07/08/96 AT&T'S NEW BOUNDARIES IN CYBERSPACE

AT&T'S NEW BOUNDARIES IN CYBERSPACE

The AT&T executives trying to push into local calling have one thing to be happy about. As tough as their job is, it's unlikely ever to be as frustrating as the company's efforts in cyberspace.
AT&T has spent millions to launch--and then kill--several online intitiatives. Like many companies, it hoped to create proprietary services and charge a premium for them. But the Internet changed all that. Now, the company is cleaning out the last bits of its old cyberstrategy and narrowing its focus to providing Internet access to consumers and businesses--which it sees as part of basic telecom service in the future. ``AT&T is severing its ties with everything outside of its core business,'' says Blane Erwin, an analyst with Forrester Research Inc.
PARTIAL RETREAT. So on June 24, the company took the ax to New Media Services, a publishing unit that includes what's left of Interchange, an online service that it bought in 1994. The unit will be spun off to Industry.Net, the company headed by former Lotus Development Corp. chief Jim P. Manzi that runs a Web marketplace for business. The combined company, Nets Inc., in which AT&T gets a minority stake, will use content developed for AT&T Business Network, a Web site. It will be, says Manzi, ``the home page for business.''
Is AT&T giving up? Hardly. The Net is a critical part of its plans to be a one-stop shop for electronic communications--from E-mail and Internet access to cellular calling and satellite TV. AT&T's primary thrust will be signing millions of customers for WorldNet, its new Internet service. To help its 10 million business customers get wired, AT&T will also provide a ``hosting'' service called EasyCommerce, which will create and run corporate Web sites. These businesses are ``a clear extension of AT&T's telephony business,'' says Michael E. Kolowich, president of AT&T New Media, who will become vice-president of business operations for Nets Inc.
Indeed, the Internet may be evolving to become a lot more like the phone business. In the past year, AT&T's revenue from 800 calls surpassed that from long-distance service, says Kolowich. The same model is taking shape on the Net: Just as companies are willing to foot the bill for an 800 number to bring in business, they are willing to pay for the costs of Web sites and advertisements to lure customers. AT&T is betting those 800 customers are ripe for the EasyCommerce Service.
What else doesn't fit in AT&T's new online plan? The company has already scrapped Network Notes, a proprietary business network and is looking to get rid of the Imagination Network, an online gaming setup. Personalink, a messaging service using technology from General Magic Inc., may be phased out. And Kolowich says ATsuperscript&T is seeking partners to take over its consumer content, too. What's left may be just the ticket for a New Age phone giant.
By Amy Cortese in New York