AT&T Wireless Services Inc. (NYSE: AWE) has drastically scaled back its 3G launch plans and is now saying it will only launch wideband-CDMA (W-CDMA) services in four major cities in the U.S by the end of 2004. The carrier had, as part of an agreement with shareholder NTT DoCoMo Inc. (NYSE: DCM), originally promised to roll out the high-speed voice and data networks in 13 cities by the summer of 2004 (see AT&T, DoCoMo Plot W-CDMA).

AT&T says it has been talking with DoCoMo and has reevaluated its original plans for its 3G launch. DoCoMo's own W-CDMA service has proved something of a damp squib, attracting a mere 150,000 subscribers since its launch in October 2001.

W-CDMA is the third-generation evolution of the GSM standard, which uses a CDMA modulation scheme to increase data rates – although it is not compatible with CDMA2000. W-CDMA is a mandated part of the universal mobile telecommunications standard (UMTS) and is theoretically expected to deliver data-transfer rates of 2 Mbit/s. However, in real life these rates are likely to be much lower, depending on how many people are on the network and how far a user is from the nearest basestation.

AT&T will now launch W-CDMA services in San Francisco, Seattle, San Diego, and Dallas in December 2004. "We determined that a more focused deployment early on has, as a first step, the greatest chance of success," David Caouette, spokesperson for AT&T Wireless told Unstrung.

Caouette says those cities have been picked due to their high concentrations of mobile professionals. The company has a team examining where to launch services next, he says.

Keeping the costs of this network buildout under control is also a primary goal for the operator. "We want to deliberately pace the rollout and control expenditure," Caouette told us, after repeated questions about the reasons for the scaling-down of its 3G plans.

Caouette would not reveal how much the operator is now planning to spend on the 3G network rollout. AT&T plans to have an analyst day on January 28 to talk about 3G and the rest of its rollout plans. "We will have more to say about capital expenditure then," he says.

However, AT&T has made it clear that it does not plan to repeat NTT DoCoMo's mistake and rush out mobile phones that can only make calls on W-CDMA networks. The phones will support W-CDMA and GPRS/GSM, but Caouette wouldn't comment on suppliers or schedules. "I haven't got a date for you yet," he says.

Nokia Corp. (NYSE: NOK) has had problems and delays with its early dualmode (W-CDMA/GSM) handsets in Europe (see Nokia: Hurry Up and Wait). But its unlikely that AT&T would now need to have handsets in stores before the holiday season of 2004.

AT&T says it has now completed its GSM/GPRS rollout. It plans to start setting up enhanced data for GSM environment (EDGE) networks next year, before moving to W-CDMA.

— Dan Jones, Senior Editor, Unstrung