AT&T's New Route to Wireless

As consolidation winnows the cell-phone business, a big-name outsider is hoping to make some hay.

Looking to capitalize on its ties to big companies, AT&T (T Quote) is planning a new wireless approach. The giant telco expects to outline its plans early next year, perhaps at its February analyst meeting.

Though the company has already hinted at its approach and pieced together a few of the parts, AT&T executives haven't fully articulated their plan for selling wireless service to business customers. Notably, though, the company will have to do so without actually owning a wireless network.

AT&T is planning to buy wholesale wireless minutes from rival wireless carriers and then resell them under its own name to business customers. AT&T is already the leading provider of wireline phone service for businesses, and the Basking Ridge, N.J., company is hoping it can use that status to get in on the rapid growth of the U.S. cell-phone industry.

The strategy, known as mobile virtual network operator, or MVNO, is pretty rare among corporate customers. But AT&T has already laid the groundwork for just such a service. In May, AT&T struck a nonexclusive five-year deal to resell Sprint's (FON Quote) wireless service.

Of course, AT&T's plans come as the wireless industry is sorting itself out at a ferocious clip. Sprint and Nextel (NXTL Quote) are poised for a $30 billion union that will narrow the U.S. wireless field to just four big service providers. The deal would be the second wireless megamerger this year, following the $41 billion linkup of industry leader Cingular and also-ran AT&T Wireless.

AT&T's planned re-entry could help remake the wireless market for big businesses. Not only would AT&T give business users another carrier to chose from, but it also gives corporate customers the ability to dramatically alter their buying patterns. For example, most office workers pick their own cell-phone service contracts, buy their own phones and then submit the bill with their monthly expenses.