March 14, 2001, 12:59 PM — In the wake of a disappointing debut in the United States, the wireless data industry was shaken up last December when AT&T Wireless (soon to be spun off from AT&T) announced that they were teaming up with NTT DoCoMo, a Japanese telecom company, to bring wireless data services to America.
Industry analysts have been raving about NTT DoCoMos wireless data service, I-Mode, which has been a huge success in Japan, with more than 17.8 million subscribers for months. I-Mode is often referred to as the model for wireless data services, especially when compared to less than extraordinary wireless Web services in the United States. Like wireless Internet services in the U.S., I-Mode allows users to access a compact version on the Net on a handheld device (like a phone or PDA). But I-Mode is faster and always on. It also allows users download things like video games and ring tones from the Net.
NTT DoCoMo will invest about $9.8 billion in AT&T for 406 million shares or 16 percent of AT&T Wireless tracking stock -- an investment that will give AT&T a needed cash infusion as well as license to the I-Mode technology platform.
The alliance changes the technology landscape in the U.S. because AT&T will now support the GSM standard, which few U.S. carriers currently use. Up to now, GSM has been more dominant in Europe and Asia; the deal gives its carriers more leverage in the U.S. market.
GSM, which stands for Global System for Mobile Communications, is a way to transmit information (a conversation for example) over a wireless network. It is an alternative to technologies like Code Division Multiple Access (CDMA), which is more prevalent in the U.S. The primary difference between CDMA and GSM is a technical issue concerning how data is sent over networks.
There is an ongoing debate in the wireless industry about which technology will be used to transmit data in the future -- and therefore become the third-generation standard. Currently, AT&T carriers use a technology called TDMA, or Time Division Multiple Access (a standard that GSM is based on), which is another one of the several ways to transmit data wirelessly. The announcement that AT&T will be supporting GSM is important because it will have a significant impact on which technology dominates in the future.
The carrier with the most subscribers will most likely have the best service because higher volume means more/better devices and lower costs regardless of which technology works better.
Industry analysts view NTT DoCoMos motive for making alliances around the world as a way to ensure that the technology that they support -- Wideband-CDMA (in contrast to a technology referred to as CDMA2000) -- will be the dominant third-generation technology.