Cingular Presses the Pain

Lehman's analysts say that Cingular's UMTS network is "fairly empty" at this stage and that it would make sense if the spending moved away from expansion and toward promotion and sales.

Industry watchers say it may be too early to judge the success or failure of Cingular's UMTS effort.

"As more enterprise users take the service, you'll see it become more ubiquitous," says one person close to Cingular's UMTS plan. "And as the number of customers goes up, the price will come down. That just how these things work."

Ericsson and Lucent share the UMTS supply contract with Cingular and are the most vulnerable should Cingular stop expansion next year. But as the Lehman analysts note, continued upgrades by Verizon Wireless and Sprint could help offset the drain on Lucent.

Shares of Lucent, which is in a pending buyout deal with Alcatel, rose 2 cents to $2.40. AT&T was up 2 cents to $27.58, and BellSouth jumped a dime to $36.29 in afternoon trading Thursday.

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