more with the computing industry, Dahan's skills are necessary to build a successful wireless data business-with the help of NTT DoCoMo, inventor of the popular i-mode service of Japan, which owns a 16 percent stake in AT&T Wireless.

Dahan began his career as a database architect with the Israeli government and held various technical-oriented positions with IBM and S.E. Qual, an information technology-consulting firm. Most recently, he held several senior executive positions with The Dun & Bradstreet Corp. Dahan, who earned a bachelor's degree in computer science from the Jerusalem Institute of Technology, recently shared some of his insights and visions with Wireless Internet Magazine.

WIM: How is the economic downturn affecting your next-generation network rollout schedule?

Dahan: We are as strong financially as we were a few months ago, and we are making no change to the published rollout plan. We are very well funded as a company. We're independent. If you looked at our recently quarterly results, we are attracting a number of new subscribers and we continue to have some very good ARPU. That's the main reason we have also decided to make an unconditional investment in creating the mobile multimedia business, which is 100 percent investment from AT&T, and it is an aggressive investment. We have made no changes to our plan. We are a wholly owned subsidiary by AT&T Wireless. Our EBITDA growth is impressive.

WIM: Can you update us on your timetable for EDGE? And how committed are you to EDGE?

Dahan: We are committed to roll out current GSM/GPRS [with] over 40 percent network coverage by the end of this year, 100 percent by the end of 2002. We also clearly are committed to roll out 3G UMTS and to get there, basically we'll get there through EDGE. And we'll start in the first half of 2002, following with the rollout of UMTS in 2003. A strong commitment on our part.

WIM: Are you fully confident in the capabilities that EDGE has to offer?

Dahan: Yes, at this point, absolutely, and I think that the fact that we went first to market with GPRS has given us a lot of learning from that, so overlaying EDGE on top of that is not a big challenge.

WIM: What is your definition of multimedia, at least in the near-term-say, within the next 12 months? Will people be using video or animation?

Dahan: No. You're not going to find a big fan [in me] of all the hype that has been created in the marketplace around that. Motion video: definitely not. I think messaging is probably the most significant component, and in messaging, I would include capabilities that are short messaging, e-mail, voice mail and the ability to switch over any device between voice and text. That's one definition.

In addition to that, access to content is based on segmentation; there are various types of content we're interested in. For the business professional, various types of news and financial content that is relevant and access to multiple content sources that are relevant, the content sources that are relevant to the knowledge worker based on their capability.

In addition to content, for the consumer market, clearly some access to entertainment information. But let me tell you how far I would go with the hype as far as entertainment, and I think in a time[frame] of about 12-18 months, access to potentially, music content through a headset that is effectively equipped with MP3 player, and so having that type of access for certain segments of the youth market-that's the type of content we will introduce. Gaming technology, probably also focused at the youth market and some subsegments of the youth market.

We're definitely going to be very much involved in target marketing. In addition to that, I'm taking a very solution-based approach to these markets, so we will package as much as possible, create a shell of base services. DoCoMo for a very low entry price enables you to basically have access to a rich base of content, but then for a very low price but then through the browser allows you to go almost anywhere and pay by the click.

We are planning a very similar approach in the consumer market, slightly different on the enterprise market. In addition to that, most of our packaging-and this is more a statement of intent-we think over the next 12 months for the consumer we will be more focused on the handset. For the business market, we're going to be looking at multiple platforms, but if I focus on the handset for the consumer, you are likely to see from us packages that come either voice activated or touchpad activated, so voice activation will be an important component horizontally across most of our offer. In addition, in-vehicle use of technology is extremely relevant considering a very, very large percentage of minutes are spent in the car today-in the U.S. market. This is a very big difference from Japan, by the way.

WIM: DoCoMo shares a percentage of its revenue with content suppliers. Do you plan to do the same?

