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AT&T Firms Up 3G Plans

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LR Mobile News Analysis
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7/23/2003

AT&T Wireless Services Inc. (NYSE: AWE) today reiterated its plans to launch the first high-speed universal mobile telecommunications systems (UMTS) 3G service in the U.S. It also said it will have a nationwide enhanced data for GSM environments (EDGE) network running by the end of the year.

The UMTS rollouts will meet the reduced commitments to rolling out 3G required by AT&T investor NTT DoCoMo Inc. (NYSE: DCM) that the operators first laid out last year (see AT&T Scales Back 3G).

AT&T says that it will tap LM Ericsson (Nasdaq: ERICY) and Nortel Networks Corp. to build out UMTS sites in four markets through this year and into 2004. High-speed, multimedia data services using the networks are expected to be available by the end of 2004.

UMTS is a third-generation upgrade for AT&T's existing general system for mobile (GSM) network, that uses a wideband CDMA (WCDMA) air interface to increase the data rate offered over the wide-area network to a theoretical maximum of 2 Mbit/s.

Two of the UMTS nodes will be situated in San Francisco and Seattle, Rich Blasi, a spokesman for the AT&T Wireless says; the location of the other two cities has yet to be decided. "We have a little latitude on that," he adds.

The companies involved aren't revealing the value of the contracts, but Unstrung expects it will cost AT&T Wireless around $144 million to install these early UMTS sites. AT&T's Blasi says it will cost the operator around $60,000 per base station (cellsite) that gets upgraded to UMTS specifications, and Nortel says it expects to supply 1,200 of these upgrades to cover the two markets it is rolling out from September of this year. Double that to cover all four markets and that indicates a cost of $144 million for a four city rollout.

AT&T Wireless has also committed to upgrade its existing GSM-based network to EDGE by the end of this year. EDGE, sometimes referred to as 2.75G technology, requires a software upgrade to GSM base stations to crank the data rates available over the network to a couple of hundred kbit/s at best. Ericsson and Nokia Corp. (NYSE: NOK) are supplying software for this rollout.

The AT&T contracts are the third major 3G infrastructure deal to be announced in the U.S. in as many weeks. Yesterday, Lucent Technologies Inc. (NYSE: LU) announced a $1 billion deal with Sprint PCS (NYSE: PCS); and last week T-Mobile USA signed on the dotted line with Ericsson for $500 million (see Lucent Guides Sprint's EV-DV and Ericsson Expands T-Mobile USA).

— Dan Jones, Senior Editor, Unstrung

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