At&T Turns Off Its Pagers -- Two-Way Paging Project Dropped To Trim Costs

After spending $160 million in license fees and almost three years of development, AT&T has quietly dropped its plan to try to dominate the two-way paging business.

More than 100 AT&T Wireless employees, including 35 in Kirkland, learned of the decision when they were laid off Monday. The move comes at a time when the telecommunications giant is rethinking its overall paging strategy.

AT&T took on the wireless communications business, including paging, with the purchase of Kirkland-based McCaw Cellular Communications in 1994.

Dropping the two-way paging project is part of a plan by AT&T to trim more than $2 billion in costs companywide, an AT&T Wireless spokesman said. AT&T will give laid-off employees a chance to apply for other jobs.

Two-way pagers allow a person to immediately respond to a page.

"Are you on for dinner at 5?," one person could send to another's pager. "No. Make it 6," another could type back. AT&T also had hoped to allow customers to send voice messages back and forth.

The status of the two-way paging project, named PACT, or personal air communications technology, has been in flux in recent months. The company confirmed that the project was on hold in December.

But on the same day in March that AT&T President John Walter was telling analysts of AT&T's commitment to cut operations, AT&T Wireless officials were telling vendors at a San Francisco trade show that it was moving forward. Days later, AT&T Wireless got the directive from AT&T's New Jersey headquarters to cut the project.

"It was an economic decision that was made," said Ken Woo, an AT&T Wireless spokesman. "We have vast resources, but we have vast priorities, too."

AT&T is trying to maintain its dominance of the long-distance business. The company also is racing to tap into the local phone business, until now run by one carrier in each market. And it has heavy investments to maintain in the national cellular network built by McCaw Cellular.

As Walter weighed the array of choices, paging - particularly an unproven, non-revenue-generating project - ranked a low priority. Over the past several months, stocks of other major paging companies have taken a beating.

One industry official estimated that AT&T invested more than $200 million on its paging project. McCaw Cellular bought the two nationwide licenses in a round of auctions in 1994.

Questions remain about the future of AT&T Wireless' paging offerings. The company had at one point been the nation's fifth-largest paging provider but has dropped to around the 10th largest.

If two-way paging becomes an industry standard, AT&T will have to resell another provider's services or risk offering an incomplete product.

The messaging group, which employs roughly 2,000 people at AT&T Wireless nationwide, is reassessing its long-term business strategy, Woo said.

"(But) it's premature to speculate on where we might be a year from now on the messaging group," Woo said.