Phillip Paulwell (right), industry, commerce and technology minister, signs AT&T's cellular licence agreement, at the Knutsford Court Hotel yesterday. Looking on are Burchell Whiteman, minister of information, and Carmen Forsman, AT&T Wireless director of international business development.

The American telephone firm, AT&T Wireless, will invest the equivalent of J$1 billion to build out its network in the tourist resorts, before heading to Kingston where it will compete for the patronage of the broad Jamaican market.

AT&T's strategy is for a soft landing in the Jamaican market by initially providing roaming services to US travellers to the island, a fairly secured market which will provide the critical mass for the company to later launch into the general market.

"We have roaming agreements with over 250 carriers across the world, so we have a lot of leverage," said Carmen Forsman, AT&T Wireless director of international business development, at yesterday's official licence signing at the Knutsford Court Hotel in Kingston. "With the high numbers come lower cost so we have the economies of scale to bring down the cost," added Forsman.

AT&T, which was last month acquired by US rival, Cingular, making it the largest cell company in the world with some 45 million subscribers, paid the Jamaican government US$6 million for the cellular licence.

But some industry experts, and at least one of the other cellular service operators, have complained that the cost was far too low - given the US$45-million price tag on each of the previous two licences sold less than five years ago.
Yesterday Forsman said that her firm was now preparing to build cell towers in Ocho Rios, Montego Bay and Negril, using the widely used GSM technology.

"We expect to launch the service in the fall of this year in those areas and Kingston in the (future)," she said.

This strategy will immediately open up a potential market of nearly two million to AT&T with over 70 per cent of Jamaica's over 1.2 million annual stop-over tourists originating from the USA, in addition to nearly a million others who visit the Jamaican ports each year on cruise ships.

AT&T, which operates in 15 other Caribbean islands, having launched in Cayman last week, considers Jamaica critical to its foray in the region.

"The development of the Jamaican market is integral to AT&T Wireless' strategy of extending our North American footprint into key markets where our customers work, live, travel and play," declared Forsman.

But this company is likely to face a saturated market as it prepares to offer its service to the local market. For already, the three other cellular providers - C&W, Digicel, and Oceanic - have a combined 1.6 million customer base from a population of 2.6 million, making this market one of the highest cell-phone concentrations in the world.

At yesterday's signing, technology minister Phillip Paulwell, who negotiated the sale of the licence, attempted to defend the price paid by AT&T. He argued, for example, that no other international company showed interest in acquiring the fourth licence, and that the Jamaican market was nearing its maturity at well over 1.6 million cell users between the three carriers in a population of 2.6 million.

Moreover, AT&T would have to erect the cell sites on its network closer together because the remaining spectrum does not have as wide a range as that of the initial bands licensed to other cell companies, he argued. AT&T has bands in 1900 megahertz.

"AT&T has chosen to invest at a time when the cost of acquiring customers is higher, the cost of deploying a network in the 1900 band is higher than for the band occupied by the other licencees and at a time when the available spectrum is at its lowest," declared the minister. Paulwell said that AT&T's acquisition by Cingular did "not change" the dynamics of the negotiations, Cingular having paid AT&T Wireless US$41 billion in cash, or US$10 billion more than was originally negotiated.

Last week Craig McBurnett, chief executive officer of Oceanic, complained that AT&T's entry fee into the Jamaican market was far too low-cost, and that it had given the Americans an unfair market advantage.

As a condition of its licence, AT&T Wireless has established a local subsidiary called Wireless Ventures of Jamaica Ltd, through which it will conduct its business. The staffing of this operation is yet to be determined.

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