As AT&T halts consumer services to focus on b-to-b, its PR team will have to surpass image obstacles to position the company as a tech innovator.It's not a stretch to say corporate public relations began with AT&T and its legendary PR patriarch, Arthur Page. Page was corporate America's first VP of public relations. The principles he articulated and practiced still guide the Arthur W. Page Society, which grew out of the old Bell system and is named in his honor. Perhaps that legacy is one reason AT&T's announcement on July 22 that it would no longer be investing in consumer telephony was so stunning to the PR profession. Outsiders saw the decision as the end of an era in which AT&T was well-known for its consumer-directed PR efforts. "[AT&T was] an originator of public relations, of the public relations process. To see that change is jarring," says Scott Sobel, a former PR person for a cable TV operation that AT&T once owned. Sobel left AT&T in 2000 after serving as a regional communications manager. He is now a VP at Levick Strategic Communications in Washington, DC. The decision to stop investing in traditional consumer telephone services presents an image problem for AT&T, making it appear that the company couldn't adapt to the changing telecom marketplace, Sobel contends. "AT&T was a large ship that, when it saw the iceberg ahead, couldn't change direction fast enough," he says. Those inside AT&T's communications see it differently. They say the company's decision to focus on b-to-b services gives them a clear PR mandate to craft a new image for AT&T as not a phone company, but a tech leader. "We have great clarity in who we are and where we're going," says Connie Weaver, EVP of PR, marketing, and brand for AT&T. "We will focus on AT&T as a technology innovator and leader." Changing the focus of PR Paul Kranhold, AT&T's VP of corporate communications, says he was surprised by some media coverage of the July 22 announcement because the impending move was known to those following the industry. AT&T has already been generating 75% of its revenues from the business sector. Yet 80% of the media calls it gets have to do with its consumer business or consumer-related telecom topics, Kranhold notes. The media, if not the public, still turn to AT&T for insight into consumer telecom trends. "People are saying, 'What are you if you're not going to be the telephone company?" Kranhold acknowledges. The answer AT&T plans to give, he says, is "a technology provider of complex network solutions to business and consumers, where it makes sense." Indeed, the company is not pulling completely out of consumer services. It will maintain existing customers and is pushing voice over internet protocol services in the consumer market, as well as to businesses. For PR, that means "we'll never stop talking to consumers," Weaver says. But it won't be talking to consumers as much as in the days of Arthur Page. AT&T's communications focus going forward will be on business as it tries to emulate IBM's success in rebranding a corporate colossus, Weaver says. "I think I've got one of the best jobs in PR today," she enthuses about her new communications challenge. The market's reaction to the new AT&T will let her know if she's right. AT&T's PR staff is undertaking this mission with reduced human resources - there is a companywide mandate to cut staff at least 8%, and PR will take part in that, Weaver says. Exactly how many PR layoffs that will mean, she could not specify. The company had 440 PR people in 1996, 250 in 2000, and 186 in early 2002 (see PRWeek, March 11, 2002). Weaver did not have a current staff number available. But staff cuts will not mean less PR from AT&T. A major b-to-b effort already is under way, tied to the company's sponsorship of the upcoming summer Olympics, Weaver notes. PR efforts in that arena include promoting partnerships with USA Today and the NBA tied into the Olympics, she says. The company began a new ad campaign at the start of the year under the tagline "The World's Networking Company," and PR, too, will reflect that slogan. The company continues to look for agency help on various projects, although it will not veer from its tradition of not having a PR agency of record, Weaver says. "I'm a believer in you mix the best together to get the best results." Recently the company has worked with firms like Citigate Sard Verbinnen, Sloane & Co., and Edelman. Kranhold says he expects to hire a new agency shortly to work on a rebranding PR effort. Communicating with businesses To successfully connect with business customers, AT&T PR must show the company cares about and has genuine connections with its customers, branding experts agree. AT&T must do a better job of talking to business than it did on the consumer side, they say. And that b-to-b market is a crowded one. "They have to get more assertive and take more responsibility for their brand," says Rob Frankel, author of The Revenge of Brand X: How to Build a Big Time Brand on the Web or Anywhere Else. Frankel thinks the company has tried to be too many things to too many people with its forays into cable TV, wireless service, and the consumer market. "AT&T hasn't only been a sleeping giant, but a comatose [one]," says Frankel. "But a comatose giant can be revived." AT&T has a major asset of its name and history in telecom as it focuses on the business arena, Frankel and others say. "AT&T will be very formidable in the b-to-b space," says Mike Aabram, PR director at Charleston|Orwig in Hartland, WI, and who handled PR for a Japanese provider that tried to penetrate the US business market. Others say AT&T needs to be more explicit with businesses about how it can help their ROI in phone and networking services. That will mean more communications with its sales force to have it stress that in sales presentations, says Joel Goren, New York-based SVP of strategic brand consulting with TNS, a market research firm based in London. "The key to a successful brand is it helps make the customer more successful," he adds. "The brand defines the relationship that enables the business strategy to be successful." No major phone company has done that since the days when the pre-WorldCom MCI introduced its Friends & Family discount plan, says Frankel. "A brand isn't a brand unless it gets people to evangelize it over the competition," he says. "The most important thing they have to understand is the brand is built from the outside in." Weaver and Kranhold say AT&T knows what its business customers want, and that they have already begun communicating how AT&T can meet those needs. "People's perceptions of the brand don't change overnight," Kranhold says. "It's still the most powerful brand in the telecom industry." An announcement of a debt rating downgrade for the company by Moody's on July 29, shortly after the consumer announcement, was unfortunate timing, admits Weaver. Moody's downgraded AT&T debt to junk status, citing heavy competition that could mean a prolonged decline in revenue for the phone company. AT&T PR responded to the debt downgrade with messages about the financial strength of the company, she says. "Facts are your friends; you cut through the bravado and go to the facts," Weaver says. Business customers will understand that it was not a significant development when it comes to AT&T's ability to serve their needs, concludes Weaver.