Manuela McCall, Program Manager
AT&T VoIP Product Development
 

Testimony & Intrado Press Release for
Senate Energy Utilities and Communications Committee
 

VOIP Informational Hearing
January 27, 2004

Madam Chair and Senators: I am Manuela McCall representing AT&T. I am the program manager for AT&T’s product development efforts for voice over the Internet services, also know as VoIP. As a California resident, I very much appreciate the opportunity to speak to you today about AT&T’s VoIP services and the benefits they will bring to the consumers and businesses of California. Since August of 2002, AT&T has offered Californians a choice for local phone service, first in SBC territory and more recently in Verizon territory. While many view voice over IP as the much-anticipated "killer app", it does require, as I will explain later, a broadband Internet connection. If VoIP is to reach its full potential, it is critical that current regulations supporting full and open local competition are maintained.

Service Description:

AT&T has the largest Internet Protocol network in the world. AT&T transports about 1,200 terabytes of data per day on our IP network. We have more than 5,000 points of presence on that backbone. This network is the result of billions of dollars of investment in equipment and infrastructure. It was built for data, but increasingly is being upgraded to include quality voice services via VoIP. In December AT&T announced a major new initiative to expand its VoIP to businesses and, for the first time, bring the benefits of Voice Over the Internet services to consumers and small business in major markets across the USA – including markets in California, from Sacramento to San Diego.

AT&T’s new service works with a consumer’s or small business’s existing high speed internet connection – either DSL or Cable Modem -- connected through a Telephone Adapter (TA) box that's about the size of an answering machine. The service works with any standard telephone set which is plugged into the Telephone Adaptor. The TA is plugged into the cable or DSL modem. The Telephone Adaptor converts the voice into digital data packets that are carried over AT&T’s nationwide Internet network.

The truly exciting potential of this new technology is the ability to harness the power of the Internet and software so that consumer and small business customers can have access to entirely new features that let them control and use information services in ways they never imagined. Just a few examples:

• Switch phones: You can transfer a call between a cell phone and a landline phone without interrupting the call.
   
• Locate Me: You can program the system to ring your other phones (cell phone, office, etc.) to find you when you are not near your home or business phone. It conveniently routes calls where you are – at home, traveling, running errands or at work.
   
• Personal Conferencing: You can set up a conference call with up to ten callers at the same line. Useful for small business and telecommuting from home.
   
• Voicemail: From your computer you can send voicemail as e-mail attachments. It's a very useful function for the small business owner who needs to keep employees in the loop.
   
• One phone number for life: It allows the customer to have one phone number that can be used wherever the customer takes the Telephone Adaptor and plugs it into a broadband connection.

AT&T is testing these services now in a beta trial and our trial participants are very excited about these new features.

Customer and California benefits:

Despite all the media attention, VoIP is still a technology that is in its infancy. Industry estimates put the number of VoIP customers at less than 200,000 nationwide. One financial analyst forecasts that the number of VoIP subscribers could be between 2.5M to 7.8M by 2008. (Source: Merrill Lynch, Goldman Sachs and Morgan Stanley.) The technology itself is still evolving and improving on a weekly basis, as companies like AT&T work to provide a high quality service and develop innovative communications management features.

Our research tells us that among the first users of these services will be small business (especially home based businesses), corporations seeking to improve their efficiency in the competitive global marketplace and Teleworkers. These new emerging VoIP services can help California workers be more effective and productive from home whether they have a permanent home office environment or they work from home a few days a week. Since our announcement, AT&T has been approached by a host of companies looking to leverage VoIP to improve their productivity and strengthen their global competitive position.

IP enables a new generation of applications and as VoIP adoption starts to grow, California technical entrepreneurs will start to develop new applications and new businesses. Innovation and investment in IP can give a much-needed boost to the economy. An August 2003 Business Week analysis stated that productivity improving technologies like VoIP could yield $140B in annual cost savings over the next five years to businesses in just six industry segments. California’s share of those savings could be significant – these productivity gains can drive broader economic growth and employment opportunities.

