AT&T Wireless Services Inc. continued to expand the reach of its GSM/GPRS service last week, signing roaming agreements with Dobson Communications Corp. and its joint venture American Cellular Corp. that will eventually add coverage to more than 11 million potential customers in parts of 16 states to AT&T Wireless’ increasingly wide-reaching GSM/GPRS service.
AT&T Wireless said the deal, which builds on a five-year TDMA roaming agreement signed between the carriers last year, brings the total number of domestic roaming agreements it has signed to more than 30 since it announced plans to overlay its TDMA network with GSM/GPRS in late 2000, allowing the carrier to quickly and cost-effectively expand its network.
“Agreements like these provide next-generation service to our customers faster, across more territory and at lower operating cost than would be possible if we were to rely solely on our own network,” said Michael Keith, president of mobility operations at AT&T Wireless.
AT&T Wireless, which said it spent a majority of its $5.1 billion capital expenditure budget last year on its GSM/GPRS network, plans to spend $3 billion this year on capex with a slightly lower percentage going toward its GSM/GPRS network.
Keith, who was president of AT&T Wireless TeleCorp following AT&T Wireless’ acquisition of its former affiliate last year, added the roaming arrangements were similar to deals most wireless carriers made early in the industry’s development.
“They are reminiscent of a spirit of cooperation we saw in the early years of the industry when all players benefited from expanded coverage at fair costs, which in turn drives better service and ultimately higher customer satisfaction,” Keith said.
Following the Dobson/American Cellular deal, AT&T Wireless said it expects to provide GSM/GPRS service to 250 million pops by the end of this year, including 35 million pops covered by roaming agreements, in addition to a number that have been signed during the past several months.
Earlier this year, AT&T Wireless officially formed its previously announced RoadRunner joint venture with Cingular Wireless L.L.C. to build out 4,000 miles of rural interstate highways in Vermont, New Hampshire, New York, Arizona, Colorado, Kansas, Minnesota, New Mexico, Nebraska, Oklahoma, Texas and Utah using GSM/GPRS technology. In addition to the RoadRunner venture, which was originally announced in January 2002, the two carriers announced a comprehensive roaming agreement involving their entire GSM/GPRS networks, which is effective through the end of 2006.
In mid-April AT&T Wireless signed a roaming deal with affiliate Edge Wireless L.L.C. to provide GSM/GPRS service covering nearly 1 million pops in portions of Oregon, Northern California, Idaho and Wyoming.
That deal was followed just more than a week later with a roaming agreement with T-Mobile USA Inc., providing AT&T Wireless with access to T-Mobile USA’s network covering approximately 3,000 highway miles and 12.1 million pops in Minneapolis; Atlantic City, N.J.; Sarasota, Fla.; the Delaware/Maryland/Virginia peninsula; along Interstate-25 from Albuquerque, N.M., to El Paso, Texas; and along I-20 from Dallas to Abilene, Texas.
The two companies also announced an agreement “encouraging” inter-carrier co-location of network facilities designed to lower cell tower colocation lease costs between the two companies and speed the buildout of each company’s network.
At the same time, AT&T Wireless announced a roaming agreement with network affiliate Cincinnati Bell Wireless, providing AT&T Wireless with access to Cincinnati Bell’s planned GSM/GPRS network in the greater Cincinnati and Dayton, Ohio, areas covering 2.2 million pops.
Following a relatively quiet May and June, AT&T Wireless reported earlier this month that it had signed a roaming agreement with Western Wireless Corp., providing AT&T Wireless access to Western Wireless’ planned GSM/GPRS network covering one-half of its existing cell sites in portions of 17 states.
Financial analysts have favored the roaming arrangements, noting the deals have allowed AT&T Wireless to expand its network coverage while at the same time trim its capital expenditures.
“Overall, we view these agreements as a positive for [AT&T Wireless] and expect to see the impact from them sometime in the next 12-18 months,” said SG Cowen analyst Tom Watts.
Others note the deals are important for GSM carriers that currently cannot match the coverage of their CDMA-based competitors.
“Network expansion-either on their own, or through roaming partnerships-has to be the No. 1 key concern for all U.S. GSM carriers, as the lack of coverage is the biggest differentiator that separates AT&T Wireless, Cingular and T-Mobile from industry leader Verizon Wireless,” said Chris Campbell, wireless service analyst at Current Analysis.
Campbell noted that while the deals have allowed AT&T Wireless to quickly expand its coverage areas, the carrier needs to also look at roaming traffic patterns for possible future network expansion or acquisition plans if it wants to have greater control of its customers.
“AT&T Wireless should keep careful track of which [roaming partnership] operates the most heavily trafficked roaming areas, marking those carriers as possible acquisition targets for possible future network expansion,” Campbell explained. “Long term, it is better for the carrier to take ownership of the more heavily trafficked as it will be able to better control subscribers’ quality of service.”
