Speech by Ken Sichau, Executive Vice President, AT&T

I want to thank Murthy for inviting me to be with you here tonight. And I want to thank the organizers of tonight's Community Awards dinner -- Larry Uno and his team. I also want to congratulate tonight's national scholarship recipients. You are an exceptional group of young people. And you are following in some very large footsteps.

We are nearing a proud anniversary for both Asian Americans and AT&T. On September 30, 1993, President Bill Clinton awarded the National Medal of Science to Dr. Alfred Cho, from AT&T's Bell Laboratories. Dr. Cho was the co-inventor and principal developer of molecular beam epitaxy. MBE is used worldwide in the manufacture of semiconductor chips. Without it, for example, there would be no CD players. Some of you parents may regard that as a mixed blessing.

Alfred Cho is just one of a long line of Asian Americans who have brought distinction to AT&T over the years. Their ability to combine the needs of the business with their own personal fulfillment has a lot in common with the role of 4A. Since the early days of your organization, you've been relentless in your drive to meet the changing needs not only of your members, but also of the business.

I know it hasn't been easy. It must seem as if every time you have your organizational issues just about ironed out, AT&T announces a restructuring and you've got a whole new set of wrinkles. So for the next few minutes, I want to try to lend a little clarity: First, to help sort out what's happening in the telecom industry. Then to look at where AT&T and 4A fit into the bigger picture.

Over the past year or so, telecom companies have consistently been making front-page news. Unfortunately for many of those companies, it hasn't been good news. In fact, I sometimes feel like AT&T is a competitor on the "Survivor" TV show. Global Crossing got voted off the island earlier this year. WorldCom wasn't far behind. And now Qwest is getting some pretty fishy looks from the other contestants.

It's been estimated that about $2.5 trillion in equity disappeared from the telecom market over the past two-and-a-half years. That's about a quarter of the entire output of the U.S. economy. Fortune magazine calls it "the biggest financial disaster ever, by a mile." In its simplest terms, the problem was that too many people were building communications superhighways for too little traffic. It also appears now that many companies didn't stop even when they saw the foundations begin to crumble.

Fortunately, Mike Armstrong and the rest of AT&T's senior leadership saw the cracks starting in the summer of 2000. That's when they took steps to sell off assets, reduce debt and re-capitalize key businesses. As you know, we spun off AT&T Wireless last year. And we expect the merger of AT&T Broadband and Comcast to be concluded before the end of this year.

That, of course, leads to the question, "What kind of company will AT&T be after the Broadband merger?" The answer is that we will still be one of the strongest -- perhaps the strongest -- company in the communications industry.

For starters, AT&T will continue to have the world's most extensive, sophisticated network. On an average day, it transmits the equivalent of all the books in the Library of Congress across the country every 13 minutes. And we deliver those trillions of bits of information day in and day out with 99.9 percent reliability.

Today AT&T carries voice traffic to 1,000 cities in more than 230 countries and territories. And, by the end of this year, we will be carrying the largest share of IP backbone traffic of any carrier.

After the Broadband merger, AT&T will also have one of the strongest balance sheets in the industry. So our plan for the future calls for us to continue to commit resources strategically. What do I mean by that?

Let's use the local telephone market as an example. We've said we will enter the market to provide residential customers with local telephone service where it makes economic sense for AT&T. Today we already provide residence customers with local services in eight states. And just last week we said we would begin offering local service in Philadelphia and Pittsburgh before the end of the year.

We will have about a million and a half residence customers after the spin off of AT&T Broadband. Eventually we expect AT&T local service to be a $10-billion-a-year business.

At the same time, we continue to be the market leader in consumer long-distance services with about 60 million customers. And our Consumer business not only looks good against its plan, but in the current telecom industry -- with several competitors facing bankruptcy or investigations into alleged accounting improprieties -- it's looking better and better overall. By staying the course and maximizing cash with integrity, we've reaffirmed our reputation as a business that customers can trust.

Of course, that also applies to the other principal unit of the company -- AT&T Business - which generates the majority of AT&T's revenue. That's the organization that I call home. AT&T Business has a number of important advantages in a very competitive marketplace. For starters, we have the best services, the most reliable network, the best brand, and the highest customer satisfaction in the industry. I like to think those are all the reasons why we also have the largest base of customers in the industry. Some 4 million businesses use AT&T services.

In today's market, AT&T is also benefiting from a "flight to quality." Customers are looking for more than simply the lowest price. They are looking for a communications provider that's going to be there for them not just today, but tomorrow and the day after.

No one wants to take advantage of someone else's misfortune. But it's beginning to look very much like some of our competitors were not playing by the rules. As a result, we think AT&T is going to be the big winner in the long run.

We've proved time and time again that we care about our customers. And our customers trust us. That trust serves us well in today's turmoil. With the days of glitz and hype behind us, the marketplace is returning to the things that really matter to customers - the qualities that AT&T has always stood for:

Quality and reliability mean something again.

Customer service means something again.

And integrity means something again.

As we've seen in the past few months, lack of integrity can shake even the mightiest companies. For me, there's no more important value. Integrity isn't just what the corporation does as a whole. It's what each of us does every day. It's the decisions we make, the actions we take, and the commitments we make. It means we have the courage to do the right thing, not the easy thing, the popular thing or the sure thing.

