Will BellSouth return to CDMA?
Wireless Review, Dec 15, 2001
As Cingular Wireless reiterates its GSM strategy with commitments to vendors, some industry observers believe BellSouth
may want to shed its 40% stake in the Cingular joint venture to pursue a CDMA-based technology path — possibly through
a merger with Sprint.
Such speculation has been fueled by BellSouth's appointment of Gary Forsee head of its domestic operations as of Jan. 1.
During his 2-year tenure as head of BellSouth International, Forsee oversaw CDMA deployments throughout BellSouth's
holdings in Latin America, where the Bell company previously had used GSM.
Cingular's 3G migration announcement was delayed because BellSouth wanted CDMA while partner SBC Communications
wanted GSM, according to industry observers. Cingular's decision to pursue a GSM migration path to EDGE technology
signaled a win for SBC, which has controlling interest in the joint venture.
Indeed, while Cingular CEO and SBC representative Stephen Carter made several appearances heralding Cingular's
decision to migrate to EDGE, BellSouth's Forsee — chairman of Cingular — was not part of the press conferences or news
releases surrounding the announcement.
Using CDMA in the United States makes sense for BellSouth, because it would let it align wireless technology with its Latin
America holdings. Merging with Sprint, would be a logical way to accomplish this. Forsee spent almost a decade at Sprint,
spending some time in the mid-1990s as interim CEO of Sprint PCS before being named president and COO of the carrier's
long-distance division.
“By posting Forsee as number two, it's a signal to Sprint that the right person is in place to lead the combined company,”
said Mike Smith, executive director for Stratecast Partners.
BellSouth could help finance such a deal by selling its stake in Cingular, but that task likely would be complex, because the
Cingular joint-venture agreement with SBC contains no out clause, according to Greg Miller, managing director for telecom
research at ABN AMRO. Also, getting out of Cingular would mean that BellSouth would lose its investment in branding
Cingular and may face significant hurdles trying to pry its bundled wireline customers from SBC, said Pat Comack, telecom
analyst at Guzman & Company.
Still, any losses on these front might be offset by capacity gains through CDMA. “Certainly, a BellSouth bid for Sprint is not
out of the question, but the difficulty would be getting out of Cingular,” Guzman said.
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