The need to add a wireless play in global telecommunications alliances became clearer last week as AT&T Corp. and British Telecommunications plc announced a strategic alliance designed to create seamless mobile communications services worldwide.
“In general, we’ve seen a lot of domestic consolidation,” said Bob Egan, research director with Gartner Group in Stamford, Conn. “Now we’re seeing a lot more activity stretching across international borders … Over the next five years, consolidation will be global.”
But analysts say wireless is only a piece of what carriers need to become successful telecommunications players worldwide. The landline and Internet markets are driving alliances globally.
“When you look at this alliance, it’s at least as much to do with the global telecom market as it does with wireless accounts,” said David Kerr, director of wireless programs with Strategy Analytics. “It’s a further vindication of the strategies of BT and AT&T to cement global positions. They are concerned about Telefonica, NTT in Japan and the Sprints more so than worried about wireless players. They’re really targeting 500 or so global accounts out there.”
Indeed, AT&T’s and BT’s announcement is the latest in a series of initiatives the two companies have undertaken in the past 18 months, which includes the purchase of 33.3 percent of Rogers Cantel in Canada and a joint investment in Japan Telecom. In July 1998, the companies announced plans to form a $10 billion global venture to serve multinational businesses, carriers and Internet service providers. That venture, which is pending regulatory approval, does not include a direct wireless strategy. The new company was designed to serve as a carrier’s carrier for wireless companies in smaller markets that want to provide international services.
“There’s three legs to this,” said Kerr. “The Internet, broadband and wireless. If you have solid global plays in each of those three streams of revenue, Wall Street affords you generous ratings and evaluations.”
AT&T’s and BT’s new alliance, named Advance, will look to provide a new mobile global account services package, offering multinational customers global contracts and consolidated management information. The two carriers expect to trial the service later this year.
AT&T noted the alliance is a broad-based one and could not provide specific details on what type of services the two companies could offer.
Agreements on voice interoperability between the Time Division Multiple Access and Global System for Mobile communications operator community will play a large role in linking the two companies’ mobile-phone assets, said Ken Woo, spokesman with AT&T Wireless Services Inc. TDMA/GSM handsets should become commercially available by mid-2000, enabling the two companies to develop new services for global travelers and multinational enterprises.
The two aim to grow roaming revenues by directing as much traffic as possible onto their networks around the world, develop more simple roaming packages to stimulate usage and negotiate with other operators on the basis of pooled roaming volumes. AT&T and BT together cover 17 countries with a total market population of more than 1 billion. Together they have a customer base of 41 million.
AT&T and BT also have agreed to take a common position on third-generation mobile and mobile Internet standards to converge TDMA and GSM standards. TDMA and GSM carriers already are working toward the same high-speed data third-generation solution called EDGE, and TDMA interest group Universal Wireless Communications Consortium has an agreement with the European Telecommunications Industry Association to develop EDGE specifications.
In related news, AT&T Chief Executive Michael Armstrong said the company has frozen hiring and plans to eliminate jobs under a plan to cut $2 billion in costs by 2001.
