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AT&T Wireless Drops Fixed Wireless

After four years in the business, Ma Bell's former wireless arm has decided to hang up the spurs on its failing fixed wireless service, a move that strands 47,000 of its customers, displaces its entire fixed wireless division staff and costs the company more than $1 billion.

Mike DiGioia, AT&T Wireless spokesperson, said the transition for both customers and employees will be gradual, not the systemwide shutdown of services that have become commonplace for failing broadband providers.

"Right now, we are planning a phased exit over the next six months, we're not going to just turn off the network on Monday," DiGioia said. "We plan on working with the local exchange carriers (LECs) in the area to work with our customers to find a solution."

Customers have not been notified of the expected shutdown, but DiGioia expects letters to go out to customers in the next couple months, either via email or phone. "We're going to do everything we can to make sure there's no interruption in their service," he said.

Although some of its 1,000 employees will get laid off as a result of the shutdown, DiGioia expects most will find employment somewhere else with AT&T Wireless. Those that don't, he said, will get help finding a job externally.

When AT&T announced its breakup into four separate entities last year, fixed wireless was kept on the AT&T Wireless books. Officials at the time were confident the division would remain if it could meet key financial targets, something it was obviously unable to do.

Part of the problem was that many executives at AT&T didn't know how to market the evolving technology. Fixed wireless, which has gained in popularity only in recent years, is a high-speed alternative to digital subscriber line (DSL) and cable Internet services.

AT&T owns DSL and cable properties throughout the U.S. -- cable through its ownership of TCI and Media One last year, and DSL through its buyout of NorthPoint assets earlier this year.

Fixed wireless never really found a home at AT&T, however. A spokesperson at AT&T Broadband made clear the fact that fixed wireless was never part of its Internet package; never was and never will, despite the fact that fixed wireless is a last-mile broadband Internet solution like DSL and cable.

Instead, it was lumped in with AT&T Wireless, a company that's had problems of its own since going public. The company has been struggling to generate traction with the American public to its 2.5G digital mobile phone service against competitors like Verizon Wireless and Cingular.

Executives certainly didn't have the time to spend time on a technology that must have seemed like competition to its expanding product line of Internet-ready mobile phones.

John Zeglis, AT&T Wireless chairman and chief executive officer, said it was the right move to make to keep its business profitable.

"This is the right decision, given our strategic priorities and the additional capital our fixed wireless business would require going forward,'' Zeglis said. "We are committed to a phased exit that will ensure a high level of support for affected customers. We'll work closely with customers during this transition period. And, we'll offer affected employees support in finding other employment, inside or outside our company." AT&T Wireless plans on taking the $1.3 billion hit in the fourth-quarter of 2001.