I have never been more optimistic because the window of opportunity has never been open wider for AT&T. And the reason I'm bullish is not because there are so many things wrong with our competitors, but because there are so many things right with AT&T.

Sure, we've got the best network, the best services and the best brand. But, in reality, every company in the industry has access to the same switches, the same routers, and the same fiber. Any company could go out and buy the physical assets that make up our services.

So, what really makes us different? What really makes the AT&T brand matter? I believe it's our people and our values. Those are the things you can't buy from a hardware or software manufacturer. Those are the things you can't fake in an accounting report. Those are the things that a startup carrier can't cobble together in a few years time.

The heart and soul of AT&T are the people who design the network, the people who build it, sell it, market it, and service it - the people who have dedicated themselves to doing whatever it takes to meet the needs of customers day-in and day-out.

At AT&T, our people are driven by a legacy of core values that bring value to our customers. Values like integrity, quality, customer service, innovation, respect for individuals, and a passion for winning. Those are the standards that have guided the people of AT&T - people like you -- for more than 100 years. And no group is more in tune with them, or more dedicated to furthering them, than AT&T's Asian American employees.

The Asian American community has always been important in AT&T and to AT&T, both as associates and as customers. Let me tell you why.

First, there's lots of work to do and we need our Asian American colleagues to help us do it. We need your help as associates, managers, and leaders in the new AT&T.

And we're not just focusing on the domestic market. Our opportunities around the world are brighter than ever. Today AT&T has some 1,200 people in 13 Asia-Pacific markets. They're working hard to sell advanced communications and networking services, including voice and data connections to businesses, governments and consumers. Earlier this year, for example, we made a significant investment to acquire a 25 percent stake in Unisiti, the first ever Sino-foreign telecom services joint venture.

Asian American employees are deeply involved in all these parts of the business. Often, their ethnic backgrounds help them make a special contribution. For example, the majority of our leadership team and many of our country managers in the region are Asian Americans. And that only makes good business sense.

At the same time, the Asian community is hugely important to AT&T as customers. They represent some of the fastest growing market segments we address. And not just in the Asia-Pacific region itself, but here in the U.S. as well.

Today there are nearly one million Asian American owned firms in the United States. The large majority are in the retail and services industries. Asian Americans are not only important customers for our services, but they're also loyal customers. Asian American business customers who use AT&T are five times as likely to stay with us as other business customers.

But, again, the Asian community is highly diverse. Like any other group, buying behavior is unique to the particular part of the world they and their families hail from. That's where the background of our Asian American colleagues has been especially valuable to AT&T. Many are combining their marketing skills with the ethnic insights to help AT&T reach out to these customers, market-segment by market-segment.

My point is that we want to make sure that AT&T gets full use of the skills and backgrounds that our Asian American colleagues bring to their jobs. And I'm not just talking about technical skills. I'm talking about management skills as well. Asian Americans possess those skills in abundance. And AT&T Business, along with the rest of the company, wants to take advantage of such skills in whatever ethnic community they occur, including yours. For example, AT&T Business has almost 400 Asian Americans employees in its management ranks. And, overall, Asian Americans make up almost 5 percent of AT&T Business domestic employees. That's a higher percentage than exists in the general population.

While we have made progress in our diversity initiatives, there's still a lot more to do. Asian Americans are not well represented at upper-management levels. And that's why attracting, retaining, and developing the best talent for AT&T will continue to be an area of focus in both the near and long term. Our recruitment strategy includes building a talent pipeline by enhancing recruitment efforts in the Asian American, African American, and Hispanic communities. I know that 4A is helping that effort through its mentoring program. By pairing promising candidates with experienced managers, mentoring can help keep talented people moving in the right direction.

AT&T is also committed to supporting Business Resource Groups like 4A. We believe they help us better manage both our business and our people. I know, for example, that in the consumer market, 4A has assisted our marketing and sales efforts in the Asian American community. You've represented AT&T in forums and interviews. You wrote to your Congressional representatives to oppose legislation that would damage the business and its customers. You reached out to external companies for some of our employees whose jobs were at risk. You took a lead role in representing AT&T at the annual Dragon Boat Festival in cities like Denver and New York.

For our part, AT&T continues to be supportive of the Asian American community. For example, over the last three years, we purchased more than three quarters of a billion dollars worth of goods and services from Asian American companies.

Meanwhile the AT&T Foundation contributes hundreds of thousands of dollars annually to Asian American organizations all around the country. I understand two of them are represented here tonight -- the National Asian-Pacific American Legal Consortium, and the Asian-Pacific American Institute for Congressional Studies.

AT&T has a long history of building a supportive, inclusive workplace. And that's because we know that we can make our strategy work only if we make use of every resource we have - including our Asian American employees. We want Asian Americans well represented at all levels of the business.

It's not just the right thing to do -- it's the smart thing to do. We need world-class people at all levels of this business. Talent is blind to race, color, creed, gender or sexual orientation.

2002 has been a year of regrouping and refocusing, both for the BRGs and for the corporation. We know what we have to do. But -- and you've heard it before -- we just need to execute.

"Execution" doesn't mean building a better machine. Machines don't execute strategy. People do. Diverse, talented, energized people. The kind of people who built 4A into the valuable, effective organization it is today.

Thank you for working so hard to make AT&T a better place for all its people.

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