During the more than thirty years that Raymond W. Smith has been with
the Bell phone system, he has been most frequently described as an
iconoclast, an innovator, and a born leader. A native of Pittsburgh,
Smith joined Bell of Pennsylvania in 1961. Frustrated by the slow pace
at the staid Bell system, he became famous for utilizing often
outrageous tactics for getting the job done.
Following the breakup of the Bell system in 1982, Smith was named
president of Bell of Pennsylvania. He was named chief executive of its
parent, Bell Atlantic, in 1989.
Smith quickly turned his attention to the promise of multimedia and
interactive services, culminating in his ambitious yet failed attempt
earlier this year to forge a merger with Tele-Communications Inc.
Long a supporter of civil rights and equal opportunity, Smith was the
first recipient of the Mickey Leland Award for Diversity in
Telecommunications, given by the National Association of Black
Telecommunications Professionals. He also is known as a writer,
playwright, and theatrical director, although he is quoted as saying
that he has no plans to quit his day job.
Educom Review: In expressing Bell Atlantic's need for content to
distribute over its wires, you recently joked that there aren't enough
New Jersey Bell safety films to serve a full programming schedule. Are
New Jersey Bell safety films as boring as they sound? And if the answer
is yes, then is that an omen suggesting that education will play only a
marginal role in the information superhighway? Please say no.
SMITH: The information superhighway is useless unless it meets
customers' needs. If it's not affordable, it will not meet their needs.
If it is difficult to navigate, customers will not be able to find what
they want and will be frustrated. If the range and quality of material
do not meet customers' needs, disappointment will keep them away.
When I mentioned safety films, it was to illustrate the point that we
are not yet programming experts, and we are encouraging others who do
have expertise, such as educators and film and video producers, to join
us in crafting the best mix of programs, affordability, and navigability
for our customers.
We are focusing on systems that will allow TVs to connect to the
information superhighway, since far more people have TVs than PCs in
their home. We feel strongly that customers will increasingly want to
interact with, select, and customize the information they want. We call
this interactive multimedia television--the use of the TV as a device to
access a variety of media, from graphs to videos to music.
Systems like these will help keep costs very low for our customers. In
the not-too-distant future, information will be available on demand, and
customers will select only the program they want to use. New video
storage computers make this possible. This is clearly different from
today's cable system, which sends dozens of programs streaming to every
home, all the time. When customers turn on their cable selector, they
are simply siphoning off the one program they want out of the dozens
that are being sent over the wire.
To make on-demand video information easy to access, we have created a
navigational concept called StargazerSM, which uses everyday models,
such as shopping malls, as a means of organizing information. Electronic
shops or buildings, such as a school building or a college, will be
depicted. For example, customers can go right to the local college
campus simply by clicking on the picture of the college on their TV
screen. This type of system will help make information overload a thing
of the past because it will be easy for customers to locate what they
want, when they want it.
Providing customers with a wide range of information choices represents
a key challenge in developing the superhighway. It would be a disservice
to everyone to make access to the information superhighway easy,
affordable, and available soon, but not provide a broad range of
material for them to browse through, select from, and ultimately delight
in.
In addition to New Jersey Bell's safety department, seventy-five content
producers have already committed to join us in making outstanding
information choices available. Some are from Hollywood; some are news
gatherers; some are from television; some are from higher education;
some are software companies; and some are quite small. Some, like
Britannica and Scholastic, are familiar names in the home or classroom,
and some may be new to you.
On-demand services will not happen overnight. First, we must deploy a
robust, high-capacity video network providing a wider array of choices
than is available on today's cable systems. We'll need to work with our
customers to develop and grow the on-demand market. We will also provide
for all programmers open access to our network under the Federal
Communications Commission's Video Dialtone rules. Because we will be a
so-called common carrier of video services, we are anxious to encourage
as many providers as possible to consider offering their services on our
network.
ER: Some observers have noted that private industry is playing an ever
larger role in the creation and implementation of programs for education
and training. What are your feelings in that regard ?
SMITH: The mission of the schools is to help students prepare to
participate in and contribute to our society. Workers today must be
flexible, creative self-starters. They will be exposed to a range of
technologies, from fax machines to networked PCs, and they will have to
know how to use these machines. Companies are increasingly adopting flat
organizational structures, which put a premium on worker accountability.
Jobs are constantly changing and continuous learning is now a reality in
many private companies.
