News

AT&T CEO aims to convert wireless cynics

• By John K. Waters
• November 24, 2003

AT&T Wireless CEO John Zeglis opened his Comdex keynote last week with a mea culpa for his industry's history of 'over-promising.'

'Wireless executives were on stages like this one,' he said, 'making people gasp in amazement at predictions about a total digital wireless nation, where 'we'll see chairs and clothes and air fresheners as machines that combine with broadband wireless networks to deliver a total sensory experience.''

Zeglis's revelation that the quote was taken from his own Comdex 2000 speech produced laughter from the audience. 'Go ahead and laugh,' he said, grinning, 'but I wasn't alone.'

It was a nice moment, a self-effacing revelation that won the sleepy afternoon crowd. But hype that 'seems to have cost the wireless industry some credibility, certainly in the eyes of the investment community, and maybe in the customer community, too,' hasn't dimmed Zeglis' personal enthusiasm for wireless.

'A lot has changed since November of 2000 when I was last speaking at this show,' he said. But one thing hasn't changed: I am [still] a wireless junkie, with a fervent and passionate belief in the wireless vision.'

While acknowledging his industry's PR excesses, Zeglis pointed out that wireless has delivered on at least two of its promises: both the numbers of wireless subscribers in North America and the range of handset options available to them have increased dramatically in the three years since Zeglis appeared at the show.

'We said that, in the United States, we were going to deepen the penetration and pile up the customers,' he said. 'Hype? No! Not guilty on this one.'

Zeglis cited studies that peg the number of wireless customers in the U.S. at the beginning of 2000 at about 74 million, for a penetration rate of about 25 percent. By 2002, those numbers had reached 125 million for 45 percent penetration, he said. This year, industry analysts at Ovum expect the number of wireless customers to approach 150 million users, with global users numbering close to 1.25 billion. By the end of the year, Zeglis said, there will be more wireless customers than wired.

AT&T Wireless launched its much-anticipated high-speed EDGE wireless data network the morning of Zeglis' speech. AT&T is targeting business customers with its new next-generation data service. Based on the GSM/GPRS global wireless standard, currently deployed throughout Europe and Asia, EDGE (Enhanced Data Rates for Global Evolution) delivers data transmission via modem cards at 100 kbps, which will give laptop and cell phone users roughly the same speeds as broadband PC connections. The standard is offered in the U.S. by three carriers: Cingular, T-Mobile and AT&T Wireless. Both Verizon Wireless and Sprint PCS, which rely on CDMA technology, are planning to roll out CDMA 20001X, which is expected to offer the same or better performance than EDGE technology.

The EDGE launch marks completion of phase two of AT&T Wireless' 3G network architecture strategy, Zeglis told his audience, and there are plans in the works to launch a higher-speed WCDMA (Wideband Code Division Multiple Access) UMTS (Universal Mobile Telecommunications System) network in a few cities next year. But Zeglis emphasized that AT&T Wireless won't be rushing into nationwide UMTS. His company is 'firmly committed to the full UMTS path,' which is its 'ultimate 3G plan and 3G goal.' If the wireless industry is going to conquer the 'cynicism' it created by over-promising, he said, it is going to have to deliver on its promises, and AT&T wants to make sure that the EDGE network delivers.

'The truth is, the hype of 2000 caused all of us to speak in terms of technology evolution that had unrealistically short intervals,' he said. 'If we just back off a few steps, we might all have remembered that you have to give new technologies time to breathe ... and to do that very important job of teaching the customers how to use all that we have made available.'

The challenge for the wireless industry going forward, Zeglis said, is to make a complex set of products and service offerings that are 'wrapped up in a multi-part system of customers, devices, bandwidth and applications' simple and interoperable. The industry's less-than-stellar record of providing easy-to-use and interoperable technologies is one of the reasons North America has lagged behind the rest of the world in wireless data adoption, he said.

'We need to improve our track record to agree to common standards,' he said. 'We've done this for voice and text messaging but not a whole lot else. This is the golden goose, the fishes and the loaves, the alchemist's stone.'

Zeglis cited Short Message Service (SMS) as an example. The technology spread like crabgrass in Europe, and by 2000 SMS was everywhere. But interoperability problems among wireless carriers slowed adoption in North America. In 2002, adoption rates increased dramatically, Zeglis noted, and the key driver was a television show.

'What happened in 2000?' he said. 'Clay and Reuben happened. And through short code voting for 'American Idol' contestants, people discovered that text messaging could be fun.'

Zeglis complained that FCC policies have stunted the growth of the wireless industry. New network services, such as EDGE, need more radio spectrum, he said, 'The government just hasn't made enough of the airwaves available,' he said. 'We in the industry can't make more spectrum. God only made what she made.' His invocation of the female deity drew more laughter from the crowd.

Zeglis also apologized for a system glitch that crippled his company's ability to activate new accounts earlier this month. The glitch had been fixed, he said, and 'we're back to near normal levels.'

AT&T Wireless' EDGE service is now available nationally for $79.99 a month for unlimited data. It is available to AT&T customers in areas served by the company's GSM/GPRS network, which covers approximately 6,500 cities and towns.