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Wednesday, July 21, 2004 - Page updated at 12:00 A.M.
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AT&T Wireless "3G" debut

By Tricia Duryee
Seattle Times Eastside business reporter

GREG GILBERT / THE SEATTLE TIMES
John Zeglis, chief executive of AT&T Wireless, holds a new wireless broadband Motorola A845, which will provide access to high-speed wireless data connections and enhanced content using the Redmond company's "3G" technology.
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The race to roll out high-speed wireless networks
AT&T Wireless workers dusted off rarely worn suits, high-powered Japanese executives flew in to town and freshly hung poster boards proclaimed: "Seattle has a new high-speed hot spot. It's called Seattle."

It was a big day for AT&T Wireless yesterday as it launched the largest deployment of high-speed wireless broadband by any carrier to date in four cities.

But, the fanfare had less to do with technology for the Redmond company and more about satisfying an almost 4-year-old agreement with Tokyo-based NTT DoCoMo, and about preparing for its takeover by Cingular Wireless, analysts said.

"I think it was a morale boost for the company. With the merger coming, you don't know what is going to happen," said Tole Hart, a principal analyst with Gartner. With the launch of the company's third-generation technology, or "3G" for short, users in Seattle, Detroit, Phoenix and San Francisco are able to access video, e-mail and other data at speeds six-to-eight times faster than a dial-up modem at home starting immediately. Later this year, the service will be available in Dallas and San Diego.

Partners include Microsoft, Hewlett-Packard and RealNetworks, which is selling its streaming video service for $5 a month.

Phones cost $300, and are the size of a short remote control with a screen 2 inches long and 1-½ inches wide. Unlimited access on a phone costs $24.99 a month.

For a modem to be used with a laptop or a handheld device, it costs $80 a month.

The technology is the next upgrade in a series of steps on the GSM wireless platform considered the worldwide standard. The move announced yesterday is a leap ahead in data speeds and can be explained as a larger pipe allowing more data to flow through.

The new data service is called Universal Mobile Telecommunications System (UMTS).

The difference in speed on 3G and a dial-up modem is the difference between watching a "glorified slide-show" and images practically indistinguishable from a TV, said John Zeglis, AT&T Wireless chairman and chief executive.

Other carriers are providing wireless data speeds — in some cases even faster than AT&T Wireless. Verizon Wireless has launched a service, Nextel Communications has started a trial, and Sprint PCS vows to roll out service soon.

And, the system is still only in its infancy. In 2008, 19 million subscribers are projected to be using UMTS in the United States for voice services and 6 million for data services, according to research company Gartner.

But even in the race to roll out the fastest technology in the most places, AT&T Wireless is only slightly ahead.

"If they are the best or the first, it doesn't matter. If they are only going to roll out in four of these cities and two after that, Verizon will roll out more, then Sprint. ... Who cares?" said Shiv Bakhshi, director of wireless infrastructure for IDC, a research firm.

Instead, he said, the announcement was about keeping competition alive, and in the shorter term fulfilling the commitment with NTT DoCoMo.

Four years ago, the Japanese telecom giant invested $10 billion to ensure that AT&T Wireless would bring the GSM standard to the United States. If the Redmond company didn't roll out the service as promised, it would have had to repay the investment, plus interest.

"These conditions weren't meant to penalize AT&T," said Keiji Tachikawa, former president and chief executive of NTT DoCoMo and current director, through a translator.

Instead, they were aimed at speeding adoption of GSM worldwide, Tachikawa said. The technology is used in Asia and Europe, so when considering the billion-dollar investment, Tachikawa said he didn't hesitate.

Keiji Tachikawa, former CEO of NTT DoCoMo
"Please consider that AT&T could have chosen a different path," he said. If they had, "the investment would have been reduced to nothing."

The next question is what will happen after Cingular Wireless acquires AT&T Wireless later this year. The merger is pending regulatory approval.

Zeglis said the rollout won't slow down. So far, the companies have spent $200 million on upgrading the towers where they have the service, he added.

"Once we have a combined company, we'll have a spectrum portfolio that makes the launch possible in more markets than either of us could do alone."

Cingular said it will launch UMTS by 2006, with the possibility of deploying an even faster version called High Speed Downlink Packet Access or HSDPA.

AT&T Wireless will report its second-quarter earnings today.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2004 The Seattle Times Company

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