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Opinion: Four Priorities Top List For Vodafone, AirTouch
By Judith Lockwood
With the enormity of the Vodafone Group plc-AirTouch Communications Inc. combination sinking in, the focus now turns to
corporate strategic priorities and what happens with unsuccessful suitor Bell Atlantic Corp.
A joyful Arun Sarin, AirTouch COO, waxed enthusiastic last week about the megacarrier's "to do" list, though the acquisition
isn't expected to close until summer. Sarin emphasized the merged companies' goals to move billions of minutes from wireline to
wireless and to go beyond the 1 billion POPs the two presently cover to serving more of the 5 billion remaining people on the
planet with an expanded array of voice and data offerings. (I could almost hear the ghost of Carl Sagan: "biiiillions and
biiiillions.")
Actually, the plan as described by Sarin is quite down-to-earth. First, the two companies currently serve nearly all of Europe so
they must drive up network usage there. Second, in the United States, AirTouch must form some kind of joint venture with Bell
Atlantic to get the economies of scale, scope and brand it needs to compete with national carriers including AT&T Wireless
Services Inc., Sprint PCS, Nextel Communications Inc. anddon't blink or you might miss an acquisition SBC
Communications Inc., continuing to build its footprint with its Comcast Cellular Communications Inc. buyout last week. Third,
the behemoth must acquire majority control and new wireless networks in areas where it does not have dominant market
position. Fourth, the combination needs to develop new products and services that continue to attract subscribers and (go back
to goal No. 1) increase wireless traffic.
This last item that has a lot of people intrigued right now because with its muscle the new giant can write a de facto technology
standard for third-generation systems enabling a wide variety of data, Internet access and video services. "We'd like to pull all
the 3G factions together [under a standard that is] backward compatible with [global system for mobile communications] and
cdmaOne," Sarin said. "When everybody designs to one standard, a thousand flowers bloom."
Vodafone AirTouch also could push regulators to bring U.S. calling practices more in line with higher-penetrated countries. "It's
tragic we don't have calling party pays in this country," Sarin said. "If we all put our shoulders to the wheel, we can get it."
That's not to mention that the company can use its leverage as a volume purchaser to further drive down handset and
infrastructure prices, benefiting customers and the industry at large.
Meanwhile, Bell Atlantic is suing AirTouch over its insistence on enforcing a non-compete agreement making Bell Atlantic give
up markets gained from its pending GTE Corp. merger. But the lawsuit is largely a negotiating ploy. The two carriers' roaming
agreements have financially favored Bell Atlantic. If AirTouch waives the non-compete in exchange for better roaming terms
and, as a result, the opportunity to cut consumer prices and better compete with national carriers, Bell Atlantic could keep its
California markets in the GTE merger. That's the easy solution, said Lehman Brothers analyst John Bensche. The options get
more complex from there.
Back At The Ranch
While the focus last week was primarily on the London and New York road show run by Vodafone and AirTouch, tiny
Regent, N.D. (population 238), also was in the spotlight. With much fanfare, Western Wireless Corp. launched fixed wireless
service there Jan. 7 using numbers purchased from the local exchange carrier, Consolidated Telephone Cooperative.
Western set up the demonstration project to show the potential of fixed wireless to bring competition to the local loop, meet
customer needs in the carrier's important rural markets and prove wireless carriers' eligibility for universal service subsidies.
Toward that end, Western involved competition promoter FCC Chairman Kennard in the launch hoopla.
All that big-picture thinking was lost on the LEC, however. In a competitive fit, it shut off the numbers, leaving Western's
subscribers unable to receive callbacks from 911 dispatchers or anyone else.
Consolidated's knee-jerk reaction gave the wireless industry a perfect opportunity to clarify how commercial radio service
providers offering fixed services should be regulated and made Western look absolutely brilliant. Clearly, CTC can't legally
refuse to interconnect. Appropriately resolved in favor of wireless, Western's lawsuits and its complaint before the North
Dakota Public Service Commission will pave the way for development of wireless local loop. (More on that next week.)
In the meantime, AirTouch's Sarin said the company "has never had any doubts it could provide that service" too. With the
murky regulatory area clarified, Vodafone AirTouch could "throw WLL into the mix" of expanded services it plans, though the
merged company would have to "figure out what sequence to do it in." |
