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Commentary: AT&T PocketNet--when free is still too expensive

As a competitive response to Sprint, AT&T's effort falls short in several ways.

See news story: AT&T Wireless offers free phone-based Net access

By Robert Egan, Gartner Analyst

As a competitive response to Sprint, AT&T's effort falls short in several ways.

First, PocketNet is a far cry from the Sprint service today, or from other competitive wireless Internet services. For one, it limits people to 40 selected sites (out of more than 100,000 wireless-friendly sites) unless they want to pay extra fees. Through an untested business plan, this "sticky" strategy may bring advertising and other revenue to AT&T and its business partners, but it needlessly restricts customer choice in a service that should be highly personalized.

The free service includes access only to these selected sites and the customer's "personal Web page." In addition to wider Web access, email and fax service will cost customers from $6.99 to $14.99 over and above their regular airtime and other wireless charges.

AT&T has been unable to attract equipment suppliers to build phones for its offering, so customers have only two models to choose from, whereas Sprint's Internet service is supported on many more phones. This is in part a penance AT&T is paying for its decision to use TDMA (time division multiple access) technology, which is unsuited to data transmission, instead of the more modern, robust technology used by Sprint.

The same constraint limits AT&T to markets that support the CDPD (cellular digital packet data) protocol, which covers only about half the United States.

Therefore, the sheer numbers tip the balance toward Sprint:

• Sprint's more modern data protocols are supported by almost twice as many points of presence as AT&T's.

• Sprint offers 10 times the number of handset models that support its data services.

• Sprint customers can access 3,000 times as many Web sites for the same price.

Gartner predicts that AT&T will not be able to fully benefit from the ongoing rapid expansion of wireless data services until it begins to more accurately meet its customers' needs and modernizes its underlying technology, which will probably take until 2002.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.