The Yankee Group perspective of AWE's decision
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AT&T Wireless Gets Decked Out for the Holidays with Boughs of GSM-GPRS
On November 30, AT&T Wireless announced that NTT DoCoMo was buying 16% of it, along with several other important changes. These changes will have a significant impact on AT&T Wireless over the next five years. From a technology perspective, the most significant part of the announcement involves AT&T Wireless installing a GSM/GPRS overlay network on top of its existing TDMA network around the United States. The company projects that 40% of its national network will be overlaid with GSM/GPRS technology by the end of 2001. And by year-end 2002, the remainder will be covered.
AT&T Wireless believes that this network configuration will enable the company to serve its existing customers while creating a smoother migration path to UMTS. We agree that, with this change in direction, it is no longer backed into the EDGE corner it had been in (although the company will still deploy EDGE for its TDMA network), where it was the principal proponent of a particular technology while everyone was skipping it for something better.
The Yankee Group has believed for the past 12 months that AT&T Wireless had to do something revolutionary with its network in order to have a viable future. AT&T Wireless believes that this alliance and shift in network technology will provide that revolution. We believe, however, that it is not bold enough. The pre-November 30 AT&T Wireless offered AMPS, TDMA, CDPD, and wireless local loop. The post-November 30 company will offer AMPS, TDMA, CDPD, EDGE, GSM, and GPRS by the end of 2001. Thus, rather than simplifying its market offerings, the company has increased the complexity by 75%!
In addition, we do not think AT&T Wireless will experience all of the technological benefits it is suggesting in its press announcements. It remains to be seen how effective GPRS will be when operating in a fully loaded network (although we do accept that it will give the company more capacity). The other technological issue AT&T Wireless will run into involves the problems with migrating a customer base between two technologies (including the handset upgrades, base station impacts, etc.). No trivial feat! So, while the Yankee Group believes that this shift offers AT&T Wireless more hope for the future, we're still not convinced it was the company's most strategic move.
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