NTT Invests In AT&T

Move gives AT&T capital and DoCoMo access to U.S. wireless markets.

NTT DoCoMos $9.8 billion investment in AT&T Wireless Services Inc. will give the Tokyo company a foothold in the United States and should help the Redmond, Wash., company create global services.

With the deal announced last week, DoCoMo bounces back from its failed attempt earlier this year to break into the U.S. market when the Japanese carriers bid for VoiceStream Wireless Corp. was trumped by Deutsche Telekom AG. For AT&T Wireless, it means access to much-needed capital as well as DoCoMos proven iMode wireless data protocol.

AT&T likely will use some of the money to buy radio spectrum in upcoming Federal Communications Commission auctions. In the meantime, AT&T plans to spin off a subsidiary dedicated to developing wireless applications for handsets using iMode.

DoCoMo, the mobile arm of Japanese telecommunications giant Nippon Telegraph and Telephone Corp., has used iMode to put 15 million customers on the mobile Internet. Though the company was initially criticized for choosing iMode over the more globally accepted Wireless Application Protocol, the move proved to be successful.

"They were [proved] right by their choice," said Roderick Nelson, chief technology officer of AT&T Wireless. "Well add iMode and create dual-mode browsers. Our intention is to create applications appealing to businesses."

Analysts, however, remain skeptical about next-generation application services for wireless phones. "The search for the killer app continues," said Mark Zohar, an analyst at Forrester Research Inc., in Cambridge, Mass. "Voice is first, and e-mail is second. Beyond that, its a toss-up. We dont see a huge market for multimedia services."

AT&T officials said theyll first focus on e-mail services that include attachments, audio files and graphics.

iMode services in Japan are sold on a packet-by-packet basis. AT&T officials have not yet decided if iMode will be sold the same way in the United States, as U.S. customers tend to respond best to flat-rate pricing.

In addition to the deal with DoCoMo, AT&T Wireless is expanding its global approach by overlaying a GSM (Global System for Mobile Communications) and GPRS (General Packet Radio Service) platform on top of its Time Division Multiple Access network.

The intent is to start deploying GSM/GPRS platforms next year and through 2002 and then upgrade the GPRS system to AT&Ts proprietary Edge technology, which boasts speeds up to 384KB per second. Edge will make the transition to Wideband Code Division Multiple Access, a third-generation protocol that officials expect to be deployed throughout AT&T networks in 2003 and 2004.