AT&T Wireless Launches 3G, But Why?

from the as-expected dept

As was entirely expected (and leaked last week) AT&T Wireless has now launched their UMTS 3G service in San Francisco, Seattle, Phoenix and Detroit. The announcement also mentions that the service will be expanded to San Diego and Dallas by the end of the year. This is a bit curious, as those two cities were in the original list of four cities that AT&T Wireless named last year, but which (for no clear reason) were dropped from the list earlier this year. There still seems to be some confusion about whether or not AT&T Wireless was really required to do this as part of their deal with DoCoMo or not. Some have said that deal was no longer an issue since Cingular had agreed to buy out DoCoMo’s share of AT&T Wireless. Still, it seems odd that AT&T Wireless has decided to launch this offering now. If the Cingular deal is really going to be completed this fall, why bother spending a couple months marketing the AT&T Wireless 3G service, only to have to rebrand it three months from now? Some are now saying that AT&T Wireless launching this service now might be an indication that the merger is a bit shakier than has been publicly stated. If the merger doesn’t go through, they would still need to launch, since Cingular wouldn’t bail them out from the DoCoMo agreement. Also, by launching earlier, they would have a head start on any 3G competition from Cingular. It still seems likely that the deal will go through, but this early announcement and unclear status of the DoCoMo clause is raising some eyebrows.

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Comments on “AT&T Wireless Launches 3G, But Why?”

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DV Henkel-Wallace says:

Possible justification

Here are two issues:

  • It’s possible that the DoCoMo agreement required them to begin the rollout by 1 August. They don’t get out of that agreement by being sold. That would just make the acquiror liable for the penalty — and maybe cingular would try to push the penalty back on AT&T because I bet they purchased “certain assets and liabilities”
  • Also, cingular purchased an ongoing business with various projects under way. AT&T couldn’t just, say, stop making payroll because they had a pending acquisition and it would be someone else’s responsibility in a couple of months.

One thing that is funny is that why didn’t cingular kick back a little to, say, cobrand the service so that it more smoothly becomes congular’s 3g service once the deal is concluded? Maybe they intend to do the contractual minimum, and don’t care about 3g.

mgallagher says:

Another piece of the puzzle

AT&T also has extended the life of the old CDPD network by a year, even after mailing out statements to every customer saying that June 30, 2004 was the drop-dead date. The extension came in everybody’s May billing (which, of course, arrived in June) and was a total turn-around.
It was my understanding that the CDPD system was going down to allow AT&T to reclaim the spectrum for other (3G) uses. Since that has been delayed by at least a year it suggests (only suggests) that 3G deployment is now a lower priority than the revenue from CDPD, which is still big in the law enforcement/fleet management world.

bob says:

I worked there

I did contract work at AT&T wireless in the mMode department, doing QA on various bits and pieces.

This was a requirement DoCoMo had or they’d pull out of AWS alltogether.
With the buyout pending it became technically irrelevant.
The FTC rules sayd that we had to proceed like there was no buyout about to happen.

so, if AWS had not done the rollout.
Docomo would have pulled thier cash (27million was the figure going around) and the FTC would have nixed the buyout.
all leaving AWS in a very bad financial position.

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