AT&T MVNO becomes a question mark

SBC's proposed acquisition of AT&T spells the end of AT&T's plans to launch a mobile virtual network operator with Sprint this year. Though AT&T chairman and CEO David Dorman said that it still plans on launching AT&T Mobile, that launch would be with Cingular, not its competitor.

"The MVNO agreement with Sprint will be reviewed," Dorman said. "We would welcome the opportunity to sell Cingular services. We will still launch an MVNO. Although if we are selling Cingular, I'm not sure it's still an MVNO."

Whether its new relationship with Cingular would be called an MVNO isn't the only thing confusing about AT&T's future wireless plans. After four yeas as living as separate entities, AT&T Wireless and AT&T Corp. may finally come back together again if the acquisition goes through--AT&T as part of SBC and AT&T Wireless as part of 60%-SBC-owned Cingular. Its brand would be freed up, but how SBC uses that AT&T brand and how it negotiates the complex relationships between it, Cingular and Cingular's other owner BellSouth is still up in the air. And while Dorman said AT&T still plans to launch wireless services this year, its acquisition isn't expected to close until 2006, meaning it would either have to strike up a separate partnership with Cingular before the closing date or wait until the acquisition is finalized.

Any deal could be a potential boon for Cingular, however. The carrier has been trying to figure out its enterprise strategy, and suddenly the biggest enterprise telecom brand presents itself in Cingular's lap, said Ragu Gurumurthy, vice president in Adventis's wireless practice.

"Taking a longer term approach, I think all of Cingular's enterprise operations would go through AT&T," Gurumurthy said. "They may call it an MVNO, but it wouldn't really be an MVNO. It would be a sales channel."

While that setup would seem to be in conflict with the interests of SBC's wireless partner BellSouth, Gurumurthy said he doesn't expect the carrier to put up much of a fuss. The enterprise revenues Cingular would bring in through its relationship with AT&T would be substantial, and BellSouth gets 40% of those dollars.

"What could happen--assuming BellSouth remains an independent company--is that SBC would agree that AT&T would sell service to small and medium businesses in BellSouth's territory," Gurumurthy said. "At the end of the day, Cingular's retail channels aren't going to be selling to enterprises anyway."