Cingular: The Call of the WiFi

Competition for an early slice of the fixed/mobile convergence (FMC) pie in the U.S. could be heating up now that AT&T Inc. (NYSE: T) has taken full control of the Cingular Wireless joint venture following the completion of its $86 billion acquisition of BellSouth Corp. (NYSE: BLS) over the new year.

Cingular's convergence plans could be off the backburner and on the main menu once more as it starts to trade under the AT&T name. "We’re about to become a company with wireless at its heart," AT&T’s chairman and CEO Ed Whitacre told The Wall Street Journal this week. Selling wired and wireless service bundles to subscribers is sure to form a major part of the newly converged company's wireless strategy.

It was initially expected by some industry watchers that Cingular would be the first major U.S. carrier to implement fixed/mobile convergence services. In the fall of 2005, Cingular was said to be working on a cellular-WiFi system using unlicensed mobile access (UMA) technology, while both AT&T and BellSouth were running similar trials. (See Cingular's Got Big FMC Plans.)

"They were hot on UMA and put it all on hold when the merger was announced," says one industry source. "We have heard they have stopped and started their SIP-based dual-mode handset service several times."

"They did it in some test markets, but customer reception was less than enthusiastic," notes Ovum Ltd. analyst Roger Entner.

In 2006, the operator said it would deploy IP Multimedia Subsystem (IMS) technology instead of UMA for delivering voice and data across 3G and fixed networks. This should enable Cingular to continue to work with SIP-complaint dual-mode handsets for the service. (See Cingular's Converged Future.)

"Still working on FMC," confirms Cingular spokesman Ritch Blasi. "We have deployed IMS in the network as it provides a more flexible platform to deliver not only FMC services, but advanced wireless 3G services."

The company is not giving any details on when it might launch a proper FMC service yet, adds Blasi.

Instead, Cingular's smaller GSM rival T-Mobile USA beat the rest of the major U.S. operators to the punch, launching a UMA-based service in Seattle in October of 2006. The move made particular sense for T-Mobile because it owns and operates one of the largest WiFi hotspot networks in the U.S. (See T-Mobile Pilots WiFi/Cell Service.)

CDMA operators Sprint Wireless (NYSE: PCS) and Verizon Wireless have been less vocal about their FMC plans. Sprint has been working on deploying IMS, while Verizon has been very quiet on the WiFi-cellular front.

This may not be that surprising. How to price WiFi calls so that average revenues for cell users do not fall off could be a big issue for all U.S. operators in 2007.

— Dan Jones, Site Editor, Unstrung