Once a bastion of cutting-edge research, it's lost its star power

By KEVIN COUGHLIN
STAR-LEDGER STAFF

When AT&T Labs was carved from Bell Labs in the 1995 breakup of AT&T, the telecom giant set lofty goals for its new research arm.

"Our mission, in my view, is to invent the future of communications," proclaimed Alexander "Sandy" Fraser, who pushed to create AT&T Labs.

Today, many of AT&T's top scientists still chase that dream - somewhere else. They strive to invent the future in the shiniest ivory towers and hottest tech companies, from MIT to Microsoft, from the Pentagon to Google.

Some 200 scientists - nearly half the core research staff - were let go from AT&T Labs in Florham Park in January 2002 amid sweeping corporate cuts throughout AT&T. Since then an all-star collection of researchers has bolted from the labs.

The fate of AT&T Labs mirrors changing fortunes at AT&T, an American icon squeezed by bad investments and bad timing. More importantly, some scientists say, it raises tough questions about the direction of industrial research and America's future as an innovator.

At AT&T Labs, the brain drain is so severe, observed Michael Kearns, now at the University of Pennsylvania, that his former employer's motto should be "404 Not Found" - the error message that greets many searches on the labs' Web site.

Defectors point to the loss of esteemed colleagues, cuts in long-range research and restrictions on travel, media contacts and publication of scholarly articles. The place has had three vice presidents of research within the past year.

For some researchers, the last straw was having to pay their own way to present scientific papers at prestigious conferences. For others, it was the elimination of free espresso and bottled water at the leafy Florham Park campus, once the estate of Vanderbilt descendants.

Yet many remember the brief heyday of AT&T Labs, during the euphoria of the Internet boom, as the most thrilling time of their careers. For them, the exodus is a tragedy.

"We had a national gem," said Avi Rubin, who exposed flaws in electronic voting systems last year as a faculty member at Johns Hopkins University.

"To see it melt away is very painful," said Andrew Odlyzko, who sensed trouble brewing in 2001 and left to head a digital technology center at the University of Minnesota.

While turmoil at AT&T Labs is a bonanza for places like Columbia University and the federal Defense Advanced Research Projects Agency, scientists say it underscores the decline of "blue-sky" research - science for science's sake - at Bell Labs in Murray Hill, IBM, General Electric and the Xerox Palo Alto Research Center.

Gone from AT&T Labs, or nearly so, are groups highly regarded for their long-term studies in artificial intelligence and machine learning, network security and cryptography, algorithms and theoretical computer science, and statistics. AT&T research operations in Cambridge, England, and at the University of California, Berkeley, are gone, too.

The National Science Foundation says federal support for basic science has waned, as well, since 1980.

"It's an open question where the next big ideas and discoveries will come from," said Paul Saffo of the Institute for the Future. A former adviser to AT&T Labs, Saffo warned that corporate America's "relentless race for short-term value is killing our future . . . AT&T Labs was a national crown jewel - and it's been terribly devalued."

"If you're focusing on research that's short-term, to impact products in a year or two, there are all kinds of world-changing discoveries that you simply miss," said Maria Klawe, president of the Association for Computing Machinery and dean of engineering at Princeton University.

Princeton has cherry-picked at least two AT&T Labs scientists since 2002; Klawe interviewed another this month. The university even created an institute for materials sciences last year specifically to "help fill a national void" left by declining resources of industrial research labs.

For its part, AT&T says fierce competition has forced a shift from basic science to business-driven research. Projects now must improve the bottom line within months, not years, as AT&T morphs from a phone company to a supplier of business networking services. When AT&T finally shed about $100 billion of cable TV and wireless ventures - disastrous investments meant to satisfy Wall Street during the tech boom - it also shed prime areas for research.

"We are playing to win," AT&T Labs President Hossein Eslambolchi told industry analysts in February.

Labs spokesman Michael Dickman called the downsized AT&T Labs a "lean, mean networking machine," focused on ensuring the reliability of AT&T's vast data network. Partnerships with universities will play a bigger role going forward, he said, declining to tout anyone still at AT&T Labs.

"We had the names, the celebrities. That was then. This is now. We don't have people like that. Even if we did, it goes against our strategy to highlight them," said Dickman.

Among prominent names to bail recently:

Lorrie Faith Cranor. Named one of the world's top 100 young innovators last year by MIT's Technology Review, the Internet privacy expert left in December to teach at Carnegie Mellon University.

Matt Blaze. The cryptographer has exposed flaws in everything from common locks to the Clinton administration's "Clipper Chip"; he left in December for the University of Pennsylvania.

Peter Shor. A pioneer in "quantum computing" - he showed how it might crack the most secure encryption someday - the MacArthur Fellow quit last summer to become a math professor at MIT.

Others have gone to Israel's Weizmann Institute of Science and to Microsoft Research - maybe the only shop rich enough to support basic research as Bell Labs did in the Cold War, when AT&T's telephone monopoly paid the bills.

Not surprisingly, AT&T Labs patterned itself after Bell Labs, birthplace of the transistor and winner of 11 Nobel Prizes.

More startling was AT&T's decision to launch a new lab at all.

