AT&T Sticks to Its Guns on UMTS

Light Reading
LR Mobile News Analysis
Light Reading
11/20/2003



AT&T Wireless Services Inc. (NYSE: AWE) says that possible further layoffs at the company will not affect its planned rollout of UMTS third-generation (3G) technology next year.

The Wall Street Journal reported today that the carrier plans 3,000 layoffs, over and above the 1,900 job cuts announced last week. A spokesman for the operator would not confirm the story but did say that more layoffs were possible as the firm works to improve its margins.

"We considering all options," the spokesman told Unstrung. The firm currently employs 31,000 people in the U.S.

Despite the cuts, the carrier is adamant that it will still roll out its first universal mobile telecommunications system (UMTS) networks in San Francisco and Seattle and two other -- as yet unnamed -- cities in the U.S. in 2004. "We're completely committed to a four-city rollout of UMTS next year," says the spokesman.

UMTS is a 3G 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 cellular network to a maximum of 2 Mbit/s (with a good, strong tailwind behind it). The carrier is using base stations from LM Ericsson (Nasdaq: ERICY) and Nortel Networks Corp. (NYSE/Toronto: NT) for the upgrade. Unstrung estimates that the installation will cost AT&T Wireless around $144 million in total (see AT&T Firms Up 3G Plans).

The carrier has just announced its expected Enhanced Data for GSM Environments (EDGE) upgrade to its network (see AT&T Wireless Launches EDGE). This software upgrade for GSM base stations will offer subscribers increased data transfer speeds of a couple of hundred kilobits a second for faster downloads and multimedia services. Ericsson and Nokia Corp. (NYSE: NOK) are supplying the code for this update, which should be complete by the middle of 2004.

AT&T drastically scaled back its original plans for a 3G rollout last December. The operator initially said that it would have UMTS in 13 U.S. cities by the summer of 2004 (see AT&T Scales Back 3G).

— Dan Jones, Senior Editor, Unstrung

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