Cingular EDGEs Out Rivals

Cingular Wireless has today become the first carrier in the U.S. to launch services using enhanced data for GSM environments (EDGE) networking technology, unexpectedly beating rivals like AT&T Wireless Services Inc. (NYSE: AWE) and T-Mobile USA to the punch (see Cingular's First to the EDGE).

EDGE is the next stepping stone on the path to third-generation cellular services, offering data transfer speeds around double that of a 56K modem. Cingular has so far only switched on the service in Indianapolis. However, Tony Carter, Cingular's senior PR manager, says the carrier will offer EDGE in a "handful" of markets by the end of this year.

EDGE is an enhancement to Cingular's global system for mobile communications (GSM) networks that increases data transfer rates to a theoretical 384 kbit/s. Cingular is promising its customers initial data transfer rates of 75 kbit/s to 135 kbit/s. "This will be optimized as we get to devices with newer coding schemes," says Carter.

Carter notes that because Cingular is already in the process of upgrading its network with a new GSM overlay (he says it will be 90 percent complete by the end of the year), moving to EDGE only requires a software upgrade on the network. This is the key to the appeal of EDGE for carriers -- it’s a quick, cheap fix compared with the option of a wholesale upgrade to 3G universal mobile telecommunications system (UMTS) networks (see 3G Go Slow ).

Carter says that Cingular is spending $1.3 billion this year on continuing GSM upgrades to its network. He anticipates that 10 percent of that capital expenditure will go towards EDGE updates.

LM Ericsson (Nasdaq: ERICY) is supplying the infrastructure for the Indianapolis launch. "They were ready," notes Carter. Nortel Networks Corp. (NYSE/Toronto: NT) and Siemens AG (NYSE: SI; Frankfurt: SIE) also have EDGE contracts with Cingular.

Apparently there is a technical reason for starting in Indianapolis. Cingular operates on two frequency bands in the U.S. -- 850 MHz and 1900 MHz -- and Indianapolis is one of the markets that straddles both bands. "We wanted somewhere that would allow us to test both," explains Carter. [Ed. note: Indiana is also shaped rather like a sock, which may or may not have been a determining factor.]

Major GSM rival AT&T Wireless says that it does plan to have some EDGE markets up and running by the end of the year (see AT&T Scales Back 3G). T-Mobile has EDGE contracts but no announced plans for service launches (see Nortel's $300M EDGE).

— Dan Jones, Senior Editor, Unstrung

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