Subject: [NEXTEL-1] WSJ - A New Cellphone Service With An Old Name

From: [email-masked]
Date: Thu, 06 May 2004 07:01:02 -0400

In a situation bound to confuse millions of consumers, AT&T Corp. plans
to launch its 
own wireless business -- using the AT&T name -- just as Cingular
Wireless closes its 
$41 billion acquisition of AT&T Wireless Services Inc. this year.

"We'll be back in wireless, probably the next day," AT&T Chairman and
Chief Executive 
David Dorman said recently. AT&T has been largely shut out of the
cellphone business 
since 2001, when it split off AT&T Wireless as a separate company to
reduce a 
crushing debt load.

When Cingular Wireless clinched its blockbuster deal to buy AT&T
Wireless in 
February, many industry and market observers breathed a sigh of relief
that one 
competitor in the crowded cellphone market, where prices have been
plunging, would 
be eliminated.

But AT&T officials are making aggressive plans to ensure it won't play
out that way. A 
provision of AT&T Wireless's spinoff from AT&T will let the
long-distance company 
take over the AT&T Wireless brand name. The Cingular deal, which will
unite the 
nation's second- and third-largest wireless carriers, is expected to
close by the end of 
the year if regulators approve. Cingular is a joint venture of two of
AT&T's fiercest Bell 
rivals, SBC Communications Inc., of San Antonio, and BellSouth Corp., of
Atlanta.

By then, AT&T intends to have a contract to resell another wireless
company's service. 
The company already is negotiating with several carriers, and hopes to
model its 
success after Virgin Mobile, a cellphone service controlled by British
entrepreneur 
Richard Branson, and other wireless companies that are expanding quickly
by leasing 
network capacity from others.

Cingular, meanwhile, plans to take advantage of a provision in AT&T's
arrangement 
with AT&T Wireless that will let Cingular make transitional use of the
AT&T name for 
as long as six months, said Clay Owen, a Cingular spokesman. "We are
going to use 
all our resources to highlight that Cingular has acquired AT&T Wireless
and we are the 
combined company," Mr. Owen said.

Marketing experts say AT&T, still the nation's largest long-distance
company, stands 
to benefit from the anticipated consumer confusion. A prime target: The
22 million 
AT&T Wireless customers who will be told they now are Cingular
customers. AT&T will 
attempt to make aggressive offers to keep them under the AT&T umbrella.
And it will 
get to take advantage of years of advertising and brand awareness for
AT&T Wireless 
-- paid for by its rival -- though to distinguish itself, AT&T might
want to tweak the 
brand, perhaps to something like "AT&T Unwired" or "AT&T Mobile,"
analysts said.

"Brands work best in confusing environments," says Allen Adamson,
managing 
director in New York at Landor Associates, a branding consultancy.
"People use 
brands as a shortcut when there are too many choices and conflicting
claims."

Others are skeptical the plan will work. AT&T Wireless has stumbled
recently, leading 
the industry in customer complaints and damaging its reputation with
service snafus 
that led its customer roster to shrink by 367,000 in the first quarter.

That AT&T is trying so hard to get back into wireless reflects the huge
growth of the 
technology, with 163 million cellphone users nationwide. AT&T also hopes
to use 
wireless to do an end-run around its Bell rivals, who own Cingular.

AT&T plans to package its new discounted Internet-based calling services
with 
cellphone service, eventually using new handsets that can double as
cellphones and 
home phones, people familiar with the situation say. For consumers, the
move could 
slash costs for local and long-distance phone service, while further
reducing the need 
to have a traditional fixed-phone service at home or at the office.
Wireless, in 
combination with new Internet-based phone services that AT&T is rolling
out to 100 
markets by year end, could provide AT&T with a way of stealing not only
wireless 
customers but also snatching traditional home phone customers from its
local-phone 
rivals.

Currently, the wireless business is dominated by the six companies that
own the 
networks. But companies that resell wireless services from another
network are 
springing up as the popularity of cellphones continues to climb.

Still, reselling wireless services isn't always a sure bet. Resellers
compete with the very 
companies that are selling them use of their service, and they don't
have ultimate 
control of the product or potential network problems. Moreover, any
profits are 
shared with the owner of the network.

Reselling wireless service was a loss-plagued disaster for MCI Inc.,
then known as 
WorldCom, in the late 1990s, though that company also plans to give it
another try. 
Qwest Communications International Inc., the Denver Bell company in many 
Midwestern and Western states, last quarter started reselling service
provided by 
Sprint Corp.'s wireless network, but ran into problems converting its
current 
customers onto the Sprint system. Still, Virgin Mobile is growing so
quickly by 
reselling service from Sprint that it added more customers in the first
quarter than 
Sprint itself did.

Analysts say the success of a wireless reseller ultimately depends on
the brand name 
of a company, its marketing and the customer base that a reseller brings
with it. In 
those areas, AT&T will have a huge head start. It doesn't possess AT&T
Wireless' 
customer list, but it can assume that many of its more than 30 million
current long-
distance and local-phone customers and many of its corporate clients
also are AT&T 
Wireless customers.

If they aren't, AT&T will have a new chance to win them away from other
carriers or 
recruit them anew by bundling wireless with the local- and long-distance
services 
that help AT&T compete against the Bells. That is likely to lead to even
more attractive 
discounts for customers -- and more bruising battles among rival
carriers. In turn, 
that would make it harder for AT&T to turn a profit on wireless
reselling.

The pending sale of AT&T Wireless clearly has energized AT&T's effort to
get back 
into cellular -- a technology it invented. AT&T currently has an
agreement to resell 
AT&T Wireless's service, but it had gotten off to a tepid start with
trials in only six 
cities after 10 months. Within weeks of the Cingular deal, AT&T put
marketing 
executive Kevin Crull in charge of a new drive to get its wireless
effort going.

The company says it still is in the early stages of looking for a new
reseller partner. 
Among the most likely candidates, according to analysts and industry
insiders, would 
be T-Mobile USA Inc., Nextel Communications Inc., Sprint and Alltel
Corp., which has 
a strong presence in smaller cities and rural markets.

AT&T is likely to market that service as part of the full package of
other services it has 
been stressing in a branding campaign launched this year, says Charles
Golvin, an 
analyst at Forrester Research. That campaign stresses the range of
services the 
company provides. The focus on wireless as part of a package could help
AT&T 
distinguish itself from companies primarily touting wireless alone, Mr.
Golvin says. 
Still, AT&T isn't likely to turn away anyone who wants to buy its
wireless service a la 
carte. The company will try hard to attract the high-end corporate users
that are a 
stronghold for AT&T Wireless.

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Make a clean sweep of pop-up ads. Yahoo! Companion Toolbar.
Now with Pop-Up Blocker. Get it for free!
http://us.click.yahoo.com/L5YrjA/eSIIAA/yQLSAA/61FxlB/TM
---------------------------------------------------------------------~->

-- 
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address 
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

Yahoo! Groups Links

<*> To visit your group on the web, go to:
     http://groups.yahoo.com/group/NEXTEL-1/

<*> To unsubscribe from this group, send an email to:
     [email-masked]

<*> Your use of Yahoo! Groups is subject to:
     http://docs.yahoo.com/info/terms/