AT&T Wireless Services Inc. said it will offer two-way short messaging service later this year, giving the carrier a more seamless data offering with its affiliates.
AT&T Wireless offers SMS service today and relaunched its PocketNet service, based on Cellular Digital Packet Data service, earlier this year, using handsets from Mitsubishi and L.M. Ericsson.
AT&T Wireless’ affiliates, the largest of which is TeleCorp PCS, are moving in their own direction with wireless data services. AT&T Wireless’ data offerings revolve around CDPD technology, while the carrier’s affiliates will offer circuit-switched data offerings this fall. AT&T Wireless and its affiliates won’t fully align their data strategies until Enhanced Data rates for Global Evolution technology arrives sometime in 2002.
TeleCorp plans to launch two-way SMS shortly, and it’s waiting for the Nokia 7100 series of phones this fall to allow circuit-switched data offerings.
Although some in the wireless industry have speculated AT&T Wireless may adopt a circuit-switched offering to fill in the gaps of CDPD coverage, AT&T Wireless said it is not entertaining the idea. Such an offering would take up too much capacity in AT&T Wireless’ network, although the carrier will support a circuit-switched data user roaming from its affiliates’ networks.
“We have no plans for any commercial deployment,” said AT&T Wireless spokesman Ken Woo. “Circuit-switched is available today, but we don’t promote it because it’s inefficient and uneconomical.”
AT&T Wireless, however, is reconfiguring its network control channels to allow a low-speed packet data service, two-way SMS, which allows very limited Web-browsing capabilities. Woo declined to detail the company’s marketing plans for the new service. Other U.S. carriers also plan to roll out two-way SMS service later this year.
Such a data service would give AT&T Wireless access to the world’s most popular brand of handset, Nokia, for data services. Nokia won’t make CDPD handsets. Only Mitsubishi and L.M. Ericsson handsets offer the PocketNet service, which supports more than 100,000 customers, the carrier said. TDMA operator SBC Communications Inc. has started selling the Nokia 8260, which is two-way SMS capable.
Still, analysts say AT&T’s CDPD technology is too dependent on roaming and lacks coverage. Verizon Wireless owns a big chunk of the CDPD systems on the East Coast, and at least 11 states lack any CDPD coverage.
“It seems until EDGE is commercially viable, it makes sense to at least entertain the idea of circuit-switched offering to fill in the gaps of the CDPD archipelago,” said Bryan Prohm, senior analyst with Gartner Group/Dataquest.
Gartner, which makes wireless purchasing recommendations to large corporations, recently released its “Magic Quandrant,” which details which carriers are in the best position to offer national accounts. Verizon Wireless displaced AT&T Wireless as the leader. Gartner cited AT&T Wireless’ lack of PocketNet service coverage as one reason.
“Leadership positions are under attack as the importance of a seamless nationwide (and international) combined voice/SMS and data service gains momentum,” said Gartner in its report.
Other reasons Gartner downgraded AT&T Wireless include its widely reported capacity problems that began in 1998 with the introduction of the Digital One Rate plan and AT&T Wireless’ third-generation technology choice. Gartner said it is not aware of any of the big three handset manufacturers-Ericsson, Motorola Inc. or Nokia-developing the EDGE/TDMA multimode, multiband handsets AT&T Wireless needs. Gartner also is not convinced the market for EDGE technology is strong in Europe.
“Sales volumes of these handsets will be much lower, and thus more expensive, because it can not rely on a large global market for increased economies of scale,” said Gartner.
AT&T Wireless has yet to announce any handset suppliers for EDGE technology, but has indicated many of the major vendors will supply handsets to the company. TDMA advocates insist European operators are interested in EDGE technology, but are quiet as they jockey for 3G spectrum. EDGE is touted as a solution to which existing GSM operators can migrate to offer higher speed data services.
2Q results
AT&T Wireless significantly improved its financial results during the second quarter. Average revenue per unit was $71.50 in the quarter, while overall revenues grew 29.4 percent. The carrier added 532,000 subscribers, ending the quarter with 11.7 million, which includes some market purchases. Last week, AT&T Wireless purchased the Indianapolis market from SBC Communications Inc.
“This solves the last remaining coverage gap in the top 50 markets,” said John Zeglis, chairman and chief executive officer of AT&T Wireless Group. “We now expect by the end of 2000, AT&T will be present in all of the nation’s top 50 markets and well over 90 of the top 100 markets.”
AT&T Wireless also continues to improve its operating cash flow, which increased 57 percent from the previous year. The strong growth primarily was driven by increased revenue and improved cost efficiencies because of lower off-network roaming expenses. The carrier has been working since it introduced the Digital One Rate plan in 1998 to reduce off-network roaming costs.
AT&T Wireless said it will begin attacking the market with more mid-tier pricing plans, those in the $50 ARPU range. It also plans to make a bigger push in the prepaid and youth markets.
