Telecommunications giant AT&T has few development centers outside the US, and one of those few has been in Israel for the past decade. The center is an important knowledge center for the company. Senior AT&T executives visit it several times a year for the purpose of assigning tasks to developers there, and, equally importantly, in order to view the developments independently initiated by the Israeli center, when needed. The center functions like a startup incubator generating solutions for AT&T.
Talking to "Globes", AT&T Israel general manager and VP of application development Nir Shalom reveals that some of the services developed and slated for launch in the near future will help AT&T develop new growth engines. This work system highlights two interesting points. The first is that AT&T is developing services by itself, instead of looking to technology companies working with it for solutions. The other is that the company's development effort focuses on services and creating growth engines, and not, for example, on the 5G mobile communications technology that AT&T is pushing for, and that is going mean a major change in our lives.
Transition to software-based network
AT&T's activity in Israel began with its acquisition in 2007 of Israeli company Interwise, which provided solutions for conference calls on the Internet. "Interwise's solution enabled every group to hold virtual meetings, share materials, see one another on video, and make conference calls," Shalom says. "This was an original product developed by Interwise. AT&T acquired the product and the entire company, and integrated the product into the package it sold to customers. On the basis of Interwise, AT&T developed a software development center in Israel that expanded, and which now deals with many core matters in places where the company envisages upcoming growth."
"Globes": Was Interwise acquired with the aim of having it become a development center?
Shalom: "The original aim was to buy the product, with the people, of course, in order to complete AT&T's offering in the area where it was missing a product. By 2010, AT&T had already gotten to know the personnel and its quality here and the way we work. The company decided to develop the center and enable it to work in many other spheres in addition to the original product. In other words, the decision was taken 30 months after the acquisition itself."
Are you AT&T's only development center outside the US?
"We are AT&T's most important development center outside the US. AT&T has other development groups, but this is definitely the leading center outside the US."
Why does a telecommunications operator need a development cente? Why doesn't it buy solutions from external vendors?
"The answer is complicated, with several levels. AT&T is actually leading a very important trend in the telecom industry - the transition from a hardware-based network with large hardware boxes managing it to software-defined networking (SDN). In general, software, not hardware, will manage the network. Switching to software-defined networking provides the company with flexibility that is impossible with hardware, such as mobile capacity, moving network content from place to place in real time, and enabling customers to manage their networks dynamically - obtaining a lot of bandwidth at certain times of day in certain areas of the company in certain offices.
"In addition, software-defined networking is far more effective at the management level, and its basic cost is lower, because network availability and survivability can be managed in a much smarter way. Above all, software-defined networking makes it possible to provide advanced services to customers that are very difficult to provide on a hardware-based network.
"When AT&T decided that it wanted to switch to software-defined networking, it also decided that it had to control the technology itself. In other words, the network is one of the most important assets for a telecommunications company - one of the things that creates the most differentiation in the market. AT&T concluded that once it controlled by itself the software being developed, it would be able to control its roadmap, and focus on services that it wanted to provide to its customers. It was then able to cut its costs, and more importantly, to be the first in the market to provide advanced services, before any other communications company."
What services or products did you develop that were a winning card for the company?
"For example, AT&T is launching a service that enables its customers to manage the network much more dynamically, to move the contents of the network from one place to another and change the quality of the service in certain areas, and to give priority to certain services for the customer in speed and in real time. This is something we're involved in.
"Bear in mind that the development center in Israel works in cooperation with development centers in the US, but we here in Israel are developing large parts of AT&T's future smart network."
Major development in television services
Shalom says that AT&T is not neglecting television; the company is focusing on new developments in the field, which is changing in tandem with changes in the public's viewing habits.
"One of the most important services launched by AT&T over the past year is called DirecTV Now (an Internet-based service on several standards, G.P.)," Shalom explains. "The service enables customers to consume television services on the Internet from any device anywhere in the world without a converter at home. You can consume it from an iPhone, iPad, television set, and what's called over-the-top on the Internet. This service is very successful. AT&T Israel developed everything relating to the end-customer, i.e. the entire user experience, the interface, and the app. Development was accomplished in a very short time. We used advanced development methods, because it was a big challenge. It was necessary to bring a solution to market within a very short time, with a large amount of content and a great many features, and to reach the market early. AT&T Israel was extremely significant in the new product."
So you are actually a technology incubator, a home for startups, but only for AT&T. Are there no technologies you are developing for others?
"True - but it goes beyond startups. What's special about us, what we're really good at, is providing AT&T with very advanced software solutions of great technological complexity in diverse areas very quickly and at very high quality for the market.
"I think that Israel has a special combination of several factors. The first is technological capability in the development environment, at the personnel level. The development center in Israel provides a large company with access to Israel's technological talent. The second is AT&T's realization that its center in Israel is a center able to work to a very short timetable, provide high quality, and handle a high degree of technological complexity. When there's a technological challenge of this type, the company therefore has a strong motive for referring matters to AT&T Israel, because we've already proved more than once that we're capable of providing a timely high-quality solution. Our commitment to the company also contributes to its motivation for investing in Israel and developing advanced products here."
In addition to network and television solutions, the center in Israel also works in other spheres. The first is security, "but in a different way," Shalom explains. "The way we help AT&T in the context of security is by generating insights relating to security from the very large amount of information passing through us. We refine the insights and risks for AT&T's customers, present the risk to the customer very simply, and enable him to respond almost in real time to such risks, and to take the actions required in order to reduce the risk."
Another area is the redhot Internet of Things (IoT). "As a global telco, AT&T regards itself as a leading global player in connecting devices to its network. In this sphere, AT&T Israel is developing solutions that make it possible to manage those devices almost completely as soon as they are hooked up to the company's network - how the information is received, how it is processed, and later how the information is used to build a practical app for the customer. The solution is put on the company's cloud or other clouds, so that it will be easy for the customer to use it."
So the global company is exposed to the Israeli market exclusively through you.
"In addition to the development center, AT&T also has an innovation center in Ra'anana. The innovation center's job is to enable Israeli startups that want to offer their wares to the company to reach AT&T decision-makers directly. If AT&T finds that the startup's solutions have value, it starts using those solutions. There have been Israeli companies that developed and grew thanks to the entry card they got at the innovation center. In this sense, the company definitely feels that it is getting dividends on its investment."
How are you budgeted? How does the system work - on the basis of success?
"We're budgeted just like the company's other development organizations. The basis is the company's business needs – it analyzes them and sets its priorities at the level of investment in innovative or existing products according to market trends. On the basis of that analysis, a decision is made to invest in certain areas. That is what happens in the vast majority of cases, but there are certain cases in which we initiate an idea based on our knowledge of the technology on the one hand and AT&T's business on the other. We very frequently come to the company with ideas for new developments, new capabilities for existing products, or completely new products, and offer them to the person who manages the customer portfolio. If that person is convinced that there is really value for the customers here, he or she can decide to budget it, and then we start developing the products for the company. This cooperation is very close."
Are you not involved in 5G mobile communications, on which the company is working intensively?
"In a certain sense, SDN is part of 5G, and we're investing in it this way. I believe that just as we're involved in the company's other strategic areas, we'll find a way to help this company in this respect, too."
Activity: Telephony, Internet, and television
Headquarters: Dallas, Texas
Revenue in 2016: $163.8 billion
Employees worldwide: 273,000
Published by Globes [online], Israel Business News - www.globes-online.com - on October 9, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017