AT&T, Covad close in on WiMax

That's because $8.5 billion is the amount that Ma Bell pays other telephone companies for access to their networks, thus allowing it to provide communications services to customers.

Now AT&T has joined the growing number of carriers wowed by WiMax, radio technology that promises to deliver two-way Internet access at speeds of up to 75 megabits per second at long range. What has AT&T and others excited is the low start-up costs for WiMax. Typically, it takes $1,500 to lay underground fiber to a single home; the cost of a WiMax hookup is $75.

On top of a WiMax network, carriers could use voice over Internet Protocol technology to sell telephone services that are much cheaper than what traditional phone companies offer, Hossein Eslambolchi, AT&T's CTO, said at the just-concluded Web 2.0 Conference in San Francisco.

"We spent $8.5 billion on local access last year," Eslambolchi said. "I'm going to find any way I can to bypass that as fast as we can."

AT&T plans to begin deploying the technology in 2006.

At the same conference, Charles Hoffman, CEO of broadband upstart Covad, said his company is now testing WiMax equipment from different vendors and has the same intentions at rival AT&T. Covad has already tested a WiMax service in the Kentucky area, he noted.

"We're looking at a 2005 rollout for a commercial service," said Hoffman.

But the plans may prove to be a bit ambitious. Scott Richardson, general manager of Intel's Broadband Wireless Group, said recently that WiMax will be integrated into notebooks by 2006, and into handsets by 2007.