December 31, 2002 12:20 PM PST
AT&T Wireless' $6 billion bet
That's the gist of an amendment filed to the Securities and Exchange Commission (SEC) putting teeth into the requirement that AT&T Wireless will launch at least 1,000 cell sites in San Francisco, Seattle, Dallas and San Diego using a new wireless technology by Dec. 31, 2004.
NTT DoCoMo, Japan's largest telecom, invested the money in January 2001 as part of a long-term agreement with AT&T Wireless to roll out so-called 3G, or third-generation, cell phone service in the United States. The deal, signed in December 2000, stipulates that the companies would launch W-CDMA-based services in 13 of the top 50 wireless markets by June 30, 2004.
The amendment scales back that schedule to four markets by the end of 2004.
Wideband code-division multiple access (W-CDMA) is an emerging cell network standard that triples network capacity without requiring a network upgrade by carriers. The standard is also known as the Universal Mobile Telecommunications System (UMTS).
According to the DoCoMo filing on Thursday, AT&T Wireless is on the hook to meet the new launch deadline or it will have to buy back its own stock from DoCoMo for the original purchase price plus interest.
"There is very, very little chance of that happening," said Mark Siegel, an AT&T Wireless representative. "We have a strong partnership with DoCoMo. We are absolutely committed to rolling out W-CDMA, and this agreement is simply recalibration of the schedule of that rollout. That's all we're talking about."
The amendment makes an exception if AT&T Wireless misses the deadline for reasons beyond its control, or if it switches its rollout plans to "an alternative third-generation technology."
AT&T Wireless's share of the NTT DoCoMo investment was $6.2 billion, according to the filing. AT&T retained $3.7 billion.
The planned launch will be "the first deployment of true 3G wireless data services based on W-CDMA technology in North America," according to NTT DoCoMo.
Another amendment to the deal grants AT&T Wireless the right to swap cities, should current plans not pan out. Dallas could be replaced by Miami or Detroit, while San Diego could be replaced by either one of those two cities, Phoenix or Houston.