Wi-Fi Ahead for AT&T Wireless

After narrowing its quarterly loss but continuing to bleed money, AT&T Wireless
said it is taking a series of steps to turn things around, including entry into the Wi-Fi business and roll-out of a new cell phone plan that does not require a long-term contract or deposit.

The nation’s third largest wireless carrier is entering the Wi-Fi business with AT&T Wireless GoPort, a high-speed wireless data service to be available in major airports and hotels. That is possible via a deal with Wayport, a Wi-Fi service provider, that will allow roaming on that company’s networks in some airports and hundreds of hotels across the United States.

Also being developed is the AT&T Wireless GoPhone offering, which has no long-term contracts or deposits. Customers simply buy and activate their next-generation GoPhone phone — and go, the company said. A set monthly fee is automatically charged to their checking account or credit card.

For the fourth quarter, the Redmond, Washington-based company lost $136 million, or 5 cents a share, much improved over a loss of $1.23 billion, or 48 cents a share, in the same period a year earlier. Revenues from services were $3.74 billion, an increase of 15.3 percent from the year-ago quarter.

Moving to reposition the company in the face of increasing competition and pricing pressure, AT&T Wireless also announced a tower cost-sharing arrangement with Sprint that provides for sharing of information about current tower inventories and future construction plans; an agreement with Bechtel to lower the costs of network expansion and a new deal with International Business Machines Corp. to create integrated wireless solutions, including e-mail, for mobile professionals.

There’s also a distribution agreement with Dell Computer that allows for wireless connectivity for Dell notebook computer users. When it becomes available this spring, customers will be able to purchase the required modem and software package and subscribe to the wide area network (WAN) wireless service through Dell.

At the company’s annual conference with financial analysts in New York, AT&T Wireless Chairman and CEO John D. Zeglis, vowing to achieve positive free cash flow in 2003, said that “to reach our goals, we will introduce new ways of marketing and distributing our products to current and prospective customers, seize opportunities in wireless data, pursue and deploy global-standard-technology, and continue to operate a high-performing, low-cost network.”

The company’s full-year services revenues increased 15.6 percent from 2001, totaling $14.48 billion in 2002 — but for the year, it lost about $2.3 billion, or or 87 cents a share.

The company did say it expects to report services revenue growth in the range of 5 percent to 7 percent for full-year 2003.

On the Wi-Fi front, the company said the new service is already available at the Denver International Airport. Beginning in mid-February, AT&T Wireless GoPort customers can access Wi-Fi systems at airports in Austin, Dallas-Fort Worth, Denver, San Jose, and Seattle, and from more than 475 U.S. hotels.

The Wi-Fi service will range in price from $9.99 for unlimited use over a 24-hour period to $69.99 for unlimited use over 30 days, the company said.

Meanwhile, AT&T Wireless said its total footprint will cover approximately 221 million PoPs by the end of 2003. In addition, a software enhancement called EDGE will be deployed later this year, which more than triples GPRS data speeds and provides two-and-one-half times more data capacity. The company ended the year with 20.86 million customers.

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