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Deutsche Telekom to Integrate Cell/WLAN Service

VoiceStream Wireless Corp. has begun to absorb its acquisition of MobileStar Network and the results could have an enormous impact on the burgeoning Wireless Local Area Networks (WLAN) sector.

The Bellevue, Wash.-based company, which itself was purchased by Deutsche Telekom last summer, now plans to phase out the MobileStar and VoiceStream Wireless brand names and will likely unify its wireless offerings around the world through integrated service plans.

"MobileStar is one component of VoiceStream's package of high-speed data offerings. I think you will see integrated service packages going forward," said Jill Meiburg, spokesperson at Deutsche Telekom.

With an integrated service plan, Deutsche Telekom would be the first service provider to unite the nascent market of unlicensed WLAN services with the maturing market of fully-licensed, traditional cellular service.

Dropping the MobileStar name means the end of the road for the much-stigmatized network of Wi-Fi-based WLANs. VoiceStream announced its plans to buy MobileStar in November 2001 through bankrupcty. The acquisition was completed on Jan. 22.

Founded in 1996, MobileStar was one of the earliest movers in deploying wireless broadband access through the Wi-Fi (a.k.a. 802.11b) standard. Through deals with airports and various shops like Bay-area Scores Legendary Sports Restaurant, the Richardson, Texas-based company used Wi-Fi-enabled equipment to set up hotspots where the public could access online services within a certain area of coverage. The crown jewel in its access-point portfolio came in January 2001 when it signed up Starbucks Coffee as a partner.

But after spending millions on rolling out a nationwide network of access nodes, the company was forced to layoff a large part of its staff and subsequently forced into bankruptcy in order to complete the VoiceStream acquisition. Industry observers said the name is not synonymous with other relics like Metricom's Ricochet service.

So now that MobileStar is officially part of the company, officials at VoiceStream have already begun to integrate its assets into VoiceStream's portfolio.

VoiceStream will "commercially market these [WLAN] services under the T-Mobile brand by the end of 2002 as a complement to our nationwide GSM/GPRS service," the company said in a 10-K filing made with the Securities and Exchange Commission earlier this week.

For example, VoiceStream technicians are already starting to change over equipment at a Starbucks location in Pioneer Courthouse Square in Portland, Ore. Portland locations are said to be going live in April.

But the re-branding efforts is far more extensive than simply renaming MobileStar assets. The company will also phase out its own VoiceStream Wireless name in the U.S. With its "Get More" marketing strategy featuring Jamie Lee Curtis, VoiceStream said it will change its brand logo to introduce "Global Wireless by T-Mobile."

"We plan to phase out the VoiceStream brand name over the next year, forming a cohesive international wireless brand using the T-Mobile name," the company said in its filing.

Officials at VoiceStream declined to specify on the pricing points or timeframe of the rollout, saying that further details will be available at a later date.

Deutsche Telekom's integration of WLAN and cellular service could be the watershed event for similar deals on the horizon between traditional cellular/telephone companies and new WLAN-based Internet service providers, industry observers said.

"Somebody has to bite the bullet and spend a few hundred million dollars for people to finally take it seriously. The next step up is not going to come from the start-ups. It's got to come from the cell/telephone companies," said Glenn Fleishman, who tracks 802.11 developments and has authored numerous articles on the subject.

Indeed, Sprint has already become an early investor in Boingo Wireless.