From AT&T’s press release:
AT&T Corp. today announced that it has taken its first step in re-entering the wireless market by reaching an agreement with Sprint that will allow AT&T to sell AT&T-branded wireless service to its over 30 million business and consumer customers. As a result of the five-year agreement, AT&T expects to significantly expand the wireless services it is currently testing in select U.S. markets with hopes of a launch later this year.
“In a world where customers increasingly desire the flexibility of mobile communications, we are confident that they will want to buy AT&T wireless services from one of the most trusted names in communications,” said AT&T Chairman and CEO David W. Dorman. “AT&T has proved it is capable of rolling out bundles of new and complex services quickly and cost-effectively, with top-notch customer service, and we are excited to have this important capability that will help us better serve customers.”
“We are delighted that AT&T has expressed their strong vote of confidence in the performance and capabilities of our nationwide CDMA network,” said Len Lauer, Sprint’s President and COO and President of Sprint Consumer Solutions. “We believe this agreement provides substantial positive benefits for both of our companies and we look forward to serving AT&T’s wireless communications needs. “
Dorman said the company intends to widen availability of its wireless service later this year by aggressively adding the service to the company’s other popular consumer bundles of communications products. Among them: the AT&T OneRate local and long-distance plans, and AT&T’s CallVantage Voice over Internet Protocol (VoIP) service that is delivered over broadband connections. What’s more, as integration of wireless handsets with WiFi networks improves over the next 18 months, AT&T plans to offer handsets that also allow customers to make VoIP calls over broadband connections in homes and businesses. AT&T’s wireless service also will be offered to enterprise, small and medium business customers. With a large base of customers and expertise in selling new products, AT&T is excited about the opportunities that this agreement presents.
The arrangement with Sprint combines the unique strengths of AT&T’s brand, customer base, marketing reach and innovation with a state-of-the-art wireless network that can deliver the voice and data services that customers want. Under the agreement announced today, AT&T, which will offer wireless service as a “mobile virtual network operator,” will provide its own unique content and applications, operator assistance, 411 information service, customer care, billing and handsets, allowing it to differentiate much of its customers’ experience. AT&T also has the added benefit of carrying the long distance and international calls made by its wireless customers over its own long haul network. Additional terms of the agreement include:
- Non-exclusive five-year deal
- Freedom for both parties to compete in market without restrictions
- The ability of AT&T to utilize existing customer channels and technology to provide directory assistance, customer support, and billing for customers.
- The ability of AT&T to sell AT&T-branded handsets through its own vendor relationships
- The ability to leverage Sprint’s existing wireless data network and innovate on top of it with AT&T-developed content and ISP platforms, value-added voice services and Virtual Private Networking services.
- No financial terms of the deal were disclosed
“The MVNO model has achieved great success in Europe and is showing promise in the U.S. when executed with the right strategy,” said Dorman. “AT&T plans to take that experience to a new level by giving customers innovative ways to integrate wireless into all of their communication needs. Residential, small business and enterprise customers can anticipate a wide array of choices — whether as a casual talker who wants a mobile phone for safety or a road warrior whose business depends on it.”
Dorman said AT&T is confident in its ability to offer AT&T branded wireless services for several reasons. Although the wireless industry is competitive, demand for wireless voice and data service continues to grow. Also, recently introduced local number portability rules that let customers take their wireless phone numbers with them when they switch carriers mean that carriers who market successfully face fewer barriers to taking market share.
Dorman added that the MVNO model allows AT&T to re-enter the market without incurring significant capital spending costs. AT&T also hopes to benefit from its scale and streamlined internal systems, as well as its status as one of the world’s most recognizable companies.