AT&T; Wireless Cuts Cities in 3G Rollout

AT&T; Wireless Services Inc., skittish about customer demand, on Thursday drastically scaled back the rollout of its next-generation mobile phone service.

The service, which would give cell phone users high-speed Internet access, will launch at the end of 2004, half a year later than previously planned. And it will debut in just four cities -- San Diego, San Francisco, Dallas and Seattle -- instead of 13 as originally proposed.

The new plan “will allow the company to cover some of the most promising U.S. markets while maintaining a prudent level of capital expenditures,” AT&T; said in a statement.

Analysts said Thursday’s announcement was not surprising, given how reluctant U.S. consumers have been to use their cell phones for anything other than making calls.

In addition, corporations have been unwilling to sign up for costly new services in a sluggish economy.

The lack of customer interest has led many wireless carriers to put off upgrading their networks to handle high-speed data transfers.

“One of the reasons for the delay is that demand has been basically underwhelming,” said Don Carros, senior research analyst for Meta Group, a technology consulting firm based in Stamford, Conn.

Cell phone users today can surf the Internet and get e-mail, but the connections are slow and the experience is hampered by the small screen size on a typical handset, Carros noted.

AT&T;’s next-generation service, called 3G because it is considered third-generation cell phone technology, would let consumers use more devices to access the Internet at roughly twice the speed of an average dial-up connection.

Still, another reason that cell phone Internet service has been slow to catch on is that it has to compete with WiFi, a technology that lets laptops wirelessly connect at speeds five times faster than 3G service. Offered at some airports, hotels and cafes, WiFi has become a popular way to access the Internet on the road.

Faced with such obstacles, AT&T; Wireless said it will form a committee to gauge how quickly it will expand its 3G service.

“Our technology committee will be assessing future markets so the rollout is determined more in alignment with market demands,” said David Caouette, a spokesman for the Redmond, Wash., company.

AT&T; Wireless, which was spun off from AT&T; Corp. in 2001, originally announced its 3G plans in 2000. At the time, Tokyo-based NTT DoCoMo Inc. paid $10 billion for a 16% stake in the No. 3 wireless carrier.

DoCoMo is the largest mobile phone company in Japan, where consumers have demonstrated more willingness to use their phones for e-mail and Internet surfing.

AT&T; Wireless shares fell 13 cents to $6.33 on the New York Stock Exchange.

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Times staff writer Elizabeth Douglass contributed to this report.