AT&T Wireless to Rise From Ashes

May 7, 2004
By now, most consumers who follow such things know that AT&T Wireless, no longer a unit of AT&T, is being purchased by Cingular for $41 billion and will disappear as a brand name.

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Or will it? AT&T -- the hoary old parent company that was sentenced to dismemberment back in the 20th Century -- says it plans to launch a new wireless service using the AT&T name.

And what does the proud parent plan to call its latest offspring? No one is saying but AT&T CEO David Dorman has vowed to be "back in wireless, probably the next day" after the Cingular deal is concluded, according to The Wall Street Journal.

A little bit of telephone history seems to have escaped everyone's attention. When AT&T spun off AT&T Wireless to raise desperately needed cash a few years ago, it retained the right to take over the AT&T Wireless name if the business was sold to a new owner who retired the name.

This has thrown the cell-phone industry into something of a dither. It virtually guarantees confusion among the 22 million AT&T Wireless customers who will be told later this year that they are now Cingular customers.

Many of those 22 million subscribers are considered "prime" -- meaning many are business customers who are loyal to the AT&T brand and, more importantly, don't haggle over pennies.

AT&T is also pulling out all the stops to load up its new wireless service with features likely to appeal to businesses and institutions. It is unveiling "CallVantage," offering voice service over the customer's broadband connection. This technology -- called VOIP (Voice Over Internet Protocol) -- potentially makes it much easier for road warriors to control their telephone service while on the go.

CallVantage also enables AT&T to "bundle" local, long distance, wireless, Internet and other enhanced services in a single billing package. It eliminates the "last-mile" problem, the necessity to lease local Bell company lines to provide local service. Now AT&T can sell to anyone with a broadband Internet connection, no matter who the ISP is.

"For all its problems, AT&T still has the ability to harness industrial-grade technology and marketing to a world-class brand name. There are 163 million cell phone users up for grabs in the U.S. market and AT&T obviously has decided to go after them. I wouldn't count them out yet," said a longtime Washington telecommunications analyst.

A potential drawback is that AT&T will be leasing wireless capacity from other carriers, which can pose customer-service difficulties and drive up costs.

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