The potential for great benefit is certainly there; but there is no guarantee. VoIP is still a nascent technology with a promising but uncertain market. For example, since VoIP requires a broadband connection, VoIP growth is dependant on broadband adoption. Only about 20% of households are currently broadband users; that number is estimated to grow to 50% by 2008.

Let me address VoIP’s impact on such concerns as E911 and Universal Service. Regarding E911, AT&T recognizes that this is a vital service for local customers in California. AT&T is working with the industry to develop a short-term solution to enable VoIP customers to reach emergency services when they dial 911, as well as to develop long-term solutions to IP-enable 911 access. In fact, today AT&T announced an agreement with Intrado that will enable us to provide an emergency calling capability to our customers while we continue to work with the National Emergency Numbering Association ("NENA") to improve the industry’s ability to provide 911 access. Next generation E911 service will benefit not only our VoIP customers, but may be expected to assist in modernizing last century’s public switched telephone network-based 911 service, transforming it into a 21st century Internet-enabled E911 service reachable by end users from a variety of communications devices using various technologies, and ultimately better serving the communities we all live in. Industry efforts to find these technical solutions are dependent on continued research and development in IP technologies.

With respect to the Universal Service Fund, today VoIP represents a tiny fraction of all voice communication in this state and country. It does not currently threaten to undermine funding of Universal Service programs. However, the overall decline in traditional telecommunications revenues and the further adoption of VoIP technology points to a need to reform USF mechanisms. AT&T supports funding Universal Service based on the utilization of telephone numbers. Such a practical and straightforward solution would address current concerns about the program, and resolve all concerns about any impact VoIP might have on USF.

Bottom line, AT&T is committed to working with the industry and state and federal regulators to address these needs in the VoIP world.

In closing, let me emphasize that the growth of these exciting VoIP services will require large investments to upgrade Internet backbone networks to enable them to carry high quality voices as well as data. Since 2001, AT&T has invested over 750 million dollars in our network infrastructure in California alone and we will continue to invest in building the capability to offer high quality information services, including voice over our Internet backbone. Applying traditional telecom regulation that was designed for last century’s circuit-switched networks to the emerging VoIP technology will unnecessarily burden VoIP with costs and stifle the investment necessary to bring the benefits of the service to consumers and businesses. While certain social concerns around E911, USF and CALEA are appropriate issues for industry government cooperation, it is clearly too early to seek to regulate VoIP, especially with rules written for a different world than what VoIP can bring us.

Thank you for the opportunity to testify before this committee.

News Release

FOR RELEASE TUESDAY, JANUARY 27, 2004

AT&T Selects Intrado to Provide Emergency Calling Solution for its Residential Broadband Phone Initiative

AT&T adds emergency calling feature to its residential broadband Voice over IP service

MORRISTOWN, N.J. -- AT&T today announced an agreement with Intrado Inc., North America's leading provider of 9-1-1 infrastructure, systems and services, to develop an emergency calling solution for its residential broadband Voice over Internet Protocol (VoIP) service. This new feature, which will provide AT&T's VoIP customers access to emergency services, will be available when AT&T launches its new residential VoIP service this spring.

Last month, AT&T announced that it will roll out its residential broadband VoIP offer in major cities across the United States in 2004, beginning in select metropolitan markets in the first quarter.

"The solution we're developing with Intrado is an evolutionary step in the development of a 9-1-1 service for VoIP and will give AT&T VoIP customers access to emergency services and additional peace of mind," said Cathy Martine, AT&T senior vice president.

AT&T, which developed and pioneered traditional 9-1-1 services, has also been at the forefront, working with Intrado, to develop the next generation of 9-1-1 solutions for VoIP. With the introduction of new technologies and products such as wireless and VoIP, 9-1-1 technology warrants redesign, upgrade and enhancement to complement these new services. AT&T is collaborating with Intrado and industry groups like the National Emergency Number Association (NENA) to further such goals. The agreement with Intrado is a step in that direction and will offer VoIP customers access to emergency services.

