Potential is very good
"Vanguard Acquisition
On May 3, 1999, AT&T acquired Vanguard Cellular Systems, Inc.
(Vanguard), an independent operator of wireless telephone systems in the United
States with over 700,000 subscribers and which operates in markets with a
population of approximately 6.9 million. Vanguard served 26 markets in the
Eastern United States. Consummation of the acquisition resulted in the issuance
of approximately 12.6 million shares of AT&T common stock and the payment of
approximately $485 million in cash."
..."WIRELESS SERVICES
The AT&T Wireless Group Tracking Stock
On March 14, 2000 the AT&T shareholders approved amendments to the AT&T
certificate of incorporation that would permit AT&T to create a separate class
of its common stock, the AT&T Wireless Group tracking stock, which would track
the performance of our wireless business. As of the date of filing this Form
10-K, no shares of the AT&T Wireless Group tracking stock were outstanding.
The AT&T Wireless Group includes the results of certain assets and
liabilities which were not managed as part of the Wireless Services segment in
1999. AT&T Wireless Group tracking stock is designed to reflect the separate
economic performance of the AT&T Wireless Group. Except as described below, we
attribute all of AT&T's current wireless operations to the AT&T Wireless Group,
including:
o all mobile and fixed wireless licenses,
o all wireless networks, operations, cell sites,
retail operations, wireless customer care
facilities and customer location assets, and
o interests in partnerships and affiliates providing
wireless mobile communications in the United
States and internationally.
The AT&T Common Stock Group retains:
o existing and future wireless activities that stem
from country-specific joint venture relationships
that are predominantly non-wireless, and
o incidental wireless capabilities or links in any
backbone or other communications network that is
predominantly non-wireless.
We currently intend to include all future wireless activities in the
AT&T Wireless Group. Our board of directors may, however, in its discretion, but
subject to the AT&T Wireless Group policy statement, direct new businesses and
assets to the AT&T Wireless Group or the AT&T Common Stock Group or dispose of
or transfer businesses or assets of either group.
Business of the AT&T Wireless Group
The AT&T Wireless Group is one of the largest wireless service
providers in the United States, based on approximately $7.6 billion in revenues
for the year ended December 31, 1999. Including its partnership markets, the
AT&T Wireless Group had over 12 million total subscribers as of December 31,
1999.
The AT&T Wireless Group operates one of the largest U.S. digital
wireless networks. The AT&T Wireless Group, including its partnership and
affiliate markets, currently holds 850 megahertz and 1900 megahertz licenses to
<PAGE>
provide wireless services covering 94% of the U.S. population, with
approximately 81% of the U.S. population covered by at least 30 megahertz of
wireless spectrum as of December 31, 1999. As of December 31, 1999, the AT&T
Wireless Group's built network, including partnership and affiliate markets,
covered 65% of the U.S. population. This includes operations in 42 of the 50
largest U.S. metropolitan areas. The AT&T Wireless Group supplements its own
operations with roaming agreements that allow its subscribers to use other
providers' wireless services in regions where the AT&T Wireless Group does not
have operations. Through these roaming agreements, the AT&T Wireless Group is
able to offer its customers wireless services covering over 95% of the U.S.
population.
Services and products
The AT&T Wireless Group offers a variety of services for both voice and
data communications. Service can include wireless voice transmission as well as
custom calling services for digital services, such as voicemail, call
forwarding, call waiting, caller ID, three-way calling, no-answer and busy
transfer. The AT&T Wireless Group also offers a variety of other enhanced
features, including display messaging, which allows a cellular phone to receive
and store short alphanumeric messages and pages and to provide subscribers with
notification of voicemail messages, even if the handset is in use or switched
off, extended battery life and enhanced directory assistance, which enables
callers to be connected to the party whose number was sought without hanging up
and redialing.
