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 Channel Futures

Telephony/UC/Collaboration


Sprint Under AT&T’s Hood

  • Written by Khali
  • June 30, 2004


AT&T Corp. announced in mid-May that it will private label services from the Sprint PCS network allowing AT&T to offer wireless service to its more than 30 million business and consumer customers.

The deal has renewed interest in the mobile virtual network operator model and positioned Sprint Corp. as the go-to wholesale network provider.

As a result of the five-year agreement with Sprint, AT&T expects to expand the wireless services it is currently testing in six U.S. markets under a deal announced last year with AT&T Wireless, the company it spun off in July 2001. “We are continuing the trials, and we expect to continue learning from them,” according to a company spokesperson, who told PHONE+ in a late May interview it was “too soon” to say whether the AT&T Wireless deal would remain in place once it is acquired by Cingular was completed.

The pending $41 billion acquisition, expected to close later this year, is rumored to be a primary catalyst for AT&T’s liaison with Sprint. More than one observer noted that the company intends to target AT&T Wireless customers to keep them in the AT&T brand family. For the time being, AT&T remains restricted by its arrangement with AT&T Wireless relative to use of the name for marketing purposes. “Certain aspects of a broad-scale launch would be dependent upon the completion of the Cingular/AT&T Wireless deal,” said Kevin Crull, AT&T’s senior vice president and general manager of wireless services in a press conference May 18.

The merger - along with aggressive growth by smaller competitors like Nextel and T-Mobile - also has put pressure on Sprint to differentiate itself in the marketplace, notes Michael Doherty, research director and vice president of Ovum’s North American telecom practice.

Sprint responded by expanding its MVNO strategy, which was kicked off with Virgin Mobile USA, a joint venture between Sprint and Virgin that targets the youth market. Last summer, Sprint announced a second MVNO deal with Qwest Communications International Inc., filling in the Bell company’s regional wireless network and creating a national footprint.

“Unlike youth-focused Virgin Mobile, Qwest’s market segmentation is similar to Sprint’s,” notes Doherty, explaining that the AT&T deal - also with similar markets - confirms a broader wholesale strategy on Sprint’s part. “By building up a strong and diverse portfolio of MVNO partners, and by focusing on keeping them happy and on keeping the network humming, Sprint might successfully reinvent itself in the U.S. wireless market,” he notes.

Analyst Jeff Kagan concurs, noting Sprint has recognized the wholesale side of the business becomes more important as competition on the retail side heats up.

“I look at the new Cingular/AT&T combination, Verizon [Wireless] - those are enormous competitors from my perspective,” says David Bottoms, vice president of strategic partnerships for Sprint PCS. “In order for us to be able to compete effectively at retail, having a wholesale business that complements that to provide some scale and efficiency is critically important for Sprint.”

While AT&T’s targets may appear similar to Sprint’s, Bottoms says they primarily are complementary. These include 22 million AT&T Wireless customers, 30 million loyal long-distance customers, prepaid business and the enterprise market.

“To the extent that they continue to be successful by bundling wireless with their wireline capabilities, we will get wireless business on our network that we would have never gotten had we been trying to win this on our own,” Bottoms says.

Under the agreement, AT&T will provide its own content and applications, operator assistance, 411 information service, customer care, billing and handsets. AT&T also will carry the long-distance and international calls made by its wireless customers over its own long-haul network.

The MVNO model allows AT&T to reenter the market without incurring significant capital costs. AT&T also expects to benefit from its scale and streamlined internal systems, as well as its status as one of the world’s most recognizable companies.

While the company declined to reveal its market rollout plans, it issued a press statement indicating it intentions to widen availability of its wireless service later this year by adding the service to the company’s other consumer bundles. Among them are the AT&T OneRate local and longdistance plans as well as its CallVantage VoIP service.

AT&T’s wireless service also will be offered to enterprise, small and medium business customers. The company is testing a bundled wireline/wireless service in Atlanta, Baltimore, Boston, Indianapolis, San Diego and Tampa.

As integration of wireless handsets with Wi-Fi networks improves over the next 18 months, AT&T plans to offer handsets that also allow customers to make VoIP calls over broadband connections in homes and businesses.

“The MVNO model has achieved great success in Europe and is showing promise in the U.S. when executed with the right strategy,” said AT&T Chairman and CEO David W. Dorman in a press statement.

Indeed, AT&T follows in the footsteps of BT, which shed its wireless business unit (subsequently rebranded as O2) and then entered into an MVNO arrangement with that spun-off operator. “The BT example illustrates what a long process becoming an MVNO can be, and how long it will take before AT&T is able to offer a fully-fledged mobile voice and data service, even once it begins offering service later this year,” says analyst Doherty. He notes BT has been acting as an MVNO of sorts since mid- 2003, but doesnt yet offer a fully-fledged suite of data services.

“[This is] good news for both AT&T and Sprint, but the positive side won’t kick in until 2005, while the costs will impact almost immediately,” he notes.


Tatara Supports Virtual Network Model

Tatara Systems Inc. announced in late June at SUPERCOMM it is expanding its Wi-Fi-focused company and software platform to enable service delivery across networks. Tatara’s new focus coincides with an increasing acceptance of a “virtual network” model wherein network ownership is separated from customer ownership, says says Kevin Jackson, vice president of marketing and product management for Tatara. He cites Sprint Corp.’s recent wholesale deals with AT&T Corp. and Qwest Communications International (see story). Technically, a company can pull together integrated data services without owning any networks, Jackson says, noting that the Tatara platform makes this possible.

“Under the hood, Tatara’s system is not tied to Wi-Fi,” he says, explaining Tatara’s platform, renamed the Mobile Services Control Platform (MSCP), emulates an IM platform in that it offers service providers the ability to communicate with a subscriber even if they are riding a network the provider does not own. The MSCP includes a centrallydeployed server and client software that sits on the subscriber’s mobile computing device.

“What Wi-Fi did was create interest” in mobile data from carriers, Jackson says, noting it also highlighted the challenge of fragmented network ownership, which requires a roaming approach. He says this, in turn, makes it difficult to provide adequate control over branding, network performance or user experience, and it also hampered efforts to extend value-based services, such as content or messaging, across networks.

“[As in an IM system], we created a way that the client software registers them back to the gateway to maintain presence and reachability,” Jackson says, noting this enables service providers to push and pull info from the user regardless of the transport network. This direct connection allows service providers to securely authenticate customers, collect diagnostic information in real-time from the device, monitor and manage SLAs with roaming partners and support a range of pricing and payment options. In addition, the Tatara platform enables the delivery of value-added services, even if the user is running a VPN.

In the same way that the platform enabled these capabilities across disparate Wi-Fi networks, it does so across other wireless and wireline networks and a range of mobile computing devices, including laptops, personal digital assistants, smartphones and others. To complete the transformation, the Tatara platform now includes capabilities for authentication and performance management that are peculiar to certain network types.

Links

AT&T Wireless    www.attws.com
Cingular Wireless LLC      www.cingular.com
Nextel Communications Inc.      www.nextel.com
Ovum      www.ovum.com
Qpass Inc.      www.qpass.com
Sprint Corp.       www.sprint.com
Sprint PCS       www.sprintpcs.com
Tatara Systems Inc.      www.tatarasystems.com
AT&T Corp.  www.att.com
T-Mobile USA Inc.  www.t-mobile.com
Verizon Wireless      www.verizon.com
Virgin Mobile USA LLC            www.virginmobileusa.com

Tags: Agents Telephony/UC/Collaboration

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