To all - another piece on Airtouch and Bell Atlantic.
January 4, 1999
Phone Deal Seen Good for Consumers
Filed at 6:49 p.m. EST
By The Associated Press
NEW YORK (AP) -- Consumers could see lower cellular phone bills if Bell
Atlantic is successful in its bid for AirTouch Communications Inc.
Such a deal would create more competition in the $30 billion U.S. cellular
phone industry by giving Bell Atlantic better footing to compete with AT&T's
flat-rate cellular phone plan. MCI Worldcom, Bell South and other companies
also would be under more pressure to expand into the fast-growing cellular
market, analysts said Monday.
''This would be great news for consumers,'' said Jeffrey Kagan, an
independent telecommunications analyst in Atlanta.
While Bell Atlantic and AirTouch have confirmed they are negotiating, a deal
could still fall apart. News reports and analysts have pegged the pricetag at
around $45 billion.
As technology for cellular phones has improved, and the need for them has
increased, the number of users in the United States has soared to 61 million,
up from just 14 million in 1993, according to the Cellular Telecommunications
Industry Association.
Cell phones, however, are still a pricey luxury for many consumers, and the
new one-rate plans are aimed at high-end customers.
In May, AT&T, the nation's largest long-distance company, launched a plan
that allows customers to call anywhere in the United States for $89.99 for 600
minutes of use. This allows consumers to avoid extra ''roaming'' charges
when they travel outside their local area.
At the same time, Bell Atlantic offered a competing plan at $159 a month for
1,600 minutes. Bell Atlantic, which has a strong network from Maine to South
Carolina, has to charge more because it relies on costly agreements with other
phone companies to complete calls outside its areas.
Both plans, however, are still out of reach for many cellular phone users, who
spend $46 a month, on average, plus long-distance charges, according to the
Cellular Telecommunications Industry Association.
Right now, phone companies ''are going where the money is,'' Kagan said.
''Competitive pressures from Bell Atlantic will bring that down market to the
average consumer.''
Bell Atlantic's acquisition of AirTouch would link Bell Atlantic's east-coast
network with AirTouch's west-coast network, allowing the companies to
expand their service and cut costs.
''It's a hand-in-glove fit,'' said Jeffrey Hines, a telecom analyst with BT Alex
Brown.
Bell Atlantic, which is awaiting governmental approval of its $65 billion
purchase of GTE Corp., will likely have to sell off any assets that overlap with
AirTouch.
Hines estimated that if Bell Atlantic's combination with both GTE and
AirTouch go through, the combined company would have to sell off 15
percent of its U.S. assets to reduce its market power in areas like San
Francisco, San Diego and Seattle.
Whether or not the Bell Atlantic talks with AirTouch fall through, the cellular
phone industry is going to continue to consolidate as companies try to piece
together nationwide networks.
MCI Worldcom, which has been sitting on the cellular sidelines, is one
company that Wall Street expects to get in the game. Nextel Communications,
one of the largest independent wireless phone companies, is the most likely
target.
''The most obvious way to do that would be to link up with Nextel,'' Hines
said.
Investors pushed up Nextel's stock almost 10 percent, or $2.25, to $25.87 1/2
a share Monday on the Nasdaq Stock Market, where MCI Worldcom's stock
fell $1.87 1/2 to $69.87 1/2.
On the New York Stock Exchange, Bell Atlantic fell 3.8 percent, or by $2.06
1/4, to $51.93 3/4 and AirTouch was off 5.8 percent, or by $4.18 3/4, at
$68.25 a share.
Copyright 1999 The New York Times Company |
