cuts back W-CDMA launch plans
Analyst: Continuous upgrades confuse market
AT&T Wireless Services Inc. said it will push back the launch of its advanced W-CDMA network by six months and scale down the coverage area to four cities.
The carrier said it will deploy a W-CDMA network in San Francisco, San Diego, Seattle and Dallas by December of 2004. AT&T said the moves will help it maintain a “prudent level of capital expenditures.” The carrier had previously planned to deploy W-CDMA network coverage in 13 cities by the middle of 2004.
“AT&T Wireless and our close partner NTT DoCoMo are firmly committed to introducing W-CDMA in the U.S.,” said John Zeglis, the carrier’s chairman and chief executive officer. “Our initial four-city deployment will cover a population exceeding seven and half million people-many of whom are technically savvy and share an enthusiasm for being ahead of the pack. Following our GSM/GPRS/EDGE deployment, our rollout of W-CDMA will be carefully timed and targeted, and enable us to make the most efficient use of our capital.”
An AT&T spokesman was careful to note that the December 2004 deployment date meant that the network would be up and running, not that the service would be commercially available to the public. Commercial services will be dependent on successful testing as well as handset availability.
AT&T’s support for W-CDMA stems from its partnership with Japanese wireless data giant NTT DoCoMo, which launched the world’s first W-CDMA network in Japan in October 2001. DoCoMo invested $9.8 billion in AT&T in 2000, money spent to ensure AT&T would follow DoCoMo’s lead and support W-CDMA.
Before the investment, AT&T planned to upgrade to GSM/GPRS, then EDGE, then W-CDMA “if/when opportune,” according to Mike Bamburak, AT&T’s vice president of technology architecture and standards. Through its investment, DoCoMo changed AT&T’s network upgrade plans to definitively include W-CDMA.
Many saw AT&T’s withdrawal as a sagacious step-a way for the carrier to cut down on its expenses while at the same time testing the market for high-speed wireless data services and honoring its pact with NTT DoCoMo.
“They’re waiting to see what’s the best way to go,” said Ira Brodsky, president of Datacomm Research Co. “They’re just covering the fact that they’re nervous about W-CDMA and the investment cost.”
AT&T wouldn’t provide a cost estimate for the four-city launch. Brodsky guessed the expense would be significant, and that a W-CDMA network for most of the major U.S. cities could run as much as $10 billion.
Further, many pointed to the handset issue as another major motive behind the carrier’s announcement. AT&T said that its W-CDMA devices work on the carrier’s GSM/GPRS/EDGE network. The move acknowledges DoCoMo’s experiences with its W-CDMA network, which has so far attracted about 150,000 subscribers-one-fourth of the number of subscribers DoCoMo initially expected. Many have complained of DoCoMo’s bulky W-CDMA handsets, some of which cannot roam onto other networks.
“The operators sure haven’t done a good job educating the market,” said Michael Doherty, a senior analyst with Ovum. “By continuing to upgrade … you just continue to confuse the market.”
Doherty said AT&T has only begun pushing its GPRS network, and by the middle of next year the carrier promises to launch EDGE services. Add W-CDMA to the mix, as well as CDMA and iDEN, and customers could become overwhelmed, Doherty said.
AT&T is not the only carrier to delay its W-CDMA plans. Among those delaying services: Finnish carrier Sonera Corp. pushed back its W-CDMA launch date from September to sometime in 2003; Orange in Sweden said it could delay its network rollout plans until 2006; and Japanese provider J-Phone recently launched its W-CDMA network after a six-month delay. Many have cited the lack of available handsets as well as technical glitches as reasons for the delays.
AT&T said DoCoMo will be able to nominate another representative to its board of directors. Nobuharu Ono, president and chief executive officer of DoCoMo’s U.S. business, currently sits on the carrier’s board.
Separately, AT&T said it reached an agreement with Dobson Communications Corp., under which Dobson will exchange its two remaining wireless properties in California for two AT&T properties in Alaska. AT&T will also transfer to Dobson all of the Dobson Series AA preferred stock that it currently holds. The announcement involves the same properties in an announcement made in October. RCR
