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AT&T Wireless hopes that partnering with NTT DoCoMo will help it vault over competitors in the next hot mobile arena: the wireless Web.
The mergers that created Verizon Wireless and Cingular Wireless dislodged AT&T from its place at the top of the wireless heap. But with roughly $10.5 billion in revenue last year, up nearly 30 percent from the year before; 15.7 million subscribers at the end of 2000; and spectrum that covers areas where 94 percent of the people in the U.S. live and work, AT&T Wireless still commands respect.
As part of its plan to “unlock value,” AT&T expects to complete its spin-off of AT&T Wireless this summer, leaving it a separately traded, asset-based common stock, tethered to Ma Bell by a $9 billion stake and long-term carrier agreements.
Chairman John D. Zeglis has the tricky task of creating a company that can stand on its own while making the most of its ties to its parent company. Citing a quiet period, AT&T declined to comment.
AT&Ts Time Division Multiple Access network will be a high hurdle to cross; competitors Sprint PCS and Verizon Wireless run Code Division Multiple Access, which is easily upgraded to enable third-generation (3G) services.
In a competitive environment, raising the key average revenue per user metric — in AT&Ts case, $68.20 — requires introducing new, higher-margin services. Data features such as text messaging, e-mail, Web browsing and commerce are good candidates, and AT&T and its U.S. counterparts are looking overseas for clues, however discouraging.
NTT DoCoMo, which invested $9.8 billion in AT&T Wireless last year, has scaled back its 3G rollout in Japan. And in Europe, a subsidiary of British Telecommunications — a partner with AT&T in the troubled Concert venture — has dropped plans to introduce 3G in Isle of Man. Whether 3G succeeds or tanks — as many pundits expect it will — getting the news early may be key to the success of U.S. wireless companies.