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AT&T's new wireless Net
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July 13, 2000: 2:10 p.m. ET
Company starts to roll out service to compete with DSL, cable modems
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NEW YORK (CNNfn) - The wireless division of long-distance giant AT&T is rolling out a new form of high-speed Internet access that will compete with Digital Subscriber Lines and cable modems, and also enable AT&T to supply telephone service to consumers' homes without having to pay an access fee to the incumbent local telephone company.
AT&T Wireless (AWE: Research, Estimates) invented a fixed wireless broadband technology, which it called Project Angel, and first unveiled it in the Dallas-Ft. Worth area two months ago. Fixed wireless uses a base station mounted on existing cell phone sites or on the sides of buildings to beam a signal to a flat antenna mounted on the outside of consumers' homes.
The service enables subscribers to get home Internet access at speeds up to 512 kilobits per second, more than nine times as fast as a traditional 56K modem. The base cost for the service is $35 per month, which is less than what most providers charge for Digital Subscriber Lines or cable modems, the two dominant ways of providing high-speed Internet access to homes.
Digital Subscriber Lines, or DSL, enable high-speed Internet access to be provided over standard twisted-pair copper telephone lines. DSL's main drawback, however, is that a consumer's home needs to be located within about 12,000 feet of a telephone company central office for the service to work properly. At distances larger than that, the speed of the service degrades and it becomes more expensive to provide.
Coaxial cable lines also can provide high-speed Internet access, but many cable companies haven't finished upgrading their networks to allow the transmission of digital signals.
AT&T's fixed wireless broadband technology resembles an older two-way broadband technology called Local Multipoint Distribution Service, or LMDS. However, unlike LMDS, AT&T's technology doesn't require a clear line of sight between the telephone company's base station and a subscriber's home. That limitation had restricted the growth of LMDS.
Rollout in its infancy
AT&T Wireless' rollout of Project Angel is in its infancy. About 2,000 people signed up for the service in the first two months it was offered in the Dallas-Ft. Worth area, showing how difficult it is to make consumers aware of a new technology. Consumer response was muted even though AT&T Wireless charges nothing for installation and equipment. The service costs AT&T about $750 per subscriber, according to spokesman Ritch Blasi.
On Thursday, AT&T Wireless announced that it had signed an agreement with communications equipment giant Motorola (MOT: Research, Estimates) to develop and license the fixed wireless technology outside of the United States. Equipment deployed by Motorola will eventually serve as a competitive local communications infrastructure in international markets. The two companies will announce trial locations for the deployment of the services during the third quarter of this year.
"Combining our technology with Motorola's international expertise in developing equipment will enable local service providers to offer fixed wireless broadband services to homes and small businesses outside the United States," said Michael Keith, president and CEO for AT&T Wireless' fixed wireless division, in a press release. "Having an always-on high-speed connection and flat-rate pricing will change the way they access and use the Internet."
The companies estimate that hundreds-of-millions of households and small businesses outside the United States are currently prime candidates for the service. Since most people outside the United States pay per-minute rates for standard-speed Internet access, offering a flat-rate, all-you-can use, high-speed service could be an attractive alternative, they say.
Getting access to the local loop
While AT&T's new wireless Internet access if off to a muted start, the company expects that it will be available to more than 1.5 million households in six markets by the end of this year and reach more than 15 million homes by the end of 2002.
For the long-distance giant, Project Angel is more than just a way to obtain added revenue from broadband Internet access - it's a way for the company to provide local telephone service without having to pay access fees to the Regional Bell Operating Companies, or Baby Bells, as they are commonly known.
Long-distance carriers commonly have to pay local service providers a fee that can reach 40 cents of every dollar of calling revenue to obtain access to the local providers' networks. Since Congress deregulated the telecommunications industry in the U.S. in 1996, long-distance carriers have been trying to devise ways to bypass the "local loops" controlled by the Regional Bells. AT&T's main way of doing this has been to invest more than $110 billion in cable television systems and upgrading those systems to provide local and long-distance telephone service. 
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