FRAMINGHAM (04/07/2000) - Two wireless service provider giants were born last week, but while one is already taking its first steps, the other is still in an incubator.
Bell Atlantic Mobile and Vodafone Airtouch Plc. formally united their wireless assets to form Verizon Wireless and announced plans to take advantage of their combined assets and reach.
The combined entity is now the largest wireless service provider in the U.S., with more than 16 million customers, and will add another 8.5 million when Bell Atlantic and GTE's planned merger goes through. Those companies will then go by the name Verizon.
Meanwhile, SBC Communications, formerly the largest wireless service provider, announced plans to merge its wireless business with that of BellSouth. This yet-to-be-named joint venture will be the second-largest wireless service provider in the U.S., with more than 16 million customers. AT&T Wireless and Sprint PCS trail, with 10 million and six million customers, respectively.
While not all telecom megamergers pay off for customers, analysts say bigger wireless service providers are generally good for business and consumer users.
"Being able to get national calling plans that include all long-distance and roaming, which Verizon came out of the gate with, is good for users," says Elliot Hamilton, senior vice president at Strategis Group, a Washington, D.C., consulting firm.
Verizon Wireless president and CEO Dennis Strigl says the firm will spend $3 billion on network upgrades this year alone to support new two-way messaging services, faster data-transmission speeds and easy-to-understand nationwide pricing.
While Verizon Wireless' network assets are all based on the same technology - code division multiple access (CDMA) - the networks and billing systems still need to be integrated.
Verizon Wireless plans to start testing third-generation wireless technologies as early as June so that it can boost data speeds to 144K bit/sec. Today, wireless data speeds across Verizon Wireless' networks max out at 14.4K bit/sec.
The service provider is also pushing ahead with a nationwide two-way short messaging service that can support instant-messaging applications useful for traveling employees who need to communicate with co-workers at the office.
Verizon Wireless is rolling out gear from Lucent and Nortel Networks to support the service, scheduled for availability by the end of September.
Verizon Wireless, which boasts a network covering 90% of the U.S., also aired a simplified national service plan called SingleRate. Users can choose from among five plans, including SingleRate 150, which features 150 minutes of service for $35 per month, and SingleRate 1500, which features 1,500 minutes of service for $150 per month.
IDC analyst Callie Pottorf points out that while the service rates are competitive with those of Sprint PCS and AT&T Wireless, SingleRate customers have to buy new dual-mode phones that cost about $200. Sprint PCS and AT&T Wireless are offering similar rates with phones that cost about $50 to $100.
As for the BellSouth and SBC venture, the service provider may have a harder time integrating its network than Verizon Wireless will.
BellSouth and SBC will likely standardize on Time Division Multiple Access (TDMA) and global system for mobile communications (GSM), but there is some CDMA in the service providers' network mix as well.
One other advantage CDMA offers over TDMA and GSM in the short term is easier upgrades, Hamilton says. Whereas CDMA can be upgraded via software, TDMA and GSM will require more involved hardware improvements.
BellSouth and SBC say they will emphasize wireless data services and upgrading to third-generation technology, but further details of their plans were unavailable.
BellSouth and SBC expect to announce the name of their venture once they get regulatory approval, which isn't expected for six months.