AT&T Wireless Inc. last week outlined a new migration path to third-generation services rife with ramifications affecting the wireless industry worldwide.
The company said it will overlay a GSM/general packet radio service system atop its existing TDMA network in the nation’s top 100 markets where AT&T has 1900 MHz spectrum, with the intent to upgrade to EDGE technology and ultimately to wideband CDMA services.
While AT&T insists it remains committed to TDMA and EDGE, analysts as a whole feel the plan digs the grave for TDMA technology and is a safety net against the possibility that EDGE will not live up to its promise.
AT&T swears it remains firmly behind both TDMA and EDGE technology, and that it is adding GSM/GPRS merely to allow it to roll out higher-speed services faster than if it waited for EDGE products to be commercially available.
“Because GSM/GPRS is available now, it makes sense to start with that and migrate to other speeds over time,” said Rodrick Nelson, chief technology officer at AT&T Wireless.
“It’s better and faster than what we contemplated just six months ago,” added John Zeglis, AT&T Wireless chairman and chief executive officer.
But reactions to the plan are mixed.
“I don’t think it was a smart decision,” said Barney Dewey of The Andrew Seybold Group. “It’s going to be a lot harder to make this kind of system satisfy a customer that moves around among markets.”
Dewey said he feels the plan is a ploy for the carrier to save face if EDGE technology does not deliver on its promise, which he said it won’t.
“I don’t believe they’ll go to EDGE,” Dewey said. “All the information we have is that EDGE doesn’t work. My perspective is that they introduced this road map to calm financial analysts … They couldn’t keep telling the lies about EDGE and had to do something.”
That AT&T remained committed to EDGE when announcing the GPRS overlay raised several eyebrows.
“To our surprise, the company did not move away from EDGE,” said Frank Marsala, analyst at ING Barrings L.L.C. “For the long-haul, it was the right thing to do, but it’s not a slam dunk. There is an execution risk.”
AT&T must install an additional layer of base stations, migrate customers to the new system and implement a systemwide software upgrade.
Specifically, AT&T plans to install GSM/GPRS equipment alongside its TDMA sites in the top 100 markets nationwide. The company said it has enough 1900 MHz spectrum in these areas to do so, and that it will expand it to 850 MHz markets as equipment becomes available. L.M. Ericsson, for one, said it is developing GSM/GPRS equipment for 850 MHz.
The company expects to have this process completed in 40 markets by the end of next year, and another 60 markets by late 2002. Local and regional plan subscribers should be able to buy GSM/GPRS handsets at that time, while nationwide calling plan customers will be offered dual-mode TDMA/GSM handsets.
The next step will be a software upgrade to EDGE over the entire network, expected at the end of 2002. The third step is to put in new hardware and software upgrading the entire system to W-CDMA, expected in 2003 or 2004.
Nortel Networks will be providing the core network infrastructure-including switches, routers and Internet service nodes-while Ericsson, Lucent Technologies Inc. and Nokia Networks will share in providing the radio base stations for GSM/GPRS.
AT&T said it will do all this for a total capital expense of $10 a covered pop and insists the method will require minimal new spectrum.
“We will require very little new spectrum to pursue this path,” said Mohan Gyani, president of AT&T Wireless. “Using existing licenses, we can build GPRS/EDGE in all 100 of the top markets nationwide, and (W-CDMA) in 70 of the top 100 without new spectrum.”
AT&T’s adoption of GPRS is seen by many as a safety net in case EDGE doesn’t work as planned, which many feel is the case.
“We could still see them move away from EDGE over time,” Marsala said. “I think the safety-net theory is a good one.”
The Universal Wireless Communications Consortium, which touts TDMA techology, however, said the move will have little effect.
“The UWCC remains confident that EDGE provides the best evolution to 3G services for our TDMA/EDGE operators in both Latin AMerica and North America,” said UWCC PRESIDENT Sheila Mickool.
If the new plan places EDGE in doubt, it almost buries popular opinion regarding TDMA.
“TDMA is going into the closet. It’s an admission that TDMA can’t get the job done for next-generation services. It has no path on a realistic timeline to get them to where they want to go.” Marsala said. “I think that if you’re a TDMA carrier, AT&T’s announcement will force you to reassess your position in high-speed data.”
“TDMA is a dead-end technology. Very few are going to want to build out new TDMA markets and the volume is going to go flat,” said Dewey.
Through it all, though, AT&T said it remained committed to TDMA technology, and said TDMA will remain the “workhorse” of its network going forward. Jim Grans, vice president of technology development at AT&T Wireless, insisted the company will continue supporting its Cellular Digital Packet Data network as well, albeit in different ways.
“We would expect subscribers to migrate, based on their own needs, to newer networks. Many may stay satisfied with CDPD because their needs are satisfied. But those wanting services requiring the higher bandwidth of GPRS will move off CDPD to the newer network.”
He said he expects CDPD will ultimately serve as a network for telemetry services.
Equipment analysts feel the real winner in all this remains the infrastructure vendors.
“TDMA is less important today than it was yesterday. This is an important carrier moving away from it,” said Matt Hoffman of Wit Soundview. Nortel, Ericsson and Lucent, all major TDMA manufacturers, are all deeply involved in this new deal. “For infrastructure providers, this is great news. One of the world’s largest wireless carries will be buying a whole lot of equipment.”
And more will follow. AT&T affiliate Rogers Cantel last week announced an identical migration strategy, as did Telecorp PCS, and Cingular has been rumored to be planning the same thing.