Intrado VoIP Emergency Calling Services will provide AT&T customers the security of knowing that when they dial 9-1-1 from the AT&T VoIP service, the call will be optimally routed for emergency response. These services give AT&T an effective way to process emergency VoIP calls nationwide for subscribers. The Intrado solution allows AT&T to route 9-1-1-dialed calls from the AT&T IP network to public safety answering points (PSAPs), which handle emergency calls and dispatch services such as police, fire or medical personnel.

The agreement with Intrado will enable AT&T to offer its customers an innovative, nationwide solution to get calls to emergency answering points. "As technology adoption rates for both residential and commercial VoIP users grow, subscribers of these services will expect that their emergency calls will be delivered as quickly and efficiently as in today's circuit switched environment," said George Heinrichs, Intrado president and chief executive officer. "Intrado is firmly committed to providing customers like AT&T high-quality emergency calling solutions regardless of the technology they are using."

AT&T is uniquely qualified to lead the industry in the transformation to voice over IP services. Currently carrying more IP traffic on its network than any other U.S. company, AT&T is not constrained by geographic reach or specific types of broadband service like many of its competitors. AT&T's new residential VoIP offer will be available in cities across America to customers with any kind of broadband service--DSL or cable modem technology.

AT&T began offering VoIP services to select enterprise customers in 1997 and currently serves hundreds of large business customers with its managed VoIP services. Already a leading provider of VoIP services in the enterprise business market, the company experienced a fourfold increase in 2003 in the number of business customers using its VoIP services. In 2004, AT&T will expand its VoIP portfolio and aggressively market a full suite of VoIP-enabled services to business customers worldwide.

For consumers, AT&T has been running a trial of VoIP services since October in three states to test market a residential VoIP offering that promises to provide a rich array of new, enhanced information services, including advanced call-management capabilities and unique web-based features.

The company's trial offers participants unlimited local and long-distance services. The success of the trial has resulted in AT&T's decision to launch a new consumer VoIP offer in key markets across the nation beginning in the first quarter of this year.

For more information on AT&T's residential VoIP service, visit www.att.com/voip.

About Intrado

Intrado Inc. (NASDAQ:TRDO), now in its 25th year, has been a pioneer in emergency communications since 1979, providing the core of the nation's 9-1-1 infrastructure and delivering innovative solutions to telecommunications companies and public safety organizations.

Intrado excels in systems engineering of complex, integrated data and telephony environments and in critical operations management. The company's unparalleled industry knowledge reduces the effort, cost and time associated with providing reliable information for 9-1-1, safety and commercial applications.

Intrado has received International Organization for Standardization (ISO) 9001-2000 certification. Additional information on Intrado, its products and services, and past press releases can be found at the Company's Web site: www.intrado.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995.

This announcement contains expectations and other forward-looking statements regarding Intrado's future financial performance, the growth of the VoIP market, Intrado's agreement with AT&T and the ability of the two companies to offer emergency calling solutions for VoIP customers. Readers are cautioned that actual results may differ materially from the forward-looking statements in this release as a result of certain factors, including: unforeseen problems and delays in the implementation or market acceptance of VoIP, and other factors identified from time to time in filings with the Securities and Exchange Commission.

Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Intrado undertakes no obligation to update or revise the information in this press release, whether as a result of new information, future events or circumstances, or otherwise.

About AT&T

For more than 125 years, AT&T (NYSE "T") has been known for unparalleled quality and reliability in communications. Backed by the research and development capabilities of AT&T Labs, the company is a global leader in local, long distance, Internet and transaction-based voice and data services.

AT&T 'Safe Harbor'

The foregoing contains "forward-looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside AT&T's control, that could cause actual results to differ materially from such statements. For a more detailed description of the factors that could cause such a difference, please see AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of AT&T.