At&T Picks Nortel, Lucent Over Ericsson

NEW EQUIPMENT will allow AT&T Wireless to boost capacity and lower costs.

AT&T, the largest U.S. cellular company, said it plans to install for the first time wireless equipment made by Nortel Networks and add Lucent Technologies equipment, in a blow to Ericsson.

Ericsson, currently the largest provider of wireless network equipment to Redmond-based AT&T Wireless, will see its share of AT&T business fall to about one-third, AT&T said. Under letters of intent, AT&T said it will install equipment provided by Lucent Technologies and Nortel Networks in several North American markets such as Los Angeles and New York City. Financial terms weren't disclosed.

AT&T said the equipment will boost the capacity of its network, improve reliability and lower costs by $900 million over the next four years. AT&T has had network problems that included the inability of customers to complete calls and at least one network outage earlier this year.

"We've selected the latest equipment from Lucent and Nortel to greatly increase our speed and efficiency in adding capacity and reliability to our wireless network," said Frank Ianna, president of AT&T Network Services. "The new business model will also lower our wireless network operating costs."

The new equipment will allow AT&T to provide high-speed data services and allow customers to use their phones overseas.

Ericsson and Lucent have been AT&T's primary providers of wireless network equipment.

AT&T said it will add Lucent equipment in New York City and parts of Los Angeles and to 11 states where Lucent equipment is already installed. Nortel's equipment will be installed in Arizona, California, Nevada, Oregon and Washington.

AT&T, which had a 42 percent increase in wireless revenue in the second quarter, has had at least one major outage in its wireless network and has had trouble keeping up with demand.

On May 10, AT&T said it restored cellular phone service in the New York-area after some customers couldn't use their phones because of a problem with a computer that directs calls.

The outage was the first of its kind on the AT&T wireless network. Customers in the Bronx and parts of Queens, Manhattan, Long Island, New York's Westchester County and some New Jersey counties were affected.