AT&T Is Ready To Launch 3G -- Next Week?
By Eric Lin, Thu Jul 15 22:45:00 GMT 2004

Thursday AT&T Wireless said was still planning to launch 3G in four US cities this year, just as it had announced in March. Rumors say it could be as soon as next week.

Not much new came out of the announcement, although the identities of the other two launch cities were revealed. In addition to San Francisco and Seattle, 3G networks will also be available in Detroit and Phoenix. The company also unveiled data pricing, set at $25 per month for unlimited access on consumer handsets, and $80 per month for laptops and PDAs using data cards.

While AT&T didn't provide much news at this announcement, rumors have started that the announcement might have been timed to warm the audience up for a 3G launch as early as next week. AT&T had previously said the launch would be "later this year," which most analysts expected to mean sometime around September or even later. An early launch of any mobile technology is always shocking, but it is even more curious in light of AT&T's impending buyout by Cingular.

The US Government continues to investigate the deal. It passed easily through the FCC and more recently was scrutinized by the FTC (Federal Trade Commission). Now the deal is being analyzed by the Department of Justice (DoJ), which has served the companies with 12 pages of questions to answer. Continuing investigation, as well as continuing actions from AT&T that are clearly separate from Cingular's strategies have fueled rumors that the deal is crumbling. However according to Reuters' piece today, the deal is still expected to close in October.

If AT&T does not sell out to Cingular, it will need this 3G network to fulfill an obligation to NTT DoCoMo or default on a $6 billion investment the Japanese company made. It will also put AT&T in a position ahead of Cingular, which does not plan to launch 3G until next year. The data prices AT&T just announced are highly competitive with Cingular's 2G pricing, putting the squeeze on their potential new owner.

If the deal is completed as planned, AT&T (with the help of Cingular) may simply be launching this network simply to fulfill their obligation to DoCoMo as promised. However it's no secret that neither AT&T/Cingular nor DoCoMo have any interest in continuing this relationship. By launching 3G in four cities, even earlier than promised, the new AT&T/Cingular will be in a much stronger position to extract themselves from the deal with DoCoMo as soon as possible for significantly less money. The new American carrier will be able to point to its investment in 3G at the behest of DoCoMo and buy out the investment for much less than the original $6 billion, while establishing a network it can use to generate revenue.

This rush to launch sounds like a no-lose situation for AT&T except that the first three handsets it has announced are all large and unappealing models that were unsuccessful for 3 last year. Like 3, FOMA and other 3G networks before, AT&T probably won't see strong uptake until it can offer small, powerful handsets like the 2G models AT&T subscribers are accustomed to. Although waiting would have hurt AT&T's strategy (no matter which strategy it is), it would have given manufacturers time to ready newer handsets. Still, it's unlikely that even with more appealing handsets that AT&T could have gotten enough 3G subscribers to compensate for the financial benefits it will see from launching now.