Will AT&T Corp. Make Retail Connection?

By Joseph Palenchar On Jun 7 2004 - 6:00am

AT&T Corp. plans to re-enter the wireless phone business later this year by marketing service to businesses and consumers, but the company hasn't settled on its consumer distribution strategy, the company told TWICE.

In one form or another, however, direct sales to consumers are likely, given that AT&T has said it would add wireless to its bundles of local, long-distance and VoIP services sold direct to consumers. In fact, in current wireless trials, an AT&T spokesman said the company is already "marketing bundled consumer offers with a wireless capability supplied under arrangement with AT&T Wireless Services. The trials," he continued, "are still in the preliminary stage, and we're not prepared to discuss them yet."

Research analysts, however, are prepared to discuss potential distribution strategies, and Gartner's research VP Philip Redman said he believes indirect retailers won't be part of AT&T's plans. AT&T-owned stores, on the other hand, will be. "A lot of wireless is done at retail," he said. "You have to have retail sales to succeed." AT&T isn't likely to sell through indirect retailers, however, because of the complexity of selling bundled landline and wireless services, he said.

As a result, Redman expects AT&T to open retail stores that look more like offices rather than high-traffic retail outlets to provide a consultative sales environment. He doesn't expect AT&T to sell a great deal of phones through direct mail, however, because "people want to see and feel phones." Long distance, he said, is comparatively "easy to sell via direct mail."

AT&T Corp. plans to reenter the wireless market after Cingular completes its acquisition of AT&T Wireless, which it formerly owned. Once the acquisition is complete, AT&T Corp. will market AT&T-brand service under a nonexclusive five-year MVNO agreement with Sprint PCS. AT&T will offer its own wireless content and data services, operator assistance, customer care, billing, AT&T-branded phones and eventually a combination wireless/Wi-Fi phone for delivering voice calls over cellular and wireless-LAN networks.

The time is right, the company contended, because wireless demand continues to grow, and local number portability has lowered newcomers' barriers to entry.