Ramifications Of The AWE Sale

Over at Unstrung, the lads are tinkering under the bonnet of the AT&T Wireless – Cingular deal to determine what the effect will be on the vendor market. Unstrung notes that if Vodafone had won, they would have invested mucho $ in order to rebuild the former AWE into a real contender in the US market, while Cingular is likely to focus instead on consolidation, which is in effect a reduction in spending. So the conclusion is that this deal is a blow to the network equipment market. We agree, but we feel the integration task will also provide some spending – especially in professional services. Other ramifications to consider in the deal follow. What becomes of DoCoMo? The Japanese investor has indicated they will sell their share and walk away with a loss on their US foray. That leaves mMode an orphan in the Cingular family, and it’s anybody’s guess what happens to it. I think it might be the artful dodger of the deal. Since Cingular has basically no discernible consumer wireless strategy, we may see mMode expand across the combined company, at least in name (it likely would lose some of the proprietary DoCoMo characteristics, like DoJa). The AWE / AT&T bundling deal will likely be replaced with a deal that uses SBC and Bellsouth for LD and fixed access – no surprise there. AT&T fixed may turn to Nextel or T-Mobile as new partners for wired/wireless bundling. The AWE 3G commitment to deploy 4 cities this year is now moot, as it was an obligation to DoCoMo, not the FCC. However, Cingular may still push ahead since the project is underway, and four cities can provide a valuable pilot; however, EDGE rollouts will dominate most of the carrier’s investment. AWE’s CDPD network is already being phased out, so no change there, and both carriers are upgrading TDMA to GSM, so no change there either. In many other respects, both companies actually have a lot of similarities, from network element vendors to LBS and 911 system providers. Maybe there actually will be synergies for once! “The devil is in the details”, they say, but I think it’s actually in morale and HR. Keep the right people, and keep them happy, and this deal will be a success, even at the high price.

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