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AT&T goes its own way for wireless

The telecommunications giant decides to stick to its own wireless route following an agreement between Qualcomm and Ericsson for next-generation cellular technology.

Last week's wireless industry truce quelled much of the war over next-generation mobile phone technology, but a few of the biggest companies in the United States still remain in the trenches.

AT&T, along with BellSouth and SBC Communications, use a different wireless technology than most of the rest of the world. That technology still competes with standards supported by Ericsson and Qualcomm announced last week.

Ma Bell today reiterated its commitment to its own mobile phone technology, called TDMA, following news of a $1 billion contract with Lucent for equipment to upgrade its wireless network.

Despite their reach within the United States, these companies' choice of technology has put them at the margins of an industry-wide effort to reach global standards for next-generation wireless phones. This new technology, which will likely begin rolling out in limited areas by the end of next year, will support high-speed Internet downloads and new voice services over mobile phone networks.

Most in the industry concede that the distinction between technologies doesn't matter to consumers, who simply want their phones to work when they are turned on. But the split matters a great deal, however, to carriers and manufacturers who will see lower prices for equipment if all components are compatible worldwide. These price savings can then be passed on to consumers.

It's the economics of such a decision that many in the industry say will ultimately push AT&T and other TDMA operators to modify their own technology to work with the Ericsson-Qualcomm CDMA wireless group.

"It doesn't matter much to consumers," said Elliot Hamilton, director of U.S. telecommunications consulting for the Strategis Group. "But for the manufacturers, the worst thing that can happen is uncertainty."

A wireless family
Last week's agreement between Qualcomm and Ericsson helped quiet what had been a bitter battle between two different next-generation wireless phone technologies--each a different form of the so-called CDMA standard.

As part of the new deal, the companies will support a single "family" of standards to allow a single phone to switch somewhat seamlessly between each technology. This means that operators can install networks supporting either standard, and consumers could roam between networks supporting the different technologies.

Companies behind the wireless agreement had hoped to eventually fold companies like AT&T into their new coalition, however.

Although development groups backing AT&T's wireless standard still pursue their own incompatible third-generation wireless technology, the Qualcomm-Ericsson deal may be able to support an upgraded version of TDMA.

Analysts say companies such as AT&T are likely to take advantage of this option, rather than continuing to pursue a wireless strategy parallel to Qualcomm-Ericsson efforts. The company is already working on making their existing services compatible with other widespread wireless technologies, analysts said.

"It might be slightly more expensive for the TDMA operators," said Weston Hendrick, a wireless analyst with the Giga Information Group. "But in the long run the premium will be worth it. There's really no other choice."