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Intel, AT&T team on telecom

The two companies are working together to give their suffering communications businesses a shot in the arm.

Intel and AT&T have been working together under a rare alliance to boost their suffering communications businesses.

Executives from the two companies confirmed late Thursday that they will collaborate on several communications projects as part of an agreement they committed to about six months ago. The projects are aimed at creating standardized components, as well as blueprints for products that manufacturers will create and sell to small and medium-size businesses.

The standard parts and device blueprints will help get products to market faster, help lower costs, and create a common experience for customers--all while helping Intel to sell more chips and AT&T to promote its communications services. Any help to Intel's communications chip business is welcome; it has been a money-losing effort for some time. But opportunities in cellular phones, handhelds, notebooks and a wireless broadband technology called WiMax are helping the group.

AT&T has seen better days. Amid cutthroat pricing, the emergence of rival MCI from bankruptcy protection, and a regulatory climate that led AT&T to step away from consumer telephone service, the company is struggling to regain its swagger and is relying on new applications such as voice over Internet Protocol, or VoIP, to accelerate growth in its business segment.

The telecommunications business is adopting the PC world's common strategy of using standard parts, which will help to speed changes in the slow-to-move telecommunications field.

"Standardized sets of elements help to ensure a reliable service and experience for the customer," said Howard Bubb, vice president of the communications infrastructure group at Intel.

Intel will use its IXP425 chip in some of its projects with AT&T. The telecommunications company will give input on how the chip should be used to best support communications services.

"These standard components eliminate complexity for operation, installation and maintenance; they're more of a plug-and-play solution," said Hossein Eslambolchi, chief technology officer at AT&T.

One project the companies are working on is "office in a box," which essentially is a complete communications product that can include service support for broadband Internet access and VoIP, and offer firewall protection, VPN software and routing capabilities. The product would allow remote offices to be set up quickly while giving it communications capabilities found in a main office. The project is about to enter testing, and executives have said it could be ready by 2006, but no firm date has been set.

"These designs can accelerate the move to converged services," Eslambolchi said.

The companies are also working on WiMax technology--a wireless broadband technology allowing several megabits of data to be transmitted over a radius of multiple miles. Intel has been a major promoter of WiMax and plans to produce chips, code-named Rosedale, for the wireless broadband technology starting early next year. AT&T has smart-antenna technology that could be used in WiMax products using Intel parts. Both companies are part of the WiMax Forum, an industry group aiding in the development and marketing of the technology.

Executives from the companies stressed that the relationship was in its early stages.

Details of the agreement were initially reported by BusinessWeek.