Schools must understand that they are preparing students to join a fast-
changing work world. The private sector has a responsibility and a role
in helping schools to understand the new requirements for tomorrow's
worker and in preparing students for their future.
Universities and colleges, and especially science-oriented faculties,
are way ahead of K-12 in providing the benefits of information
technology. For instance, many colleges today offer special connections
in dorm rooms for students to hook up PCs to the Internet and other
online services. Some even supply PCs to students, and courses that
include a strong technological component are becoming increasingly
common.
Experience with two-way distance learning is also encouraging. Most of
that experience comes from the university and corporate sectors, in
which distance learning is commonly used as the cost-effective choice
for meetings, education, and training. Strengthening the communication
and linkages between school, work, and home is one of the most important
potential benefits that will result from the information superhighway.
ER: In a very general way, help us to understand the corporate
strategies of the seven Regional Bell Operating Companies. For example,
why is Bell Atlantic so interested in providing video services, whereas
a company like NYNEX seems not to be tempted to get into the fray? Do
they know something you don't know? Do you know something they don't
know?
SMITH: Strategic differences can be attributed to a great extent to
differences in regulation, competition, and the economic conditions
among the various regions. The regulatory climate in each state differs,
for example. Some states have realized that regulating the price of
basic service is better and more meaningful for the customer than
regulating the earnings of a telephone company. More than elsewhere, in
Bell Atlantic's region, the regulators have chosen the price model.
The competition Regional Bells face also differs. In areas of high urban
concentration, such as Bell Atlantic's, there is greater incentive for
competitors to engage in cream-skimming of lucrative commercial
accounts. The 10/90 rule applies: 10 percent of the customers produce 90
percent of the revenues. Competition is fierce for the biggest-revenue
customers and is almost nonexistent for low-revenue customers, who are
costly to serve and whose prices are subsidized by other customers, for
example, residential plain telephone service.
Some Regional Bells serve areas with higher economic growth than does
Bell Atlantic. For instance, a long-term growth rate of 4 percent is
typical in the South, but in our area, 1 percent is more common.
A decade ago, we started investing aggressively in fiber-optic cable and
digital switching equipment. As a result, our customers are in a better
position to benefit from affordable, advanced services than those in
other regions. We also made smart investments in cellular services and
profitable overseas phone services.
About five years ago, we began a sustained program that shaped our
corporate culture to better meet the discipline and innovative demands
of the competition through rational restructuring and right-sizing our
management ranks.
Last year, Bell Atlantic won a court battle to offer cable service--
unlike any other Regional Bell Company. Collectively, these moves mean
that Bell Atlantic is well positioned to meet customer needs for modern
and advanced services--and to compete successfully.
It doesn't surprise me that our decisions and perspectives sometimes
differ from those of other Regional Bell Companies. I am convinced that
our vision will help to position our company for the future and to
ensure that our customers have access to the information superhighway
sooner rather than later.
ER: A number of business writers have contrasted what they like to call
the rough-and-tumble culture of the cable industry with the more
disciplined, more traditional, and more highly regulated culture of the
telephone industry. How much truth is there in that characterization ?
SMITH: Since the court affirmed Bell Atlantic's right to offer cable
service, I have come to know many people in the cable industry better.
Our industries developed on different paths, so there are bound to be
differences in culture. But the relevant fact is this: the cable,
telephone, broadcast, wireless, and information industries are
converging. We are increasingly all in the "bit business." It will take
partnerships of all kinds to build the type of information superhighway
that I have been describing and that Vice President Gore is championing.
Differences in culture notwithstanding, you will continue to see
convergence in the communications industry in the months and years
ahead.
ER: Speaking of different cultures, communications people like to talk
about the need for partnering between companies such as Bell Atlantic on
one hand and colleges and universities on the other. As you see it, what
kind of partnering would make the most sense?
SMITH: We have had extensive experience in partnering with universities
and colleges and have formed many strong relationships. By partnership I
mean concerted, joint actions in pursuit of a well-defined goal. For
example, in Blacksburg, Virginia, we are working with Virginia Tech and
the city to bring advanced communications that will support meaningful
learning, research, and commerce. With the University of Pennsylvania,
we have supported research in ultra-high-speed switching and
encryption/decryption. With Howard University, in Washington, D.C., we
are a partner in devising more effective, less costly ways to achieve
collaborative case management in the health and human services field.
There are other examples, but these three illustrate conditions that
seem to lead to a successful partnership. Both parties must have similar
interests that can be furthered by working together. Creating such win-
win situations is a must, because as in any relationship, the right
incentives must exist for both partners to give their all. This is what
makes for success.
