Dropping EDGE could regain edge for AT&T : AT&T Wireless' 3G plans could see it drop plans to deploy EDGE and, instead, move straight on to the global W-CDMA platform

America's Network, Feb 1, 2001 by Grahame Lynch

AT&T Wireless big announcement late last year of NTT DoCoMo's 16% investment and its 3G network upgrade plans has subsequently raised more questions than answers.

Investors have speculated that DoCoMo is unlikely to stop there and will angle for a greater stake when the Wireless unit is eventually spun off as a separate company. And, AT&T's plans to upgrade its network using three separate technology platforms within five years prompted some to ask why it wouldn't miss out the first two steps and go straight for the end-game W-CDMA 3G platform.

Although AT&T holds just a 12% share of the US mobile market, its influence is disproportionately greater. It pioneered national flat-rate roaming and its CDPD-based 19.2 kbps PocketNet service continues to be the most successful packet-based wireless service in the market today.

So when the world's most successful wireless Internet provider, NTT DoCoMo took a $9.8 billion stake in AWE and agreed to transfer its i-mode platform to the United States as part of the deal, the industry certainly took notice. DoCoMo has signed 17 million Japanese customers to its 9.6 kbps i-mode service while its less well-known 64 kbps PHS "m-opera" service has just launched the wold's first mobile video service with 47 programming channels and a video camera facility.

But while the cellular commentariat was busy speculating on whether a wireless Internet service with Japanese characteristics would transfer to American culture, the real story was in what DoCoMo didn't say about the AT&T news.

As part of its announcements, AT&T announced four vendor agreements that provide for a staggered network upgrade. Initially, AT&T said it will deploy a GSM-based General Packet Radio Service overlay on its 1900 MHz PCS network. This platform currently supports real-world speeds of between 25 kbps and 50 kbps at the cell, although it is specified to operate at 115 kbps. Then, AT&T would upgrade to fully-fledged EDGE, which is specified to operate at 384 kbps. Unlike GPRS, there are no commercial EDGE products planned for well over a year. Then, by 2003, AT&T would harmonize its platform with DoCoMo's and introduce W-CDMA technology, currently specified to operate at up to 2 Mbps at the cell.

However, it may make more sense for AT&T to forget about EDGE and move straight to W-CDMA. DoCoMo plans to launch its first W-CDMA network within five months, serving the greater Tokyo area and parts of neigboring Yokohama. Service will be rolled out to Osaka and Nagoya before the end of the year. The initial incarnation of DoCoMo's W-CDMA network will support speeds of 384 kbps, the equal of EDGE's promised specification.

In announcing its AT&T investment, DoCoMo made a deliberate reference to AT&T Wireless' "GPRS/W-CDMA upgrade", perhaps giving an indication of how little it thinks of EDGE. Part of DoCoMo's AT&T investment calls for a "joint buying consortium" for network equipment and handsets. Given that DoCoMo has no intention of deploying EDGE, it would seem to make more sense for AT&T to quickly leverage off DoCoMo's W-CDMA suppliers.

GPRS has been slow to commercialize, even though the network platform has been deployed by a wide swath of Asian and European operators. Only a few GPRS handset models such as the Motorola Timeport are shipping in any sort of quantities, with most promised releases yet to eventuate. EDGE is only likely to be deployed by a handful of TDMA operators in the Americas - and by the time it comes around, W-CDMA handsets are likely to be shipping in plentiful quantities with competitive prices and highly-evolved form factors.

Certainly, AT&T has the spectrum resources to deploy W-CDMA. "We have more spectrum than any of our competitors", boasts AT&T Wireless president Mohan Gynar. Indeed, AT&T has enough of the 2x5 MHz spectrum required for W-CDMA to launch the platform in 70 of its top 100 markets without further spectrum acquisition. AT&T could use GPRS and further spectrum & network acquisitions to make up the remainder -- it bought networks in four new markets alone in 2000.

So with the prospect that DoCoMo's favored suppliers such as NEC may pick up some lucrative new AT&T business, where does that leave Nokia, Nortel, Lucent and Ericsson - AT&T's current preferred group of 3G suppliers? Only Lucent has an agreement as such. The rest have received letters of intent. Lucent and Nokia are to supply GPRS-enabled base stations, Nortel an IP backbone, and Ericsson its new turbo handset, the R520 - which promises to support tri-band frequencies, GPRS, Bluetooth and the new version of WAP, v.1.2.1.