AT&T Wireless Services Inc. reversed course in narrowband personal communications services, resolving not to deploy services using the personal Air Communications Technology advanced paging protocol.
AT&T Wireless said it still supports the technology development of pACT, but the turnabout could affect pACT vendors and the two-way industry as a whole.
“The decision had nothing to do with the technology from a technology standpoint,” said AT&T Wireless’ corporate spokesman Todd Wolfenbarger. “We believe in the way pACT was set up. It just has to do with capital. We will finish `specs’ on the protocol,” assured Wolfenbarger.
“John Walter (AT&T Corp. president and chief executive officer) said we cannot do everything,” added Wolfenbarger. “It’s up to each individual business to deliver the most value back to shareholders.” AT&T Wireless is infusing capital chiefly toward buildout of 1900 MHz personal communications services and fixed wireless networks.
“It was a financial decision and a sound financial decision,” said industry analyst Andrew Seybold. “It’s a good thing they quit when they did because I don’t think they would have ever been able to make it work from a financial point of view.”
“The decision by AT&T was not entirely unexpected,” stated David Kerr, Strategy Analytics. “AT&T was unable to really project significant rapid adoption and significant value added.”
AT&T Wireless was the only carrier with stated plans to deploy pACT-based services, which could leave pACT vendors on shaky ground.
“We haven’t had time to evaluate the full impact,” said Jeff Curtis, director worldwide sales, wireless data business unit for Calif.-based Retix, a pACT vendor. “We’re talking to AT&T, but don’t have comment on how its going to shake out.”
“We’re all very disappointed,” commented Ted Pielemeier, a board member of the pACT Vendor Forum. “It’s a shame if this spec isn’t deployed by some money,” he added. “Industry benefits from choices, too.”
The forum has not yet issued a response to the news, said Pielemeier, new business development manager in the wireless communications division of NEC Corp. He noted some vendors have been designing products to the pACT specification for a year-and-a-half.
“I never thought it made much sense to align yourself with a single technology and a single vendor,” commented Seybold of pACT vendors. “Even if (AT&T Wireless was) wildly successful, what are they going to sell? A million units? Motorola spits out pagers like popcorn.”
Kerr said AT&T’s decision is a major disappointment for NEC and Ericsson Inc. and for other vendors who had hoped to attack Motorola’s dominant position. “The failure of pACT means FLEX is the only game in town and that implies paying Motorola’s license fees and trying to outperform Motorola on its own technology.”
“One question I’ve been asking for a long time,” said Seybold, “is whether (AT&T Wireless believed) this was a better technology to begin with or a play against Motorola. Plays against other companies usually fail.”
Looking at the business case, AT&T Wireless’ “underlying reason to deploy pACT was a chance to do business against their major competitor where their competitor wasn’t going to be playing. It’s not clear that there was a sound business case for another technology in a market full of FLEX, ReFLEX and InFLEXion from Motorola, and Ardis and RAM (USA Mobile Data L.P.).”
What overall effect might AT&T’s decision have on the two-way business?
Other narrowband PCS licensees have been holding back to begin with, said Seybold. “This will probably make them hold back longer, and it could be harder to get money on Wall Street.”
“It signals a further delay and retrenchment,” agreed Kerr. “With the exception of SkyTel (Corp.) and PageMart (Wireless Inc.), most are scaling back plans for deploying true interactive services. If AT&T, with all of its resources cannot justify deploying a two-way network, one must question whether the second-tier paging operators can afford or be willing to invest in deployment.
“This may represent a good opportunity for RAM, which plans on being a wholesaler of interactive paging services,” said Kerr.
Seybold believes AT&T’s move could help Ardis, RAM and SkyTel. Both RAM and Ardis could profit reselling two-way services to other carriers, and “SkyTel can build out systems that are better and more robust.” Both Ardis and RAM are deploying two-way interactive paging services using the Research in Motion’s Inter@ctive device.
Seybold said the question also must be asked, “If Walter is looking at investment opportunity and bang for the buck, is he going to look at [Cellular Digital Packet Data] and say we cannot continue to support CDPD without a return on investment?”
CDPD is already “in the ground,” noted Seybold, but there are few users. RAM and Ardis are in the same position. “Everyone believes wireless data has a bright future, but nobody’s making any money on it.”
Wolfenbarger said AT&T Wireless’ course is away from narrowband PCS for the time being, keeping in mind the spectrum-two 50 kHz/50 kHz nationwide channels-holds tremendous value.
“We think we can make a go of it with our one-way business,” said Wolfenbarger. “We have a good plan in place from a high value standpoint. There are a lot of ways to tackle the service,” including broadband PCS.