Our involvement has to go beyond merely writing checks or making
financial contributions. We want to concentrate our partnering efforts
at the level that will produce results, so we select just a few
partnership opportunities at a time, and we put our heart into those.
ER: As an interested and knowledgeable outsider, what do you think of
higher education in America?
SMITH: Unlike our K-12 schools, which face some fundamental problems,
including the need to deploy and integrate technology in the schools,
American higher education remains in basically good shape. The very fact
that hundreds of thousands of foreign students come to this country
every year to learn in our universities and colleges is one indication
of the strength of our system of higher education. Our nation's research
infrastructure, based in our universities, is, again, envied by many
other countries.
Despite these strengths, however, there are some problems in our
universities and colleges that need to be confronted. The problem of
financial barriers that prevent many otherwise academically qualified
students from attending college must be addressed. The financial returns
enjoyed by higher education make it one of the better investments for
taxpayers to support. A well-managed and properly funded student loan
program is essential to that end. I commend Secretary Riley's courage
and wisdom in making that an early priority.
If I were to change anything, it would be to bring colleges and
universities into closer partnership with their clients, who, for the
most part, are in the private sector. In addition, colleges and
universities should adapt their teaching methods and class structures to
better accommodate societal demand for lifelong or continuous learning.
More and more, workers must continuously go back to school, and
universities and colleges can fill the fundamental need in that area.
Community colleges have partially filled the role, but this is one area
where distance learning and the use of communications and information
technology can be extremely important. Allowing students to take classes
off campus, either from home or from work using two-way communications
technologies, constitutes one means of providing the continuous learning
services needed by our workforce.
Except to participate in lab classes, I cannot believe there is a
significant academic advantage to forcing disciplined students to
forsake their office or home and drive to a night class instead of
actively participating from the home or office.
ER: We understand that the Bell Atlantic telecommuting trial was
declared a success and that telecommuting is now an option for all
16,000 management personnel. What lessons did you learn about managing
from a distance, and how quickly do you think the practice will spread
to the service population in general?
SMITH: Telecommuting is proving to be a winner. As practiced at Bell
Atlantic, we see stronger productivity by telecommuters, for all job
types, and some with remarkable improvements. Before telecommuting, an
employee and supervisor had to reach agreement on the suitability for
the particular job. Most of our telecommuters split their week about
evenly between their home and their office locations. Although some jobs
require special gear, a business line, voice mail, a fax-modem, and a PC
are usually enough for the employee's home office to dovetail with the
company's workflow. New wireless technologies, such as personal
communications services, will soon make it even easier for employees to
work wherever they are located
With little fanfare, telecommuting is spreading in popularity throughout
the service sector of the economy. A verdict of same-or-better
productivity gave the necessary green light. Supervisors' unease about
an employee's being out of sight is dissipating. Through telecommuting,
some supervisors are learning useful lessons about what really makes
them effective as a supervisor. Such events as the recent California
earthquakes, horrible winter weather, fuel price hikes, and personal
illness nudge some to give telecommuting a try, but in the main, word of
mouth provides a steady stream of employees and supervisors willing to
try it. Most love it and do well for their employer in the bargain.
ER: Although the proposed TCI merger never took place, you've made it
clear you're still interested in mergers and alliances. What makes
alliances so desirable, necessary, and even critical to Bell Atlantic's
future?
SMITH: The TCI merger process should be seen against the backdrop of
Bell Atlantic's publicly avowed strategy: to become one of the world's
leading entertainment, communications, and information management
companies. TCI had done a lot of things very well, and it owned a video
distribution network that reached some parts of forty-nine states. The
merger was envisioned as an efficient, very fast tactic for forwarding
Bell Atlantic's strategy. Some mergers and alliances can produce more
than the sum of their parts. We continue looking for such opportunities
because they can advance our strategy rapidly.
Regardless of the result in the case of TCI, we are moving ahead within
our region by deploying full-service networks as quickly as the
regulatory environment and economics permit. We will bring products like
Stargazer to market, and we will license and sell them to other
companies. We will operate as an open network, in part because we are a
common carrier and in part because offering the customer the maximum in
choice makes good business sense. That's a big task, and we are smart
enough to know that the right kind of help could make those choices
available even faster for our customers.
We welcome, and indeed need, the input of our customers as these
activities unfold. We are anxious to work with the education community
at all levels to help us determine what is needed, what works, and where
we should be headed in the education arena.