AT&T 'Decentralization' Pares 500 HQ Jobs

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Making good on a promise to retool its management structure, AT&T Broadband will shave 500 corporate jobs from its payroll and shift more power to executives in the field.

The cuts — announced last week, and centered on departments within the Englewood, Colo., corporate headquarters — will affect about 12 percent of the MSO's 4,400 employees.

AT&T explained the moves to staffers at headquarters in an electronic-mail message sent Feb. 18. Affected employees will remain through February and receive full pay and benefits through March. Some may have the opportunity to transfer to field-operations jobs.

Another 2,000 Denver-based field-operations employees will not be involved, according to the company.

AT&T executives stressed that the restructuring was unrelated to the cable unit's pending merger with Comcast Corp., expected at the end of this year. Instead, they said the goal was to improve customer service and decentralize the MSO, giving more responsibility to market-level executives.

'CLOSER TO CUSTOMERS'

"We've got very strong senior executives in the field and they are closer to customers, they interact with employees on a day-to-day basis — they are, in fact, better equipped to make certain decisions than we are here at corporate," said AT&T Broadband chief operating officer Ron Cooper.

"We've worked hard to get [a] good alignment of decision-making, accountability and resource allocation, because you can't hold someone accountable for something if you are not willing to give them the latitude to make the decisions that need to be made," he said.

That latitude will include oversight of customer care, employee relations and finances. Corporate executives will provide strategy and direction for the MSO as a whole.

"We still have a very sizable complement of people here, and we have some real strong leaders," Cooper said. "One of the roles that corporate will continue to fulfill is to provide strategic, thorough leadership in key areas of the business, like marketing and sales and human resources and so on."

Cooper also downplayed the comparisons between this new management structure and that of the former Continental Cablevision Inc., an MSO that was headed up by AT&T's current management team.

"I think that oversimplifies things," he said.

But other industry watchers, including analyst Bruce Leichtman, said that was a likely factor behind the management shift, along with the cable industry's general trend toward decentralization.

Leichtman, a former Continental marketer and now president and principal analyst at Leichtman Research Group Inc., noted that Continental ran a cable operation with between 4 million and 5 million subscribers with just 150 corporate employees.

"It certainly doesn't come as a surprise that those people that came from that Continental environment would look at the disparity," Leichtman said.

But Leichtman was also quick to note that the company has grown significantly, which calls for a mix of centralized administration and local decision-making.

"There are clearly elements that you need of both," Leichtman said. "We are at a very different state in the industry than we were five, eight, 10 years ago, and that dictates a different mix of centralization versus decentralization.

"There is a happy medium of both to make the company as efficient as possible."

If the restructuring isn't tied to the pending Comcast merger, it does align AT&T's structure more closely with that of the Philadelphia-based MSO.

"Comcast, I think, has done a good job with the happy medium," Leichtman said. "They work both the decentralized and centralized very well. They have got a strong corporate office and yet they allow their systems a lot of autonomy."

AT&T ISN'T ALONE

Across the industry, MSOs have decentralized as they've grown and consolidated, said Harvard Business School professor Thomas Eisenmann, who has studied the cable sector.

Though they do run some risks, decentralized MSOs have an advantage in better tapping local markets, which vary in terms of competitive pressures and subscriber programming preferences.

"The key strategic challenge facing the cable industry right now is rolling out new services, and you love decentralization against that challenge, because you get a lot of ideas bubbling up and a lot of innovation and a lot of aggressive push if you have people that are motivated to make things happen, and understand their consumers and so forth," Eisenmann said. "On the other hand, you can blow your costs out of control if you are not too careful about how you do it."

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