Bells behind curve on wireless business
By John Borland
Staff Writer, CNET News.com
January 20, 1999, 4:10 p.m. ET
As the wireless market explodes with big-money
mergers and new calling plans, the nation's leading
local phone companies are scrambling to catch up to
their national competitors.
The most aggressive of the Baby Bells have subscriber
figures that rival or exceed national players like AT&T. But
the wireless business is tipping towards companies who
can offer national coverage, and none of the Bells yet have
this ability.
"There is a movement towards national rate plans, and
pressure on operators to offer them," said Dataquest
wireless analyst Matt Hoffman. "And if you don't own your
own properties, it's likely you will be paying higher roaming
charges."
Bell Atlantic's well-publicized bid for AirTouch
Communications, which would have given it national
network, broke down last week. But the company has now
filed suit against AirTouch to ensure that a joint agreement
doesn't block a new nationwide expansion gambit.
Meanwhile, SBC Communications announced today that it
is buying Comcast's cellular operations, which gives it solid
footing on the East Coast and helps spread its own
nationwide properties.
The Bells' moves follow aggressive pushes nationwide by
AT&T's and Sprint's wireless divisions. The most ambitious
regional Bell operating companies are following suit, hoping
to offer national mobile phone services that they eventually
can package with traditional local and long distance.
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The drive for a national mobile network has been spurred by
AT&T's Digital One Rate plan, which offers users the ability
to use their phone nationwide without paying long distance
fees. Sprint and Nextel, a smaller nationwide cellular
service, have copied that plan, which has proven popular
with consumers.
Companies without national coverage can still allow their
customers to use phones nationwide, but the users must
pay "roaming" fees to the companies whose service areas
they travel through.
Despite their regional origins, the Bell companies
increasingly view themselves
as national and international
telecommunications
companies, and are trying to
build and buy their own
national wireless infrastructure
to support this ambition.
Analysts say a Bell Atlantic
acquisition of AirTouch would
have given it the most secure
national wireless network
among the Bell companies.
The two firms shared mobile
phone standards and
purchasing agreements, and
were already partners in a
mobile joint venture called
PrimeCo PCS. The two
companies' service areas
would jointly have given them
coverage in virtually every
state in the nation.
The loss of AirTouch to the U.K.-based Vodafone Group
has forced Bell Atlantic to scramble for other options. The
company is suing AirTouch to make sure a non-compete
clause in the two companies' PrimeCo agreement doesn't
block whatever alternative expansion plans it finds.
"Absent the AirTouch agreement, we saw it was necessary
to file the suit, since Bell Atlantic and GTE must now find
another way to offer a competitive national wireless
service," said Bell Atlantic spokesman Robert Varettoni.
Bell Atlantic currently serves about 5 million wireless
customers along the Eastern seaboard in the United
States.
SBC's expansions through mergers and investments
have matched Bell Atlantic's, giving the company
about 6.5 million wireless customers. The addition of
Comcast's customers will bolster SBC's wireless
ranks by another 800,000 subscribers.
But SBC has flaws in its national wireless network.
Its acquisition drive has given it a fragmented
network, with three different mobile phone
technologies in use. This makes it difficult for
customers from Texas, for example, to use SBC's
Pacific Bell system while traveling.
"They're going to end up with nationwide properties
without the abilities to offer nationwide roaming,"
Hoffman said. "They are a technological
hodgepodge."
Meanwhile, the other Bell companies have been less
aggressive in pursing national wireless goals.
BellSouth has focused on filling in coverage in its
own Southeastern territory, while US West
transferred much of its cellular operations to
AirTouch in early 1997. The company now is pushing
a digital mobile service in its service area, however.
Analysts say the Bells are likely to strike other
merger deals to expand their territory quickly, and to
help prevent other new large competitors like
Vodafone from entering the U.S. market. Smaller
companies such as Omnitel, Nextlink, and Nextel
are viewed as attractive acquisition targets.
"If they don't want to get left behind, then yes, they
have to expand," Hoffman said.
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