Wireless Footprint Required For Competition
(09/30/99, 11:13 a.m. ET)
By Mary Mosquera, TechWeb
The consolidation frenzy among wireless
carriers is marching on as big players
connect the dots to form a nationwide
wireless footprint.
Meanwhile, regional wireless networks are being left
behind, analysts said.
Wireless companies are going for scale now and will
probably merge themselves into just five or six major
players, said Eddie Hold, senior telecom analyst at
Current Analysis in Sterling, Va. Right now, the biggest
wireless players are AT&T, Sprint, Bell
Atlantic/Vodaphone AirTouch, Nextel, and
VoiceStream/Aerial.
However it finally plays out, the customer is the winner,
with more reach and more services at lower prices,
Hold said.
MCI WorldCom is poised to gobble up Sprint, a
potential combination that intensified when Bell Atlantic
and Vodafone AirTouch announced their wireless joint
venture two weeks ago. A merger of the U.S. No. 2
and No. 3 long distance players will make a formidable
competitor for AT&T in that space, but MCI
WorldCom is looking for Sprint to fill its wireless hole,
said Jeffrey Kagan, an Atlanta-based
telecommunications analyst.
Bell Atlantic and Vodafone AirTouch agreed to a joint
venture worth $70 billion to form a wireless service with
over 20 million customers once Bell Atlantic's purchase
of GTE is completed. In addition, AT&T and British
Telecom have formed Advance, a transatlantic deal to
provide customers of the combined companies
seamless international service.
Last week, VoiceStream Wireless, which is completing
a previously announced merger with Omnipoint,
purchased Chicago-based Aerial Communications,
which is majority owned by Telephone & Data
Systems, in a deal worth $1.8 billion. Aerial, which has
markets in the Midwest, Texas, and Florida, has been a
player in the GSM wireless market.
VoiceStream could be eyeing Powertel, another GSM
player. And if a combination with Sprint isn't realized,
MCI WorldCom may make a play for
VoiceStream/Aerial, Hold said.
The big winner is the customer, Kagen said.
"Until recently, the big winners have been the heavy
users and business customers," he said. "Now with
AT&T, Sprint, and Bell Atlantic/Vodaphone slugging it
out, we'll see the low costs and innovative plans moving
down the market to every level of customer."
The telephone business is a scale business. The bigger
the network, the better a company can leverage costs,
so the churning will leave five or six major
telecommunications companies, each with a bundle of
services, said Charles Pluckhahn, vice president and
telecom analyst at Stephens investment bankers in
Boston.
"Distinctions among the type of connectivity will matter
less, whether it be voice, broadband, wired, or
wireless," Pluckhahn said.
The distance a call goes is becoming irrelevant due to
AT&T introducing the one rate plan, he said.
Wireless companies will continue to favor buying more
cellular operations than striking roaming agreements to
cut costs, Kagen said. But the activity doesn't mean
wireless will replace wired communications, he said.
"It's just a piece of the menu," Kagen said. "I think we
will use whatever infrastructure makes the most sense
for what we are doing. People have all kinds of
networks. We're consolidating among entities, but types
of services we use are fragmented."
However, wireless taken alone is far more important, a
focal point of developing communications services,
Hold said.
"As prices are going down, they're coming up with
more added information services to increase the minutes
used," he said.
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