AT&T Wireless and Cingular to share networks

High capital expenditures associated with next-generation wireless systems and rapid buildout requirements prompted AT&T Wireless and Cingular Wireless to share GSM/GPRS networks along 3,000 miles of interstate highways by 2003.

“Roaming expense is a huge hit to large operators such as AT&T and Cingular, and, as we migrate our technology over to GSM/GPRS, we didn't want to pay someone else for roaming,” said Dave Williams, vice president of strategic planning with Cingular Wireless.

The wireless carriers plan to share spectrum and network equipment along major interstate routes in Arizona, Colorado, Kansas, Minnesota, New Mexico, Nebraska, Oklahoma, Texas and Utah. Both plan to spend more than $5 billion in capital expenditures this year on next-generation networks. The deal is expected to save them millions of dollars in buildout costs.

“AT&T wants to maintain guidance that, in 2001 and 2002, they would hit the high-water mark in terms of capex,” said Tim O'Neil, vice president with Wit SoundView. “It is trying to conserve resources on building out in rural markets and focusing on urban markets.”

In October, Cingular signed a similar deal with VoiceStream to share infrastructure in markets such as New York, where both operators were lacking in coverage. Both carriers cited long-term savings as the driving force for a 50/50 joint venture, which will let them exit easily in the future, because they are not relinquishing spectrum licenses or operating control of their networks.

VoiceStream CEO John Stanton said the deal would save his company at least $1 billion in the first three years.