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Rollout of AT&T fixed wireless looks slow

December 8, 1999
Web posted at: 9:01 a.m. EST (1401 GMT)

by David Rohde

Network World Fusion

(IDG) -- AT&T is back in the wireless local loop business, though the chances of you getting your hands on the service soon is fairly small.

This week the carrier announced it is creating a national, wireless competitive local exchange carrier (CLEC). The unit will provide an antenna-based residential and potential small-business service initially offering 512K bit/sec worth of bandwidth, which users can employ for multiple voice lines and up to five data devices.

The service, eventually to be boosted to an aggregate T-1 speed, will be priced to compete with bundles of conventional voice and DSL services that incumbent local carriers could offer, AT&T officials say.

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Former AT&T Business Services President Michael Keith will head the fixed wireless CLEC. It will be housed in the new AT&T Wireless Group, a new tracking stock also announced Monday by AT&T CEO C. Michael Armstrong.

AT&T made a halting attempt to enter the fixed wireless, or wireless local loop, business in 1996 with Project Angel, a similar antenna-based residential offering that promised 128K bit/sec of bandwidth, primarily for multiple voice lines. But the project was taken back to the labs after Armstrong became CEO in 1997 because he frowned at the cost per subscriber, which was then an average of $1,149.

The new fixed wireless offer, which includes an antenna plus a network interface device (NID) on the side of the house, a battery supply typically mounted in the garage, and potentially a "personal base station" inside the home, will now cost AT&T about $750 per subscriber.

"And a lot of that is variable," says John Zeglis, the current AT&T president who is slated to take over the new wireless tracking stock. "The money doesn't get spent until the customer says yes." Armstrong also touted projections indicating the cost per subscriber will go down to about $500 over the next couple of years.

The initial 200 users of the service, located in and around Dallas, can order multiple voice lines and connect up to five data devices. And unlike AT&T's cable business, the fixed wireless business will offer users a choice of ISPs from the start. AT&T will even offer customers an online registration system to select their ISP from among those who have registered for the AT&T fixed-wireless program.

But whether users can get their hands on AT&T Fixed Wireless is a matter of chance. AT&T is building the network only where AT&T doesn't happen to own cable properties or its business local division owns fiber. "Our target is where AT&T is not," Zeglis says. AT&T Fixed Wireless will also have to be in territories where AT&T has at least 10MHz of personal communications services spectrum available that it's not already using for digital PCS voice service.

For example, next year AT&T is only slated to offer fixed wireless in three more cities -- one of them Dallas neighbor Fort Worth and the two others still unnamed. The service will pass a total of 1.5 million households in those three cities, AT&T says.

AT&T will reach out to partners to help get the service rolled out. For example, it's going to hire an installation contractor whose trucks will read AT&T Wireless but is actually a different company, says Lew Chakrin, vice president for consumer wireless product management. Eventually it hopes to have value-added resellers and potentially even retailers such as Circuit City or Best Buy sell the service.

AT&T officials depicted fixed wireless as a complement to its cable strategy, filling in gaps in its nationwide push to displace the regional Bell operating companies as local carriers. Some analysts questioned whether the limited rollout indicated this was just a tactical move to buy time while AT&T negotiates more cable deals -- such as cable competitors agreeing to sell telephony and Internet access under the AT&T brand.

"Have we just implied that we just haven't gotten the [cable] joint ventures done?" asked one skeptical Wall Street analyst attending an AT&T investment conference where the announcement was made.

Zeglis is adamant that AT&T is interested in pushing fixed wireless for its own sake. "Fixed wireless is not a club and it's not a threat," he says.

The fixed-wireless announcement was part of a broad move by AT&T to boost its already booming mobile wireless business by placing it in a tracker stock. Zeglis says AT&T will use the tracker stock as "currency" to make investments elsewhere, promising to invest in small start-ups with promising wireless technologies and applications.

Ironically, AT&T has recently suffered service problems with its ordinary mobile telephony service right in New York City, with widespread dropped or uncompleted calls. Current AT&T wireless president Dan Hesse admits that AT&T has not moved fast enough to build new capacity in New York.

Hesse requests patience while AT&T's suppliers ramp up their own production. "What we found out is that we have big suppliers and they have suppliers who have suppliers who have suppliers," Hesse says.

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