In the unique mathematics of business services, Cingular Wireless is hoping that one plus one equals No. 1. With an asset infusion from the former AT&T Wireless, Cingular is trying to position itself as the top wireless business services carrier. Not only has it reformed its enterprise unit as a separate operating subsidiary with a former AT&T Wireless executive at the helm, but it also is looking to capture a wider share of the lucrative enterprise market.
The move makes sense given what Cingular acquired in the AT&T business unit. It was a bright spot for troubled AT&T Wireless, with a well-established customer base that included 95 of the Fortune 100 companies, 80 percent of Fortune 500 companies and more than 1,200 federal, state and local government agencies.
A further indication of AT&T Wireless' business services clout can be seen in the fact that it created the plan for the Business Markets Group. The AT&T enterprise team started work on that plan in June, even before the merger was complete and without Cingular market data that was kept private under antitrust laws, according to Kent Mathy, former executive vice president of AT&T's business marketing group and now president of the Business Markets Group.
The resulting organization has four sub-units: Global, covering major Fortune 1000 or larger international companies; Corporate, concentrating on businesses with 50 or fewer employees; Small Business, handling companies with fewer than 49 employees; and Government, overseeing federal, state and local government agencies as well as colleges and universities. The Business Markets Group operates as a company within a company, with its own customer service, sales and financial operations.
'PICKING THE BEST' That the plan came from the AT&T side could have created conflict among Cingular's existing business staff, but Mathy says the process was pretty amazing. Having worked through the less-than-ideal AT&T Wireless acquisition of research firm Management Consulting & Research in 2000, Mathy was aware of the potential pitfalls.
"When one group comes in and says, 'It's going to be my way,' you basically minimize the value of the new partners," he notes. "Whether it is within Business Markets Group and the new Cingular or the new Cingular period, I'm very proud to say we are picking the best of not only process and procedure but of people."
That includes his own leadership team, which he drew from former AT&T and Cingular camps.
Mathy says there was also a good fit in the types of businesses each side brought into the merged unit. AT&T's expertise was with major business accounts, while Cingular had focused on small- to medium-sized business clients.
Melding two organizations together isn't an overnight process, and work to integrate the network systems is now under way. One of the things on the "to-do" list was to go through and pick a single set of rate plans, and load them into the billing systems. That was accomplished in November, Mathy says.
Existing enterprise customers will continue with their AT&T or older Cingular plans, and Mathy notes there is no huge rush to move them to the new lineup. Offering multiple sets of products in the meantime is not much of a hassle for Cingular, he adds – particularly because it allows more time for the eventual service and network integration to strengthen the new sets of offerings.
"It's just literally a matter of getting it into one single, unified platform, and we believe that will be happening in the first half of 2005," Mathy says. "So there is really no need for the customer to do anything in an unnatural way, and we haven't had any customers concerned about that."
RELYING ON EDGE In data services, meanwhile, Mathy says the new Business Markets Group will benefit from AT&T Wireless' wide-scale rollout in the past year of EDGE technology in more than 7,500 cities.
"Right now, when a customer is thinking about deploying an application wirelessly in the United States, we are the only carrier that can truly offer them high-speed all over the United States," Mathy says.
Although Cingular faces competition from CDMA rivals Sprint and Verizon Wireless as they roll out high-speed EV-DO networks, Mathy says the service availability is just as important as customer service. With EV-DO rollouts still limited, "unless your business is in one city or one airport, you are probably not going to be taking full advantage of that."
In addition, UMTS is on the horizon. Earlier this month, Cingular and Lucent Technologies announced they had successfully transmitted the first high-speed downlink packet access (HSDPA) data calls on a test network in Atlanta. The 3G UMTS technology promises of sustained data north of 3 Mbps puts it at throughputs comparable to EV-DO.
Analysts say the combination of Cingular and AT&T enterprise assets stands a reasonable chance for success. Gartner Research senior wireless analyst Tole Hart notes it seems that Cingular is bringing much of the AT&T Wireless enterprise team over, and "that's a positive sign. Their strength was in enterprise wireless data and hooking up to a wireless network and helping enterprises do that, and that was one of Cingular's weaknesses."
Yet enterprise customers may have to wait a while to see any benefit from the revamped Cingular enterprise group. "I think it will be a good thing a year from now [when] GSM is comparable to what Verizon has," Hart says. "The GSM network – it's getting stronger but it is not quite as strong as a CDMA network, so once they pump in a lot of money in the next year I expect it to be fairly comparable on the GSM side."
Mobile Competency President and CEO Bob Egan, however, says EV-DO doesn't put as much pressure on Cingular. "Frankly, that's really disconnected from the wants and needs of the enterprise, which really have to do with first and foremost coverage, and second it's about reliability," he says. "And when you talk about EV-DO, you don't get either one of those."
Meanwhile, Cingular's attempt to create an enterprise division with strong customer support and broad service reach may give it a competitive advantage, particularly in courting companies looking for unified global services, Egan says. And while he admits he has been a curmudgeon when it comes to Cingular, so far in the merger process, "I'm giving them some pretty good marks. On the other hand, I think Verizon is acting out of arrogance and that Sprint and Nextel are going to move into a little bit of distraction, so I think those two things combine to make the ability for Cingular to capitalize on that a whole lot easier."
For now, Cingular's goal is to complete the integration of AT&T and Cingular enterprise elements and capitalize on that combination. "We don't necessarily have some stake in the ground that says, 'Every little thing has to be done.' What we have is a stake in the ground that says, 'Are we at this point and time the best, and are we going to be even better tomorrow?' That's how we ran the business and that's how we are going to run the business going forward," Mathy says.