Wireless deal could lower cell rates
By Steve Rosenbush, USA TODAY
NEW YORK -- Bell Atlantic and Vodafone AirTouch's plan to create another nationwide wireless carrier is expected to push prices lower for all U.S. wireless customers.
The price of a digital wireless call has fallen about 30% a year. Consumers who use their wireless phones a lot pay as little as 10 cents a minute. That could "drop to 3 cents a minute over the next three or four years," says analyst Andrew Cole of consultant Renaissance Worldwide.
Bell Atlantic and AirTouch are expected to announce as early as Thursday that they will combine their U.S. wireless assets in a joint venture valued at about $75 billion, people close to the talks say. A deal was originally expected earlier this week. But "they are hung on a lot of complex issues, such as management, pricing and multiple overlapping properties," says analyst Mark Lowenstein of market research firm The Yankee Group.
The combination will unite two former rivals into a nationwide carrier that competes with AT&T Wireless and Sprint PCS. Early this year, Britain's Vodafone won a bidding war with Bell Atlantic for AirTouch.
Sprint PCS, AT&T Wireless and Nextel have a variety of popular flat-rate pricing plans. They allow customers who buy chunks of airtime to call anywhere in the USA for 10 cents or 15 cents a minute, without long-distance charges.
Bell Atlantic has one such plan: 1,600 minutes a month for $160. The typical wireless customer uses only about 400 minutes a month. The joint venture would allow the combined companies to offer a variety of plans targeting the lower and middle levels of the market.
Several hurdles exist:
The new company must sell overlapping networks in markets such as California.
It can take years of effort and billions of dollars to establish a nationwide brand.
Plans will be complicated, at least in the short-run, by federal regulations that currently restrict Bell Atlantic's access to the long-distance market.
On the East Coast, Bell Atlantic can offer long-distance service only to wireless customers. And it isn't allowed to have its own national long-distance fiber network, as Sprint and AT&T do. "The way we were able to do it, and the way AT&T was able to do it, was by keeping calls entirely on our own network," Sprint PCS President Andrew Sukawaty says.
Bell Atlantic will ask the Federal Communications Commission this month to lift long-distance restrictions in New York. It could win approval there by year's end and expand into other states next year.
But it will still take time to establish its own long-distance network through construction or acquisition.
|
