AT&T to offer wireless service via Sprint

It will be able to keep AT&T Wireless name after Cingular purchase

May 19, 2004|By Jon Van | Jon Van,CHICAGO TRIBUNE

After Cingular Wireless completes its purchase of AT&T Wireless this year, AT&T Corp. will begin a new wireless phone service using the network operated by rival Sprint Corp.

If that sounds confusing, it's part of the plan.

AT&T Corp. has a "window of opportunity to take advantage of the confusion to win as many customers as they can," said Michael Grossi, a consultant with Boston-based Adventis. "Confusion is absolutely the cornerstone of AT&T's strategy."

AT&T Corp. signed a five-year agreement yesterday to sell wireless service over Sprint's network, the companies said.

AT&T spun off AT&T Wireless as an independent company in 2001. That company, which uses AT&T's name and logo, agreed this year to merge with Cingular in a $41 billion deal expected to close in the fall.

As part of the spinoff, AT&T Corp. stipulated that if AT&T Wireless were sold, the brand would revert to the parent corporation, Grossi said.

That could add to the confusion, at least among the soon-to-be-former AT&T Wireless customers.

"An AT&T Wireless customer probably won't realize his company is gone until he gets a bill that says Cingular on it," Grossi said. "But his phone's logo will still say AT&T."

Mark Siegel, a spokesman for AT&T Wireless, said that once the deal with Cingular closes, "we will be branded with the Cingular brand. We will cooperate to effect whatever transitions need to be made with the AT&T brand, which, obviously, we will no longer use."

AT&T Corp. said it will begin selling wireless phones bearing its logo as soon as the Cingular deal closes and will market cell phone service to the 30 million customers who use its long-distance and local wired phone service.

Kevin Crull, AT&T Corp. senior vice president, said his company will offer some forms of wireless service before the Cingular deal closes but that the main rollout and marketing push will start once AT&T can freely promote the AT&T brand.

"This isn't a resale of Sprint's service," Crull said. "We're using Sprint as a wireless, last-mile connection to our network."

AT&T will add the wireless service to its service packages and will sell customers a package that includes long-distance, local and Internet access on one bill. The wireless Internet telephony package would enable customers to make calls from wireless fidelity (Wi-Fi) access centers and to use the Sprint cellular network, Crull said.

The company also will provide operator assistance, 411 information service, billing, phones and long-distance lines under the agreement with Sprint, but it has the right to contract with other carriers, too.

One of the key ideas in the plan is that customers who buy a bundle of telephone services from one company are less likely to defect to other carriers.

"AT&T Wireless has been losing 350,000 customers a quarter," said Peter Firstbrook, a wireless analyst with META Group. "It's the only major carrier to lose customers. They obviously haven't done a good job of managing their existing customer base."

AT&T has forecast a sales decline this year of 7 percent to 10 percent. The company is behind rivals such as Verizon Communications Inc., which sell mobile calling along with the other services.

Sprint supplies Qwest Communications International Inc., Virgin Mobile and others with wholesale mobile service to create what the telecommunications industry calls a mobile virtual network operator (MVNO). Such networks, relatively new to the United States, have been popular in foreign markets.

Sprint was among the first U.S. wireless carriers to embrace the idea, said Grossi.

"A lot of other carriers didn't believe in the MVNO model," he said.

John Garcia, senior vice president for sales and distribution at Sprint, said that its deal with Virgin Mobile launched its wholesale business. Rather than try to reposition Sprint as a company best suited to sell to teen-agers, Garcia said, it made more sense to let Virgin Mobile do it.

"We've had great success," he said. "We are part owner of Virgin Mobile."

As more carriers bundle local phone service with long-distance and Internet connectivity, wireless is seen as an essential component, said Jeff Kagan, an Atlanta-based telecommunications analyst.

The Chicago Tribune is a Tribune Publishing newspaper. Bloomberg News contributed to this article.

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