Pursuing Innovation, AT&T Increasingly Opens Its Network

AT&T Senior VP-Brand Marketing Esther Lee on Hooking Up With Small Businesses to Look Young

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You can add AT&T to ever-expanding list of technology companies whose marketing position revolves around terms like "innovation," "cutting edge" and "platforms." The test for executives, including AT&T Senior VP-Brand Marketing, Advertising and Sponsorships Esther Lee, is making them more than just words.

Esther Lee
Esther Lee

AT&T has adopted a variety of programs and policies to that end, aimed, for example, at encouraging software developers to build on top of its mobile network, the second-largest in the U.S. behind Verizon. In 2011, it established "innovation centers," pseudo tech incubators in California, Texas and Israel, where app developers attempt to build digital products for the company.

The weekend before this year's CES, the company hosted a hackathon for more than 400 developers with prizes such as $30,000 and a Chevy Volt. In March the company will introduce to eight cities its Digital Life product, an "internet of things" service that will allow homeowners to monitor the security and management of their homes from their mobile devices.

AT&T hasn't always been so open with its network. It previously had a reputation for being stingy with its data, impeding the kind of progress it says it's now committed to fostering. Now it is using its core competency -- maintaining a robust network -- to attract developers that can help lend it the energy and creativity more common to startups.

Ad Age met with Ms. Lee over lunch at CES in Las Vegas to discuss that , being friendly on Facebook and why AT&T is less concerned with making products than platforms.

Advertising Age:Why is it important for you to be here at CES?

Esther Lee: It's very important to see how people respond to some of the technologies we're dealing with and see how developers respond. It's important to see where the technology edge and where the competition is .

Ad Age : That relates to a lot things you've been doing with developers like the incubators and hackathons.

Ms. Lee: A lot what's happening now is that our best play is to build platforms, not to build end products. If we can build platforms and APIs that allow developers to innovate, we can accelerate innovation for the whole industry. And that allows us to help customers more expansively.

We also do have a revenue play in it. We give 80% of the revenue to the developer, but we take 20%.

Ad Age :That's a nicer revenue split for developers than Apple and Google offer.

Ms. Lee: Absolutely.

Ad Age : So do you consider yourself one of their competitors?

Ms. Lee: It's about opening up the network. One thing that always amazes me, is we talk about living a mobile lifestyle, and yet we're the one running one of the biggest mobile networks. Who better to allow for broad-based innovation than AT&T?

Ad Age : It seems like you have a big emphasis on openness with your network. Was that always the case?

Ms. Lee: No, that wasn't always the case. I think that first of all, the network has completely changed. When we were a voice network, we didn't really need anyone's help. We now get to a point where it's a data network and we don't have enough people, brain power or resources to make the kind of innovation that world needs.

That was something we shifted from not just in terms of how we do business but culturally.

Ad Age : How's that manifested itself?

Ms. Lee: We've had to shift the way in which we formalize partnerships, whether it's revenue splits, contracts, the speed by which we do those things. Rather than thinking about us as a company that just produces a finished product, it's about providing the right kinds of platforms. Not feeling that we have to own the entire end-to-end value chain -- that we can own the platforms and the rest of the value chain will be provided by others. We said, "We're no longer going to just be a finished goods company, we're going to be a platform company."

Ad Age : I imagine that it would be a challenge to instill that mindset in a big company.

Ms. Lee: The ways that people have built on the network and pivoted in terms of their amount of data usage, you can sit back and say, "Shouldn't they have known?" But it was so unpredictable.

Ad Age : You're talking about all this openness, but there has been this reputation of AT&T as not being very data-use friendly. What are you doing to change that ?

Ms. Lee: We were the exclusive provider of the iPhone for three and a half years. So it was a situation where the data traffic was just unprecedented. The challenges in actually keeping up with that level of usage was a tough time for us. But we've learned a lot from that . Things like, in very highly concentrated areas, we're building for smaller cells to create better in-building penetration. I hear more stories of people talking about how the network's gotten so much better.

Ad Age : I wanted to ask you about Facebook. Is your marketing spending with them going to be the same as last year?

Ms. Lee: I would say at least as much, and we're probably one of the bigger spenders.

Ad Age : And you're one of the bigger spenders in general. How are your marketing dollars going to shift this year?

Ms. Lee: We generally don't talk about numbers, but as the industry shifts, we have to engage in the same way. Traditional media is not dead, however. It's not as if we're going to cut off television and go all to social media.

Ad Age : You're positioning yourselves as a nimble company. Is it realistic to think that a company as big as AT&T is as nimble as some of the other tech companies out there?

Ms. Lee: I don't think we're trying to be like other tech companies out there. So, we still are the Fortune 10 company, we still are an infrastructure company, we still run a network, but the network still has to be five nines.

On the application and software side, we're not going to do it all. The applications and the end products and the devices, you need a whole ecosystem of people to be able to do business with us and do it in a way that works for them and works for us.

Ad Age : What are your customer demands at the moment?

Ms. Lee: Overall, making things more simple and intuitive. I think some of it is going to be around, in the longer term, personalization. I think some of it is going to be curation.

Ad Age : Curation? So AT&T as a publishing platform?

Ms. Lee: One of the things that we're talking about on the enterprise side is you can't create custom solutions every time out and have them be as excellent as they could be. There may be ways to use user expertise to create configurations that are curated to create solutions that are right for a lot of our customers.

Ad Age : When people think of AT&T, what do you want them to think?

Ms. Lee: Well, I do hope they think of innovation for living life more expansively. And I'd love for them to think about "However I want to live my life, AT&T is going to be there."