Cingular's Network Upgrade Could Cost $4 Billion

Cellular giant Cingular Wireless may spend as much as $4 billion dollars to build its new high-speed mobile network, almost a billion more than its estimate, according to details of its deals with suppliers.

Cingular is currently building its "Edge" national network, which will use General Packet Radio Service and Global System for Mobile Telecommunications technologies to provide high-speed Internet access over cell phones. Cellular vendors in the U.S. hope that features such as fast mobile Internet access, text messaging, and even videoconferencing will help revitalize the slowing market.

In October, Cingular said costs for the upgrade would be about $3 billion. But a handful of announcements from its suppliers, released Monday, reveal the actual number to be much higher: Swedish telecommunications equipment manufacturer Ericsson said it will sell the company more than $2 billion in gear; handset leader Nokia says it has cut a deal well in excess of $1 billion; and a contract with Siemens Information and Communication Mobile LLC will is worth more than $500 million. Cingular has declined to comment on the terms of the deals and is sticking to its original price estimate.

Whether the final number is $3 or $4 billion, it's clearly a huge investment. But Gartner analyst Tole Hart says it's a sound one, as corporate IT buyers are going to snatch up the high-speed devices. "It's going to make mobile workers more productive," he says, "You can schedule things while you're out on the road, you can look up parts, and file paperwork." Hart says adoption might start slow, but will ultimately take off. "Technology managers are generally happy with things the way they are, because it's less trouble," he says. "But when people start seeing the savings competitors are getting, you're going to see word come from top down saying, 'We need to implement this.'"