Battle For Enterprise Drives Mobile-Phone Deals

Lurking beneath the furious negotiations currently playing out among the country's mobile-phone providers and AT&T Wireless is a technology battle between two high-speed data network standards, whose features are coveted by corporate enterprise users.

The standards are AT&T Wireless's EDGE technology and Verizon Wireless's EV-DO standard. The rollout of each is being hampered by the multiplicity of wireless standards and schemes that cut across all six of the county's mobile-service providers.

"It's not sustainable to have six major mobile-phone providers," said Michael Doherty, vice president of Ovum's Telecom Practice. "There are one or two too many. The main market segment they're all interested in is corporate."

The most oft-mentioned deal would have AT&T Wireless combining with Cingular Wireless--both firms utilize the GSM standard and have cooperated in building infrastructure towers. AT&T Wireless has brand name advantage and it is a public company; its stock could be used to acquire additional companies relatively easily. However, the company has recently been plagued by consumer complaints and it has been slow moving from its aging TDMA infrastructure to GSM. A deal with Cingular, which is jointly owned by former regional Bells, SBC Communications, and BellSouth, would make sense.

"You would have a very strong competitor [to Verizon Wireless]," said Doherty of a Cingular-AT&T Wireless merger. Doherty considers EDGE to be a 2.5G technology, noting that AT&T Wireless has moved to install true 3G W-CDMA networks that will be able to support audio, video, and VPN services.AT&T Wireless began offering its EDGE nationwide high-speed data service in November before Verizon Wireless offered its EV-DO service nationally. Verizon Wireless had been offering the EV-DO service in two cities before that, and is now rolling out the service nationwide, setting the stage for a showdown between the two technologies.

"They're dueling," said Doherty, "They've been leapfrogging each other."

Somewhere in the mix with AT&T Wireless is Japan's NTT DoCoMo, which has a 20 percent equity stake in the American wireless firm. AT&T Wireless unveiled its mMode service last year, which is similar to DoCoMo's popular iMode service that has been embraced by millions of Japanese consumers. It remains to be seen whether DoCoMo will become a more active partner with the U. S. company.

The Wall Street Journal noted Thursday that DoCoMo and Nextel Communications have also discussed making a deal with AT&T Wireless. And Verizon Wireless and Sprint utilize similar CDMA network standards, making them logical partners.