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AT&T chief sees more IT gloom ahead

AT&T CEO David Dorman calls it the "ever-receding imminent recovery." Is there any end in sight to the decline in information technology spending?

ATLANTA--AT&T Chief Executive David Dorman said Tuesday that business spending on information technology will decline again this year, with no end to the tailspin in sight.

The amount companies spend on computers, networking equipment and other information technology (IT) will drop by about a percentage point in 2003 compared with 2002, Dorman said after his keynote speech at , a telephone network equipment conference held here. Even more important to AT&T is the amount businesses spend on telephone services and equipment, which Dorman believes will decrease this year by 3 percent to 5 percent.

"I like to call this the ever-receding imminent recovery," Dorman said during his keynote speech. "I've never seen...dollars harder to come by in my 25 years in the telecom business."

When asked when the slowdown will end, Dorman said it will be "two years before the set of industry dynamics will play out."

Dorman's predictions are decidedly more negative than forecasts from market analysts earlier this year. In a study released in April, market researcher IDC said IT spending will increase in 2003 by 1.5 percent. In March, research firm Forrester Research offered a rosier prediction, pegging the increase at 1.9 percent. A recovery was hinted at earlier this year when some of the biggest players in the phone industry, including AT&T and BellSouth, saw a return to profitability.

This year, Dorman said, AT&T will spend about $500 million to help make its existing customers happier. The company plans to pare its billing systems from about 30 to one and give businesses more control over their AT&T services by linking their IT management systems directly to AT&T's network. The company also plans to make it possible for some customers to buy a virtual private network, a secure connection businesses use, in just one hour. Normally, it takes a week to set it up, he said.

AT&T also announced that, like competitors Verizon Communications and SBC Communications, it will add wireless "hot spots," or public places with wireless access, into its service mix. Dorman expects that AT&T will have about 500 locations by 2005, mainly airport executive lounges and hotels, where AT&T customers can use Wi-Fi networks to surf the Web or link to a computer network.