Business News – Four Companies Pair Off in Wireless Ventures

Posted: 05/2000

Four Companies Pair Off in Wireless Ventures
BY KEN BRANSON AND STACY LANE LINKMEYER

Bell Atlantic Corp.
(www.bell-atl.com) and Vodafone AirTouch plc
(www.vodafone.com) launched a joint wireless and paging joint venture, Verizon Wireless on April 4.

One day later, BellSouth Corp.
(www.bellsouth.com) and SBC Communications Inc.
(www.sbc.com), said they too would come together with their own wirelss company.

“Yesterday, wireless was a hodge podge of smaller providers,” says Jeffrey Kagan, an independent telecommunications consultant based in Atlanta. “Tomorrow, there will be fewer, larger, national players offering wireless voice and data services to customers nationwide.”

Verizon
( www.verizon.com) will offer its wireless services from a national footprint, which has been the point of the $70 billion deal announced last September.

The new company will have 23 million wireless subscribers and 4 million paging customers. It will cover 90 percent of the U.S. population and 96 of the top 100 U.S. wireless markets, company officials say.

Verizon officials say the new company will become the largest wireless provider in the United States when it absorbs GTE Corp.’s
( www.gte.com) domestic wireless business, which will occur later this year, after Bell Atlantic and GTE complete their merger.

Verizon Wireless also has announced products with its new name: a single-rate national wireless service that eliminates roaming and long distance; new phones with Internet capability starting at $200; and, a $35 per month minimum rate at the low end of the service spectrum.

COO Lowell McAdam says Verizon Wireless will launch a nationwide Internet portal in June, a two-way, nationwide short-message service in July and a national digital prepaid wireless service in August.

The as yet un-named venture from BellSouth and SBC and will become the second-largest in the nation in terms of subscribers, with about 16.2 million, company officials say. They say the venture will be managed independently and will be capable of making acquisitions.

SBC will own 60 percent of the equity,
but management control will be split evenly between the two corporate parents, officials say.

According to company officials, the SBC-BellSouth venture will reach about 70 percent of the population in 19 of the top 20 markets and 40 of the top 50.

Kagan says he believes BellSouth and SBC had little choice but to consolidate their wireless assets.

“SBC and BellSouth apparently read the writing on the wall, and decided to continue their rapid growth, and to reduce costs, they needed a bigger, national footprint,” he says.

A BellSouth spokesman would not say when the new company would launch, but he added he expects FCC
(www.fcc.gov)  approval “by the fourth quarter.”

Kagan says the consolidations are not a bad thing, as long as consumers still can choose from several competitors. Companies will be able to standardize their networks and technologies, he explains.