When AT&T was split up in 1995, Lucent Technologies inherited its equipment-making business - and Bell Labs. Sandy Fraser, a genteel British researcher from Bell Labs, helped convince AT&T, now strictly a services company, it still needed a lab.

"It was very courageous in a way for a services company to embrace the idea of having its own research organization," said Ron Brachman, an expert in artificial intelligence who followed Fraser from Bell Labs to AT&T Labs. (Both left in 2002 Fraser started a research firm, and Brachman joined the Pentagons Defense Advanced Projects Research Agency.)

Lucent kept most of the chemists, physicists and materials scientists. AT&T vied for Bell Labs computer scientists, mathematicians and, especially, speech recognition experts. It was messy. Lucent kept the libraries of Bell Labs; AT&T got the librarians.

"We like to think we stayed with it, the parent lab," said Ron Graham, a Bell Labs math star whose jump to AT&T Labs inspired others to follow. He left for the University of California, San Diego, in 1999.

AT&T Labs named its Florham Park headquarters for Bell Labs legend Claude Shannon. Researchers even tried juggling on a unicycle, as Shannon once did, said Michael Littman, now a Rutgers professor.

About 80 percent of research involved projects with an eight- to 10-year window. Now, turnaround targets are 18 to 24 months, said Dickman, the AT&T Labs spokesman.

Early on, the diverse talent mix surpassed the most elite schools, former researchers said. Brainstorming was encouraged in lounges called "bump spaces." Mathematician Eric Rains (now at the University of California, Davis) joined the quantum computing group thanks to a discussion overhead during his job interview. Cryptographer Rebecca Wright, now at the Stevens Institute of Technology, said rounding up dozens of computer security experts used to be easy at AT&T Labs.

They were galvanized by Fraser, who spoke of a digital "Renaissance Network," and David Nagel, a former Apple Computer executive who once designed cockpits for NASA. Nagel, the first president of AT&T Labs, now is CEO of PalmSource Inc.

"I used to think I had the best possible job," said Avi Rubin, who envisioned a long career at AT&T Labs. He compared it to a great university - without the hassles of grading exams and chasing grants.

Research was eclectic. AT&T Labs tried teaching computers to learn from mistakes. Researchers designed intelligent scheduling devices, smart antennas and wireless delivery of local phone service.

They dabbled with Internet delivery of music before Napster, and with Internet video phones. Computer scientists were widely quoted in debates about instant messaging, privacy and security. That last topic struck close to home David Smith unleashed the Melissa virus in 1998, when he was a contractor for AT&T Labs in Florham Park.

About 300 researchers work there now, roughly half the number from the late 1990s, estimated Dickman. Another 6,000 people - mostly in development, not research - work at a mammoth complex in Middletown. Thats down by about 1,500 from its peak, Dickman said. A hundred or so researchers are based in Menlo Park, Calif., and about 30 more staff a lab in Nice, France, he said.

As the air whooshed from the tech bubble, AT&T slashed spending on research and development from $550 million in 1999 to $254 million in 2002, according to Schonfeld & Associates, a business research firm.

Free espresso was among the casualties.

"Thats real penny-pinching," said Jim Reeds, snapped up by the Institute for Defense Analyses in Princeton after the 2002 layoffs. Lorrie Faith Cranor, who paid her own way to deliver a paper at a Florida conference last spring, said life grew confusing at AT&T Labs.

"There was a lot of pressure to tie everything to the immediate im pact on the business. At the same time, they told us they understood the importance of doing research not directly tied to the business," said Cranor, whose husband Chuck, a networking researcher, also left AT&T Labs.

Rubin said "baby sitters" from public relations were assigned to all media interviews. He said he struggled for permission to publish a research paper about the Postal Services vulnerability to cyber at tacks. When a co-worker was laid off, he resolved to split.

Peter Shor said he felt so isolated after all the departures that he had to leave. "Nowadays, I dont know what the mission is" at AT&T Labs, he said.

Others said AT&T Labs had no choice but to downsize.

"We soldiered on as well as we could, quite competently. And we got mugged - by Wall Street," said Bjarne Stroustrup, inventor of a popular programming language. Stroustrup left AT&T Labs last year for Texas A&M but retains ties to the labs. He doubts universities can pick up the slack from corporate research labs.

"They dont have the size or the culture or the reward mechanisms or the management experience. Universities dont operate on the scales that Bell Labs and AT&T Labs did" in focused areas, said Stroustrup.

The president of AT&T Labs insists the organization is helping AT&Ts bottom line. Technology from the labs foiled the Slammer worm last year, Hossein Eslambol chi told industry analysts in February. He praised advances in speech recognition, natural language understanding and artificial intelligence for automating customer service. He promised more advances in high-speed data over wireless networks and power lines, and technology to aggregate voice and e-mail messages.

Eslambolchi, who holds four job titles, compared AT&T Labs to a big league ball team.

"It is the talent of the players ... that differentiates teams," he told the analysts. "AT&T has the winning players, and we are playing to win. ... This is our story, and we are sticking with it."

NOTES: "We soldiered on as well as we could, quite competently. And we got mugged - by Wall BJARNE INVENTOR OF A POPULAR PROGRAMMING LANGUAGE

GRAPHIC CAPTION: LIST: BRAIN DRAIN: A SAMPLING OF WHO HAS LEFT AT&T LABS