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AT&T Wireless Slowing Down But Not Leaving Market AT&T Wireless Services'



RELATED SYMBOLS: (DCM)(AWE)

Jan 15, 2003 (Wireless Data News/PBI Media via COMTEX) -- generation network
rollouts this year puts more pressure on it to increase revenues with its
existing footprint, but the change doesn't make the company more likely to be
acquired.

Redmond, Wash.-based AT&T Wireless trimmed its planned wideband-CDMA service
launch this year from 13 markets to four. It plans to launch in Dallas, San
Francisco, San Diego and Seattle in December. Its earlier W-CDMA plan was part
of the agreement around NTT DoCoMo's [NYSE: DCM] nearly $10 million investment
two years ago.

DoCoMo understands AT&T Wireless' timidity about spending on W-CDMA. DoCoMo also
will cut back its 3G capital expenditures. The Japanese wireless giant is adding
around 6,500 customers a month to its 3G service it launched in October 2001,
and through November had less than 150,000 subscribers using the network built
with an interface based on W-CDMA.

AT&T Wireless has completed its GPRS rollout over its GSM footprint, and plans
this year to start adding enhanced data for GSM environment (EDGE) networks on
that footprint before moving to W-CDMA. Whatever it does, AT&T Wireless needs to
grow its average revenue per user. Cutting capital spending by slowing its 3G
plan is a sure sign that it's not generating higher ARPU through its GPRS
overlay.

"I think this really is a wakeup call to folks that the demand has not been
there," says Scott Drobner, wireless program director for InfoTech, PBI Media's
market research firm in Parsippany, N.J.

One reason AT&T Wireless and other U.S. carriers aren't reporting APRU hikes
after introducing higher-speed service is the growth of the Wi-Fi market.
Customers wireless carriers count on for their highest revenues--business users
who say they want wireless data access--are using Wi-Fi services instead.

"That's kind of taken a little bit of the steam away from the demand for AT&T
Wireless," Drobner says.

But not enough steam to take AT&T Wireless out of the market. Curtailing its 3G
plans doesn't indicate AT&T Wireless' imminent acquisition. Rumors that Vodafone
[NYSE: VOD] might be unsatisfied with its U.S. play as the minority owner of
Verizon Wireless has some observers expecting Vodafone to bid for a U.S. GSM
operation.

But AT&T Wireless doesn't appear to be on the block, and DoCoMo's investment is
a particularly significant impediment to being sold. DoCoMo not only would
collect its share of the sale payments, but also would be due additional
payments from AT&T Wireless.

"The stakes are a bit higher now," Drobner says. "AT&T Wireless has to have some
sort of a rollout. I think it will be forced to repay about $6 billion to NTT
DoCoMo, which is a pretty sizable chunk."

>>Scott Drobner, [e-mail]<< [Copyright 2003 PBI Media, LLC. All
rights reserved.]

Wireless Data News, Vol. 11, No. 1 [Copyright 2003 PBI Media, LLC. All rights
reserved.]



Copyright 2003 PBI Media, LLC. All rights reserved.

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Daniel Nieves