AT&T Inc., which until last week was SBC Communications Inc., is getting set to stack its wireless deck with plans to launch an AT&T-branded wireless service that will use subsidiary Cingular Wireless L.L.C.’s network. AT&T, which changed its name following SBC’s $16 billion acquisition of AT&T Corp., owns 60 percent of Cingular, which completed a $41 billion acquisition of AT&T Wireless Services Inc. last fall.
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AT&T’s wireless plans were partially leaked by Chairman and Chief Executive Officer Ed Whitacre, who said that Cingular was dropping its brand name for the AT&T brand in most of its markets in USA Today. BellSouth Corp., which controls the remaining 40 percent of Cingular, said in the story that it did not have any objections to the name change.
However, that story was quickly refuted by Cingular, which said it had no plans to change its name.
“We are continuing with the strong Cingular brand that we have spent the past five years building and promoting,” said Cingular spokesman Clay Owen.
Owen said Whitacre’s comments were related to SBC’s plans to launch an AT&T-branded wireless service that it would sell in select markets using Cingular’s network. Owen likened the setup to Sprint Nextel Corp.’s extensive mobile virtual network operator agreements.
An AT&T spokesman echoed Cingular’s clarification of Whitacre’s remarks.
“We are looking at launching an AT&T-branded wireless service using Cingular’s network, but don’t have any additional details at this time,” said AT&T spokesman Larry Solomon.
Solomon noted that both SBC/AT&T and BellSouth retained the right to launch their own branded wireless services when they joined their wireless operations to form Cingular in 2001.
While the possibility of Cingular changing its name to some derivative of AT&T lit up Internet message boards, AT&T’s plans to re-enter the wireless space-though convoluted-are nothing new.
After AT&T Corp. spun off its wireless business in 2002, the long-distance giant continued to resell wireless services to its business customers using AWS’ network. That offering appeared last year to be coming to an end when AT&T signed a deal with Sprint Corp. through an MVNO agreement.
The AT&T MVNO was expected to use the AT&T brand, which the company was to set receive back from AWS following Cingular’s purchase of AWS. Analysts applauded the move at the time, noting the brand equity built up within the AT&T name would almost guarantee the success of the venture.
However, when SBC bought AT&T, it made less sense to use Sprint’s network since SBC had an equity stake in Cingular.
Analysts noted that while details of the AT&T wireless service are still murky, the launch could spell trouble for Cingular, which is struggling to keep No. 2 operator Verizon Wireless at bay. Verizon Wireless has added more than 5.4 million customers through the first nine months of this year, which was nearly 70 percent more than the 3.2 million customers Cingular has managed to snare. Cingular ended the third quarter with 52.3 million customers, compared with Verizon Wireless’ 49.3 million, and is on pace to lose its leadership position by the middle of next year.
“There is definitely the potential for a conflict of interest,” noted Gartner telecommunications analyst Tole Hart. “If AT&T goes after the enterprise and leaves the consumer play for Cingular, it might not be too bad. But it could still hurt Cingular’s attempts at gaining more enterprise customers.”
The criticism is not new as similar concerns were raised earlier this year when AT&T backed out of its MVNO plans.
“I think it’s difficult for BellSouth, SBC and Cingular to agree on a mix of services for enterprise customers,” said Mitch Mitchell, vice president of A.T. Kearney’s communications and media practice, at the time. “Adding AT&T to the mix is like having a fourth family member fighting over the same drumstick.”
While confusion regarding AT&T’s wireless future continues to reign, it appears the name is set to re-enter the wireless space in one form or another.
