17 Gifts at All-Time Lows Gifts Under $30 'Forest Bubble' on Mars RSV and the Holidays MyHeritage 'AI Time Machine' Postage Stamp Price Increase Household Items on Amazon Melatonin vs. GABA
Want CNET to notify you of price drops and the latest stories?
No, thank you

Bells behind curve on wireless business

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.

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.

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 Omnipoint Communications, 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.