Dahan: I come from the computing environment. Nobody yet has found the clear formula for giving content providers [or] application providers pay for their efforts when they contribute some of their efforts into an offer or a solution. Nobody has cracked the nut on that-with the exception of proprietary databases in the computing world. If you own a proprietary database, you make people pay by the drink no matter whether they're embedded into somebody's else's solution or not. On the Web, because of the challenges in the ability to build and the challenges around what I would call the micropayment microbilling component, there are no real solutions. We are clearly aiming at the variable open architecture first of all. In addition to that, creating a layer of software that will allow us to bill on behalf of others and remove some of the backoffice burden and the infrastructure business system burden from the application developer companies and from the content providers ,so when I sell a solution-and this may be on a subscription basis or on a per-use basis-I have this opportunity to bill for the use of other people's content, and I think that's where DoCoMo differentiates itself very early on with some of their providers, their partners.

WIM: Over the years the wireless industry has been criticized for not working more with the computing industry. What are your thoughts on that?

Dahan: I think what's interesting is the convergence is being forced not by just the synergy that exists between the two but because of the fact that businesses, in particular, are now looking at the wireless solution required to equip their mobile worker, their knowledge workers, that are functioning on multi-platforms. So their requirements for having a high degree of interaction with the computing industry is enormous. If you look at messaging, if you look at what Microsoft is doing both from a standpoint of creating almost a platform that is almost transparent and then if it's not clearly transparent, from Windows, from the pocket PC all the way up to the software on the server that supports that to the enterprises that support and entire enterprise, very much a computing approach that we as wireless providers, we as wireless innovators, have to make a contribution and create the appropriate links … [There is an] enormous amount of synergy between the two industries. More experience exists in the computing industry on how to manage the process of constructing an integrated solution, a solution that inter-operates, so I think that's an experience I will draw a lot on and make sure as the touchpoint with the computer industry that we are successful.

WIM: How important is it that the carriers get into the IT departments? Is there a secret formula for that?

Dahan: Clearly, it is a very important set of constituents because [IT departments] are the keeper of security walls ... Now we're seeing more and more the wireless solution demand on the [chief information officers] because organizations are much more virtual and the speeds that are being promised by the new generation networks are very relevant and very comparable to what they have experience in a dial-up mode.

WIM: What are your thoughts on using wireless to do stock trades?

Dahan: For mobile commerce services, I think we need to cross one more hurdle, the hurdle of security, and I think you're going to see some of that late next year from us, but the whole category of financial services-connectivity to your bank account, connectivity to your brokerage account and the ability to be used in real time. While technologically there are really no hurdles, I think one of the big challenges we're facing is working with the security functions of the IT organization and creating a security context that is non-interruptible and the challenge that exists for most of the players right now is really the fact that you know, as you start encoding and decoding data, you're facing some security exposure that no one is prepared to accept. I think the industry will evolve to the same point where the Web users have gone-at some point is digital type of containers or veri-sign type of digital certificates that will be with a transaction from the point of entry until you exit because you're exposing a lot of content on the way and nobody likes to expose your content to security breaches.

WIM: Is security a bigger concern since Sept. 11?

Dahan: I think the biggest challenges since Sept 11 are not that. The biggest challenges are the high demand for location-based capability, not just for emergency purposes but also in the applications-where am I? Where are my closest friends and relatives? Where are my buddies-as well as what entertainment application or location-sensitive application much more in demand. The security dimension is going to become more important when we start linking to banks and other types of financial institutions and there are enough standards that have emerged in the industry that will allow us to build to this and be fairly robust.

WIM: What are you doing in the area of location-based applications?

Dahan: We'll have products that include location-based services in the beginning of the second quarter of 2002. In fact, it will most likely be a standard for us. It would be part of the base package.

The part we haven't talked much about is going to be significant for us is the telematics environment. We are, in fact ,already engaged aggressively with Dahmler-Chrysler, and we will offer a lot of interoperability in the car with Bluetooth technology. That will most likely replace all the complex systems, currently experimental in nature.

WIM: Is that driven in part by the FCC's E911 mandate?

Dahan: Actually not. While the mandate on E911 is very critical, and has forced all the carriers to do the infrastructure work required to get to that point, it is driven by the demand and it is driven by the wealth of applications that the location-based applications, that are very relevant, whether you are driving or an individual looking for entertainment or a business person looking for relevant commercial information, so we are building that into our base offer.

WIM: Do you have any favorite wireless devices that you use?

