Landline Telcos Revive Mobile Plans
By Carlo Longino, Tue May 18 17:30:00 GMT 2004

Old-school phone companies AT&T and BT, both of which have exited the mobile business through spin-offs, reaffirmed mobile as a key part of their plans today.

One question hanging over the AT&T Wireless-Cingular merger has been what would happen to the AT&T Wireless brand, the rights of which will revert to AT&T, which owned the wireless company of the same name before it was spun off and taken public a few years ago. The company said today it would launch an MVNO using Sprint PCS' network later this year under the AT&T Wireless brand.

AT&T will use the service to offer bundled wireline and wireline plans, as it did before through AT&T Wireless. AT&T will also pursue similar agreements with other carriers in markets without Sprint coverage so it can offer service across the US.

It's kind of a strange move on AT&T's part for several reasons. Since Sprint uses CDMA and the old AT&T Wireless uses GSM and TDMA, users that currently have bundled wireless service from AT&T will have to switch handsets, something that will likely cause a lot of confusion and consternation. Also, users of the old AT&T Wireless that choose to switch will find similar confusion as the new AT&T Wireless will be a completely different company using different technology and offering different services.

But the biggest question hangs over exactly why AT&T would want to continue the AT&T Wireless brand. While AT&T is one of America's oldest and most recognizable brands, AT&T Wireless has done its best to run the wireless brand aspect into the ground. It leads the nation in complaints against carriers, had well-publicized computer problems that rendered it helpless last year, and it's got a pretty terrible reputation for poor service and customer relations. AT&T will have its work cut out for it to quickly and clearly differentiate itself -- a task rendered significantly more difficult by using the same name.

BT, which exited the mobile business when it spun off its mobile division, mmO2, three years ago, said today it was launching a new service with Vodafone. The Bluephone service will let users make calls on Vodafone's mobile network but also send calls made from the user's home or office over a Bluetooth link to a BT landline. BT had been testing the Bluephone service with mmO2, but mmO2's CEO said the company had no plans to deploy it commercially because it wasn't satisfied with how the phones worked inside homes.

mmO2, incidentally, also announced its first full-year profit today. The company earned GBP 95 million in the fiscal year ending March 31, compared to a loss last year of over GBP 10 billion, a figure bloated by significant writedowns of its 3G licenses. mmO2's customer base grew 14 percent to 20.7 million while its revenues jumped 22 percent to GBP 5.65 billion.