CINGULAR BACKS AWAY FROM WCDMA

Cingular Wireless is erring on the side of caution by upgrading its network to EDGE technology and not outlining a path that includes wideband CDMA (WCDMA). But with the U.S. wireless data market virtually nonexistent, playing it safe may be the only sure bet. They are not making promises they cannot deliver," said Robin Hearn, Ovum senior analyst. Because U.S. consumers have not shown a huge propensity for wireless data yet, overlaying EDGE onto its network and achieving 384kb/s probably will be enough, he said.

The move to EDGE, an interim mobile data technology, will begin with the installation of general packet radio service (GPRS) and GSM voice technology over Cingular''s TDMA and analog networks.

Cingular said its decision to pursue EDGE was based on GSM''s increased spectrum efficiency, the availability of GSM network infrastructure and the development of wireless phones that will let customers seamlessly move between its TDMA and GSM networks.

"We probably would not have done the joint venture with Voice-Stream if it was not the path we wanted to pursue," said Bill Clift, Cingular CTO. He maintained that GSM still will enable Cingular to be competitive. The upgrade, which will cost about $3 billion, is expected to be complete by 2003.

Cingular CEO Stephen Carter said the carrier believes WCDMA is a long-term vision, but it will not be a reality until additional spectrum is available. For now, the carrier is content to focus on what it has called 3G EDGE.

Cingular may not have had any other option than EDGE, though. "It is the best way for them to squeeze as much as they can out of the spectrum they have," Hearn said.

Competitor AT&T Wireless already has made the jump by announcing it would implement EDGE in its network and then go to WCDMA. “Cingular does not have a $9.8 billion investment from DoCoMo, which is interested in AT&T Wireless migrating to WCDMA,” said Phil Marshall, senior analyst for The Yankee Group.

Analysts aren''t ruling out EDGE as a suitable intermediate step for either company. EDGE may be more compelling than WCDMA from a cost standpoint because it can be implemented within existing spectrum. WCDMA also demands a separate base station.

Indeed, operators may lobby to have EDGE accepted as a 3G technology because of the cost and spectrum advantages, Hearn said. The caveat will be whether or not the devices will be available.

To facilitate the transition, Cingular said its EDGE network will be backward-compatible with GPRS devices.

Ericsson, Nokia and Siemens will assist with the infrastructure buildout and serve as the primary suppliers of GSM/TDMA dual-technology terminals. The three vendors also will be part of a larger group that will supply 850/1900MHz GSM handsets.