BT, AT&T; Form Wireless Phone Alliance

AT&T; Corp. and British Telecommunications said on Thursday that they formed a wireless phone alliance to attract lucrative business customers and world travelers tired of incompatible phone technologies.

The pact expands the relationship between AT&T; and BT--the largest phone companies, respectively, in the United States and Britain--which last year agreed to form a $10-billion joint venture to provide voice and data services to large, multinational corporations.

The alliance, named Advance, comes as Britain’s Vodafone AirTouch, the world’s largest wireless phone company, is in talks to forge a U.S. wireless partnership with former adversary Bell Atlantic Corp.

AT&T; and BT’s wireless operations, which serve 41 million customers in 17 countries, will remain part of their existing parents. But the operations will work together by transmitting calls over one another’s networks.

“We’ll put our buying power together to get lower prices, we’ll get more roaming revenues from each other . . . and we’ll be able to get [new] technology deployed faster, less expensively and [at] higher volumes,” Dan Hesse, president of AT&T; Wireless Services, said.

BT and AT&T; said they had enough market clout to convince equipment manufacturers to help develop the wireless technology and networks that would allow their customers to use one wireless phone device across the world.

Although the popularity of mobile products such as cell phones has exploded, their use has been frustrated by a string of different international standards that do not allow subscribers to pick up messages, find data or make calls easily across the world.

Hoping to cash in on a lucrative market and win new customers, BT and AT&T; said manufacturers such as Lucent Technologies Inc., Canada’s Nortel Networks Corp., Sweden’s Ericsson and Finland’s Nokia would make products bridging the technological gulf dividing the world’s communications markets.

Few analysts said the BT-AT&T; deal challenged Vodafone’s dominance, saying instead it was a step in the right direction to strengthen their competitive positions.

The AT&T-BT; alliance could actually spur Bell Atlantic and Vodafone, if they successfully completed talks for a U.S. wireless joint venture, to eventually form a similar global partnership, analysts said.

The Advance alliance could be another step on a road that might eventually lead to a takeover of BT by AT&T;, some analysts said.

The wireless alliance does not require regulatory approval. AT&T; and BT’s international joint venture, however, still awaits regulatory clearance.

On the New York Stock Exchange, AT&T; rose $1, or 2.2%, to $45.50, and British Telecom’s American depositary receipts rose $5.25, or 3.5%, to $153.