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

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.

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