Bell Tolls for AT&T

Could basic research have saved AT&T?

4 min read


Though in nature mothers sometimes eat their young, it isn't often that the young get to return the favor. But in the corporate world, anything goes, as we've recently seen in the case of Baby Bell SBC, formerly Southwestern Bell, now poised to feast on the remnants of Ma Bell—aka AT&T (and it may get that meal for a mere US $16 billion).

Once upon a time, AT&T was the most powerful and most creative company the world had ever seen. Some say that AT&T's great reign came to an end when the U.S. government's antitrust suit led the company to lop off its local service carriers in 1984. But was it the later amputation of its most precious asset—unmatched, world-class, Nobel Prize-winning basic R&D, exemplified by the fabled Bell Laboratories—that really cooked its goose? If it had been able to maintain its research presence, could it have found ways to reinvent itself and survive the commoditization of short- and long-haul telephony?

Times are tough for everyone in telecommunications right now—you can't make money selling simple phone service anymore. The descendants of the old national phone networks, from SBC to Swisscom—and their cable competitors—are trying to figure out how to make money by delivering services like broadband, music, TV, and movies on demand cheaply enough to create a mass market for these services. That's part of what's fueling the mad scramble to get into voice over Internet Protocol [see Steven Cherry's "Seven Myths About Voice over IP" in this issue].

VoIP will give the industry a short-term boost. But what about the long term? It's not clear, especially as corporate R&D as a whole has turned toward applications. No company today is churning out results in basic science that can create whole new industries—the transistor, the solar cell, microwave radio relays, fiber-optic cable, satellite communications, cellular phones. Most companies can't seem to find a way to justify the risk and uncertain outcome of basic R&D.

This is particularly true in the struggling telecommunications sector. Lucent Technologies, inheritor of much of Bell Labs when it was jettisoned from the mother ship in 1996, is reporting quarterly profits again. But at what cost? As Harry Goldstein and Ronil Hira discussed in the "IEEE Spectrum R&D 100" last November, R&D spending at Bell Labs' current parent company, Lucent Technologies, dropped 57 percent from $3.5 billion to $1.5 billion between 2001 and 2003. It's hardly alone in the sector. As late as 2001, Nortel spent more on R&D than all but 18 companies in the world, but by 2003 it had fallen to 36th place; in the same time, Alcatel dropped from 32nd to 48th.

Can applications-oriented R&D replace basic physics in the pantheons of innovation? In that same survey, Goldstein and Hira pointed out that software now dominates R&D, and not just in the sense that Microsoft is currently the world's top R&D spender. At most companies, software is taking up an ever-larger chunk of the development budget year after year. It is at the heart of everything from drug discovery to automobile telematics. But even here Ma Bell had her stake in the ground first—Unix was invented at the old Bell Labs in 1969, the C programming language in 1973, C++ in 1983. We may never see a research operation like it again. The Future of the Book

For centuries, the biggest and best ideas have found their way out into the world through books. But now that we can put not only words and images but also video and sound in our pockets, or send them anywhere in the world in an instant, is the quaint practice of printing and binding pages poised for slow but sure decline?

That's what The Institute for the Future of the Book ( is trying to figure out. Founded in 2004 by entrepreneur and Atari veteran Bob Stein, the institute is supported by the MacArthur and Mellon foundations and has facilities in New York City at Columbia University and in Los Angeles at the University of Southern California's Annenberg Center for Communication. It publishes a Web-based electronic journal and hosts symposia and conferences aimed at developing fully realized dynamic, interactive digital documents.

Stein, who is best known for establishing the Criterion Collection of classic motion pictures on DVD, says the guiding premise of the institute is not that books will become extinct—after all, even television wasn't able to knock off books. Rather, the idea is that the locus of serious intellectual discourse will shift from page to screen over the next 25 years. Books will evolve away from the things we know and love today: static objects that somebody writes, someone else prints, and someone else reads. They'll increasingly be bundles of data that are networked, and whose authors and readers are joined perennially in ongoing discussions within the context of specific published documents.

Such a revolutionary intellectual infrastructure awaits the solution of a few fundamental problems. First, of course, there are the copyright and business issues. Then there are the hardware challenges—we don't have anything like the right devices to access the books of the future. Ultraportable computers are close and PDAs are closer. But what we really want is something the size of a paperback that we can carry around in our briefcases or pockets, that has a high-resolution color display with good sound and video capabilities, a powerful operating system, wireless linkage to the Web, and battery life measured in weeks rather than hours. We'll also need more powerful search tools to wade through and evaluate documents that, freed from the physical limitations of paper, cardboard, and glued bindings, will eventually swell into millions of linked pages.

Obvious developments never seem so until after the fact. But it's clear that technology will continue to bring big changes to book publishing, and to the way we develop and share our most creative and powerful ideas.

The editorial content of IEEE Spectrum magazine does not represent official positions of the IEEE or its organizational units. Please address comments to Forum at

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