As a packet-switched network, the AT&T Wireless Group's cellular
digital packet data (CDPD) network takes advantage of the fact that with many
data applications, data is sent in bursts with intermittent quiet periods, which
allows many users to share the network channel. As a result, relative to data
services carried over circuit-switched analog or digital wireless networks, the
AT&T Wireless Group's packet-switched CDPD service is a significantly more
cost-effective means of sending data for the majority of applications because it
allows a channel to be shared by many users. For example, for many applications,
the AT&T Wireless Group's packet-switched CDPD network allows it to offer its
customers unlimited, always-on usage, most often for a flat monthly fee. This
makes its CDPD network service attractive for a variety of new applications.
In the future, the AT&T Wireless Group expects a number of additional
applications will be developed, including e-commerce and shopping services and
services that are enhanced by information about the user's location. By
providing or facilitating such applications, the AT&T Wireless Group believes it
can generate new revenue streams, as well as develop personalized relationships
with its customers.
The AT&T Wireless Group offers a variety of products as complements to
its wireless service, including handsets and accessories, such as chargers,
headsets, belt clips, faceplates and batteries. As part of its basic service
offering, the AT&T Wireless Group provides easy-to-use, interactive menu-driven
handsets that can be activated over the air. These handsets primarily feature
word prompts and menus rather than numeric codes to operate handset functions.
Some handsets allow mobile access to the Internet. In addition, the AT&T
Wireless Group offers tri-mode handsets, which are handsets compatible with PCS,
digital cellular and analog cellular frequencies and service modes. Tri-mode
handsets permit customers to roam across a variety of wireless networks and
incorporates AT&T's intelligent roaming data base (IRDB) system. The AT&T
Wireless Group offers its customers use of Nokia, Ericsson, Mitsubishi and
Motorola handsets.
<PAGE>
The AT&T Wireless Group markets its wireless services in its managed
markets under the AT&T brand name. It markets wireless services to business and
residential customers through a direct sales force of 2,100, through sales
points of presence in approximately 390 AT&T company-owned stores located in 36
states, and kiosks and other customer points of presence, including the Internet
and inbound call centers, and through local and national non-affiliated
retailers throughout the United States. The AT&T Common Stock Group sales force
also sells wireless services to business and residential customers as part of
bundled offerings with services of the AT&T Common Stock Group. The AT&T
Wireless Group also relies upon dealers to market its services in some
locations.
The AT&T Wireless Group charges may include fees for service
activation, monthly access, per-minute airtime and customer-calling features,
which may include a fixed number of minutes or packets of data per month at a
set price and generally offers a variety of pricing options, most of which
combine a fixed monthly access fee for a fixed number of minutes or packets of
data and additional charges for usage in excess of those allotted. Customers may
also incur long distance and roaming fees.
Fixed Wireless
Fixed wireless service provides customers with high speed broadband
access coupled with wireline quality voice access. Fixed wireless provides a
high speed packet data channel which can be used by up to five data devices
simultaneously (for example, five personal computers simultaneously accessing
the Internet) at download speeds of up to 512 kilobits per second. The service
is expected to be capable of speeds of up to one megabit per second by mid 2000.
In addition, fixed wireless can provide up to four lines of wireline quality
voice telephony, including custom calling features (e.g., call waiting, caller
ID, three-way calling) available today over wireline networks. Fixed wireless
was reported within the Consumer Services segment in 1999, but will be included
in the AT&T Wireless Group in 2000.
Other assets
The AT&T Wireless Group also possesses certain other assets not
described above. The most significant of these assets include a number of equity
interests in domestic and international wireless operations and an air-to-ground
wireless operation.
Domestically, the AT&T Wireless Group has joint ventures with or
interests in a number of wireless operators, including Telecorp PCS, Triton PCS
and Tritel Inc.. Internationally, the AT&T Wireless Group owns one half of the
33.3% equity stake in Rogers Cantel it holds jointly with British
Telecommunications. The AT&T Wireless Group is the operating partner in wireless
ventures in Colombia, India and Taiwan. In 2000 the AT&T Wireless Group was also
allocated one half the interest that AT&T possesses in Japan Telecom. In
addition, subject to existing agreements or commitments, to the extent that AT&T
acquires any international wireless investments in connection with its merger
with MediaOne, AT&T intends to allocate those investments to the AT&T Wireless
Group in exchange for fair and reasonable consideration.
"
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