Saturday, December 02, 2000, 10:00 p.m. Pacific
AT&T Wireless prepares to dive into
cyberspace
by Mark Watanabe
Seattle Times technology editor
There's no doubt that NTT DoCoMo's $9.8 billion investment in AT&T
Wireless Group announced last week is about money.
Behind the billions, though, are a couple of bets calculated to take the
Redmond company further and more deeply into an Internet future.
First, the deal maps out the technological path AT&T Wireless, the
nation's third-largest wireless carrier, has chosen to take. As wireless
networks carry more and more data traffic, AT&T Wireless and other
carriers are scrambling to find the right technological solutions.The other
gamble is even more fundamental. Although wireless delivery of Internet
content is the hot technology du jour, its impact in this country has been
more hype than functional. There's a lot of money riding on whether it can
catch on to the extent it has abroad.
The announcement of the investment came after months of speculation
over the leading Japanese wireless company's desire to enter North
American markets.
Now, if the deal is closed as expected early next year, it has one - through
the company that telecommunications pioneer Craig McCaw started and
which AT&T acquired in 1994.
For AT&T Wireless, the funds mean more capital to finance its
development and offer clues to how it's going to compete.
Underlying the investment is the growing complexity of the world of
wireless communications, a world shrouded by forbidding abbreviations
and acronyms - TDMA, CDMA, EDGE, UMST are just the start - and
difficult-to-understand technologies.
If nothing else, last week's announcement clarified how the company plans
to pursue high-speed delivery of data through wireless networks,
something a litany of companies big and small have set out to perfect. The
company said that, in forming its alliance with NTT DoCoMo, it had made
certain choices that will lead it to some of the most advanced technology
on the books.
"The choices are based on broadness of coverage and where the
technology will take you," said Ken Woo, a company spokesman.
The third generation
All of this comes in the context of questions and doubts about where the
company - not to mention such competitors as Verizon Wireless, Cingular,
Sprint PC and VoiceStream Wireless - was headed as the current, so-called
second generation of wireless technology heads into the third.
Years ago, as digital wireless emerged, AT&T Wireless adopted TDMA,
or time-division multiple access. Other companies, including what's now
market-leading Verizon Wireless and Sprint PCS, chose CDMA, or
code-division multiple access, a standard developed by San Diego-based
Qualcomm.
Both platforms, mostly used to carry voice traffic, became the underlying
technology for most wireless infrastructure in this country. In Europe and
Asia, however, a third standard called GSM (global system for mobile
communications) proliferated. GSM, a technology related to TDMA,
proved to have many fewer adherents in this country, and the only
national carrier to adopt it has been Bellevue-based VoiceStream Wireless.
Meanwhile, the use of GSM-based cellular phones to tap into the Internet
has taken off in Europe and Asia, and GSM has become a channel through
which carriers can reach the next, third generation of technology.
Sometimes called 3G, this technology is designed to handle the demands
of data traffic - downloading newsand sending information via wireless
devices. .
For AT&T Wireless, the next generation has meant developing a standard
called EDGE, Enhanced Data rates for Global Evolution, designed to
deliver data at speeds of up to 384 kilobits per second, about six times
faster than a conventional dial-up modem.
Excitement surrounding high-speed wireless now centers on UMTS, or
universal mobile telecommunications system, also known as WCDMA. It
is rated to deliver speeds of 2 megabits per second, faster than even
high-end services such as DSL.
In a single swoop, AT&T Wireless' announcement last week navigated
this technological labyrinth, carving out a path designed to bring the
company into the business of delivering high-speed wireless access to the
Internet.
The key, said AT&T Wireless President Mohan Gyani, is adopting UMTS,
which he called the "gold standard." The company has set up a timetable
that will take it - get ready for the alphabet soup - from TDMA to UMTS,
through GSM and including EDGE.
Gyani and Chairman and chief executive John Zeglis boasted that the
company will be able to deploy this scheme for the same cost it had
projected in earlier plans to migrate from TDMA to EDGE. They said the
cost forecasts are based on agreements it has worked out with companies
supplying the necessary equipment.
"For no more than we always planned to spend, we have created a plan
that leapfrogs us into the third generation over our competitors and
produces advantages at every step of the transaction," Gyani said.
Will people use it?
The NTT DoCoMo deal also brings a service called i-mode that could give
AT&T Wireless an edge in making wireless Internet access attractive to
customers.
The service, which allows users access to news, e-mail, transaction
services and other functions, has proved popular in Japan, attracting 15
million users in two years.
Analysts generally lauded the migration plan AT&T Wireless has
outlined. "We view such a technology move positively," Thomas Lee, an
analyst with Chase H&Q in New York, said in a report, "as AT&T
Wireless has effectively neutralized any lingering concerns about
`future-proofing' of its network."
Larry Swasey, senior vice president for communications research at Allied
Business Intelligence in Oyster Bay, N.Y., said the scheme should give
AT&T Wireless the kind of data network, to go along with its voice
network, it needs to compete. "Every wireless carrier realistically has to
build a decent data system," he said.
Others were more skeptical. David Berndt, director of wireless/mobile
technologies with the Yankee Group, said the company needed to do
"something revolutionary," and this wasn't it.
For customers, he said, AT&T Wireless is making choices more
complicated and the technological benefits may not be as real as the
company is portraying.
Then there's the question whether, for all the lofty talk surrounding
wireless delivery of the Internet, it will be popular in a country where
Internet use emerged from the PC and largely remains that way.
Penetration rates are still low. AT&T Wireless' Pocket Net data service, for
instance, has drawn only about 300,000 of its 15 million subscribers since
being introduced earlier this year.
But experts expect use to keep growing, with Allied Business forecasting
1.3 billion wireless subscribers worldwide on second- and third-generation
systems by 2005.
AT&T Wireless is indeed betting it will. "Once we start deploying some of
this stuff, Marshall McLuhan's prediction of a global village will come to
pass," said spokesman Woo.
As the company prepares to become independent of AT&T, there's no
bigger challenge facing it.
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