News World: Affymetrix: AT&T, BT Linking Up

AT&T, BT Linking Up

By Dave Marino-Nachison (TMF Braden)
September 16, 1999

Unwilling to wait for an announcement from "the competition," leading telephone companies British Telecommunications (NYSE: BTY) and AT&T (NYSE: T) today announced the formation of Advance, a new global wireless alliance.

The cellular industry is the fastest-growing segment of the telecommunications business today, and Advance will target multinational enterprises as it works to establish a network users will be able to access from anywhere in the world. To do that, the companies will support a single cellular technology standard not currently shared by Europe and the U.S.

While some companies manufacture telephones that can be adapted to different standards, the hope of many on both the industry and the consumer sides of the aisle is for a single standard for more convenient global use.

"This alliance is an important one for AT&T and BT customers," said AT&T President John Zeglis. "If you travel, you expect your BT or AT&T digital phone to work anywhere.... This is not possible in many cases today for a whole host of reasons, including incompatible technology and government regulation. We think we can make some things happen that will eventually give customers those 'anytime, anywhere' capabilities from their mobile phones."

The companies' wireless operations have a customer base of 41 million in 17 countries, according to the Advance news release.

The Fool has reported on similar negotiations between leading wireless company Vodafone AirTouch PLC (NYSE: VOD) and Bell Atlantic (NYSE: BEL).

Vodafone AirTouch is powerful in Europe, where cellular usage has caught on even more quickly than in the U.S. A combination with Bell, which is working to sew up the acquisition of GTE (NYSE: GTE), would give the companies dominant cellular presence on both sides of the Atlantic.

Details of the structure of any deal between Bell and Vodafone AirTouch are scarce, naturally, because only talks have been confirmed at this point. The Advance cohorts hope they'll take the lead by getting their setup in place ahead of anything Vodafone AirTouch and Bell might dream up together or separately.

A few high points of the AT&T/British Telecom press release: The companies will create a new mobile global services package that will go on trial later this year, work together on technological standards, set up a work exchange program within the Advance setup, collaborate on investments and purchasing decisions, and work to boost roaming revenues by directing as much traffic as possible onto its own networks.

Today's development might have been presaged by an alliance the companies put together in July 1998; currently awaiting regulatory approval, that $10 billion pact also targets multinational business with its voice, data, and Internet service offerings. That deal has recently been supplemented by other deals, including a 30% stake in Japan Telecom closed earlier this month that will help the companies distribute joint services.

All of these pieces are certain to come together in time with, for example, companies developing cellular telephones with Internet and other advanced capabilities.

Those trends are perhaps even more important for investors to watch than the development of a global communications standard, because if the entire industry is operating on a similar global system, even more of the pressure returns to the individual companies to distinguish themselves by way of services, technology, and price.

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