AT&T Wireless Grudgingly Gears Up For 3G Launch

The lesser of two evils: AT&T Wireless Enterprises is preparing for its 2004 launch of 3G W-CDMA (UMTS) services. As part of the US$10B DoCoMo investment in 2000, AWE agreed to have at least four cities commercially launched with 3G by 2005. Since that deal, the desire to launch 3G networks has essentially evaporated at AWE, but if they fail to meet the deadline, they will have to return $6.2 Billion of DoCoMo’s $10B investment (AWE was trading at $18/share at that time, and now trades below $8). Returning the $6.2B investment now would be like giving DoCoMo $3.5B, so AWE will grudgingly meet the minimum W-CDMA deployment required. The four cities are home-base Seattle, San Francisco, and possibly San Diego and Dallas. US carriers are so reluctant overbid for spectrum that they were in favor of the latest round of delays for 3G spectrum auctions. Since 3G auctions have never taken place in the US, AWE will be using existing 1,900MHz licenses. US carriers, in general, want a lower level of uncertainty around 3G before the FCC auction for 3G-specific frequencies takes place. Ericsson and Nortel will provide the network gear for AWE’s W-CDMA launch.

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