Cingular wins bid for AT&T Wireless

IDG News Service |  Mobile & Wireless

AT&T Wireless employs approximately 30,000 people in some 500 locations across the U.S., and as of the end of last year reported about 22 million consolidated subscribers, the company said. AT&T Wireless split from AT&T Corp. in July 2001 to become an independent company. Once the merger is completed, the combined company will shed redundant staff, but Cingular hasn't yet determined the size of those cuts, Sigman said.

Along with creating the largest GSM (Global System for Mobile Communications) network in the U.S., Cingular's acquisition of AT&T Wireless will speed the company's ability to offer advanced wireless data services and upcoming 3G (third generation) services to customers due to its improved spectrum holdings, Cingular said. The merger will give Cingular a presence in 97 of the 100 largest markets in the U.S., up from 83 today, Sigman said. Customers will benefit from broader coverage and a more robust network, he said.

Should the deal between Cingular and AT&T Wireless receive full approval, the newly combined company will knock Verizon Wireless from its current number-one position in the U.S. wireless market down to number two, with 36 million subscribers.

"Hey Verizon, can you hear us now?" AT&T Wireless' Zeglis quipped during the press conference.

"Vodafone really wanted the GSM footprint that AT&T Wireless would have provided and it won't be happy with the number two position," said Paolo Pescatore, senior analyst for IDC in the U.K. "The question now is what will Verizon do to re-establish its position?"

Julian Hewett, chief analyst with U.K.-based IT consulting firm Ovum Ltd., expects that though Cingular will lead with consumers in the U.S. wireless market, Verizon Wireless will continue to lead the business market, partly because of its new CDMA2000 1x EV-DO (Code Division Multiple Access Evolution-Data Only) high-speed data services.

"I imagine Vodafone and Verizon Communications will reassess their relationship now and they may decide that they have got to make the best of it," Hewett said.

For example, with 3G, the technical differences between GSM and CDMA will decrease and roaming in the U.S. may become possible for Vodafone's business customers. "Vodafone currently roams on T-Mobile's network, but it is a pretty big disadvantage to have your customers -- European business travelers -- roaming on another network."

According to Hewett, Vodafone and Verizon Communications may decide to develop a virtual 3G service on Verizon Wireless' network or attempt to acquire Sprint, which has 15.5 million customers.

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