AT&T Wireless scraps fixed wireless

AT&T Wireless Group's announcement this week that it's closing its fixed wireless operations - just a week after Sprint said it is scaling back its fixed wireless plans - is the latest indication that this may be a broadband access technology ahead of its time.

Observers say that product technology in the works will greatly reduce the cost of providing fixed wireless services and enable new service features, both of which are needed for carriers to justify the delivery of such services across the rural regions typically targeted. But they say it's unlikely this technology will be solid for another few years.

"Service providers would rather roll fixed wireless out when they have a more cost-effective architecture, and that's still in flux," says Maribel Dolinov, senior analyst at consulting firm Forrester Research Inc..

All this helps explain why AT&T Wireless is subjecting itself to a US$1.3 billion writedown of its fixed wireless business rather than trying to keep it going. The company says continuing to operate and expand its Digital Broadband business would just be too expensive.

Unlike other fixed wireless providers such as Sprint and WorldCom Inc. (which continues to forge ahead with its fixed wireless plans), AT&T Wireless only targeted residential users with its 512K bit/sec Internet access service. The Digital Broadband offering attracted 47,000 users, most of them consumers, with a smattering of small office/home office users included. The service runs over the company's PCS 1900-MHz spectrum and its Wireless Communication Service spectrum in the 2305- to 2320-MHz and the 2345- to 2360-MHz ranges.

The idea was to offer customers a last mile alternative when they were not on AT&T Broadband Inc.'s cable network or DSL could not be provisioned, Dolinov says.

But clearly this was an AT&T Corp. initiative. AT&T Wireless, now separated from its parent, does not have the same last mile concerns. While the company says this is a bittersweet cut, AT&T Wireless officials are also quick to point out that Digital Broadband is a nonstrategic business.

It's taking too long to locate towers, installation costs have gone up and AT&T Wireless has not been able to improve backhaul provisioning with the incumbent local exchange carriers, which "exasperate costs," says John Zeglis, CEO at AT&T Wireless.

On the bright side, AT&T Wireless will be able to reclaim PCS spectrum in San Diego and Dallas that is being used to support its fixed wireless services sooner than expected. The company needs this spectrum to deploy 3G mobile wireless technology.

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