Dahan: I use all kinds of devices. I carry three devices, but I'm not going to share with you which ones I carry at this time, but I rely enormously on my phone. I do a lot on my phone from a short messaging standpoint, and honestly, I do believe that short messages have been poorly positioned in the U.S., in North America, period, by all the carriers.

WIM: How so?

Dahan: Nobody knows about it, first of all. A limited number of users really know about short messaging in the U.S., and when you look at the potential application around short messaging, the opportunity is enormous. What you're going to see coming from us is a very market-driven approach. We're going to package effectively, and we're going to target segments, the segments that are likely to endorse, for example, short messaging, or voice activation to access information very early into next year, and we are going to be aggressive from a marketing standpoint. We'll deliver the evidence to come with that. In other words, the products will be there, with the right type of technology, which has not been the approach from the carriers. And I put all carriers in the same bag. The carriers have been very feature driven; they build features but the messaging and the customer experience was below par, so it's very difficult to see a high rate of adoption in any of these categories, and it's a marketing problem to drive rate of adoption. It's not a technology problem.

WIM: What happens to your CDPD network going forward?

Dahan: For now, it is going to be around. We have one offer, the PocketNet offer, as well as a number of enterprise customers that are on our CDPD network. We have a very strong presence in law enforcement agencies around the country, police departments and public safety, so we are going to still have the CDPD network, but it's easy to project that as 2.5 and 3G becomes very successful, we'll have some migration, and obviously we will have to take into consideration the kinds of services that are available on the CDPD network.

WIM: What are the industry's biggest challenges right now?

Dahan: I think devices. The devices clearly are a big challenge for the industry in the North American market. The availability of browser devices with a lot of feature functions that exist in many other places. Color is one, navigation that is becoming a standard, some form of standardization on the software platform on the deices …

In the GPRS market we have increased the number of potential suppliers. As we start looking at 3G networks, then the device becomes a lot more critical, because there most of the devices that are planned for our PDA, our business type of devices, data-only devices, not voice yet.

WIM: How much does data play into your company's financial picture?

Dahan: Clearly in the future it will play into that. In the past it hasn't been a very cohesive, orchestrated effort. I don't think the industry thought about it this way. We have a plan--we don't share it externally-but we have a financial plan that's very much supported by the strategy around data.

WIM: Are you finding you keep a lot of your plans close to the vest?

Dahan: We will go out publicly, not about the financial plan around data but we will share the strategy with the market, with the major components of the strategy. My intention is to have clearly the strategy, which we call the framework for growth, around data be made available probably within 60 days. Subsequent to that, we will deliver the evidence to support that strategy quarter by quarter … We are building this business aggressively right now.

WIM: Are there enough handset suppliers right now?

Dahan: In the GSM/GPRS market we obviously now have increased the number of potential suppliers, but I think we will see additional suppliers coming into this market, and then we start looking at next-generation, 3G networks, then the device becomes much more critical.

WIM: What advantages do you see in a GSM-based network vs. CDMA?

Dahan: For us it was mostly an issue of migration, but from our path, it's mostly an economical scale. That GSM is such a strong standard on a global basis was an important factor as well.

WIM: How much intellectual property exchange is there with DoCoMo?

Dahan: A lot, plus the learning experience of some of the hurdles that DoCoMo has gone through. Plus some of the influences that DoCoMo has been able to exercise on content provider partners, the equipment manufacturers and others.

WIM: If you were to start all over again with the wireless Internet, what would you do differently?

Dahan: The first thing I wouldn't do is I wouldn't have created the hype that was created a year or two years ago around wireless data, and I think that for too long, people were in search of the killer apps around data to … basically fill up all the capacity that the networks were going to build, and that is a backlash to the industry today. I don't believe there is a killer app at all because we all behave differently. We use devices--whether it's in the wireless world or your laptop-differently. We have different needs, different demands based on our lifestyle, based on the type of profession we are in. If you were to ask me in wireless data, what's the killer app, there's probably 50 of them that are emerging. There isn't one … If you look at DoCoMo, if they have 25 million users at one time on the i-mode platform, and if you look at the number of content providers - in the thousands -what you will find is groups that gravitate--50,000 users to a site. You're not going to find a million or 2 million to a site, and that shows the fact the only killer app in the wireless industry is voice.