AT&T delays 3G, plans limited service by end 2004

ITworld.com –

AT&T Wireless Services Inc. is scaling back and delaying the launch of a planned 3G (third generation) mobile network and plans to offer service in four cities by the end of 2004, major shareholder NTT DoCoMo Inc. said Thursday.

The revised plan calls for a commercial WCDMA (Wideband Code Division Multiple Access) service to be launched in San Francisco, Seattle, Dallas and San Diego by the end of 2004. The company had originally pledged, as part of a shareholder agreement signed with NTT DoCoMo in December 2000, to launch a WCDMA service in 13 of the top 50 wireless markets by the end of June 2004.

Running up to the launch, AT&T Wireless' board of directors will form a technical committee to oversee it and make recommendations on the size and timing of a wider launch. An NTT DoCoMo representative will sit on the technical committee and a second seat on the board of directors will be given to the Tokyo based cellular carrier, it said. NTT DoCoMo also won the right to be consulted on strategic issues, it said.

The increased hand in AT&T Wireless's business comes after NTT DoCoMo was forced to write off the majority of its investment in the Redmond, Washington, carrier.

NTT DoCoMo bought a 16 percent share in the company in late 2000 for US$9.8 billion and later spent $380 million to keep its stake at the same level when AT&T Wireless issued additional shares. As the company's share price dropped, NTT DoCoMo has twice written off part of the value of the stake it holds. For the previous fiscal year it wrote off ¥563 billion (US$4.2 billion) and in the first half of the current fiscal year it wrote off ¥339 billion.

The WCDMA service will offer AT&T Wireless' users faster data transmission and support for applications such as video telephony.

Delivering speeds of between 200k bps and 300k bps (bits per second), it is several times faster than GPRS (General Packet Radio Service), which runs at speeds of up to 60k bps and which the company has recently completed rolling out across its GSM (Global System for Mobile Communications) network. It is also faster than the planned EDGE (Enhanced Data rates for GSM Evolution) service which is expected to be launched next year and will offer data transmission at speeds of around 118k bps.

The plan's revision comes as the telecommunication industry is in poor health and 3G services have been met with a lack of enthusiasm by consumers. NTT DoCoMo became the first carrier in the world to launch a WCDMA-based service in Oct. 2001 and has managed to attract 149,000 subscribers between launch and the end of November 2002. In comparison, it signed up 3.9 million to its second generation network over the same period, according to data from Japan's Telecommunications Carriers Association.

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