Alltel Corp. said it plans to turn off service for former Public Service Cellular Wireless customers on Dec. 28, as part of transitioning the PSC network from TDMA/GSM to CDMA technology. Alltel is also moving ahead with a similar network shut-off for former AT&T Wireless Services Inc. customers in Oklahoma City and northern Texas.
Alltel acquired Reynolds, Ga.-based PSC Wireless in early 2005, and began selling its products and services in the PSC markets in July. The privately held, low-cost local carrier gave Alltel an additional 54,000 customers in a 27-county area of western Georgia and eastern Alabama, including the greater Columbus and Fort Benning areas. The region has a population of roughly 900,000 people.
Alltel said it has invested about $15 million to build a CDMA2000 1x network for the PSC market. It made exclusive offers to former PSC customers to entice them to switch to Alltel services, including deeply discounted phones, waived activation fees, a free month of service and $40 in free accessories. Alltel said it has been using postcards, bill inserts, letters, automated telephone calls and text messages to alert customers of the impending shutoff.
Similar incentives were available to customers in the Oklahoma and Texas markets.
Alltel said it spent about $33 million to convert the former AWS network it acquired late last year from Cingular Wireless L.L.C. Cingular was forced to divest licenses, network assets and subscribers in Oklahoma City and Grant, Okla.; Sherman-Denison and Jack, Texas; Owensboro and Fulton, Ky.; Litchfield, Conn.; and Yalobusha, Miss. Alltel also acquired spectrum in Wichita, Kan., and several Georgia counties as part of the pact. Alltel spokesman Larry White said the company was particularly eager to expand its presence in Oklahoma, and the Georgia expansion extends the company’s network closer to the suburbs of Atlanta.
Alltel representatives plan to begin going door to door in Oklahoma City next Wednesday to offer service information to customers who have not yet chosen another carrier, White said. “We’ve done everything we could to make it compelling for them.”
In total, the two deals gave Alltel another 267,000 subscribers. White declined to give retention figures, but Bear Sterns & Co. Inc. estimated that as of the third quarter, about 94,000 of those subscribers had churned. Alltel successfully transitioned an estimated 60,000 customers. The investment firm expected Alltel to land about half of the 113,000 customers who remained at the beginning of the fourth quarter, but that the effort could cost Alltel another $11 million. The company already had announced $11.9 million in customer subsidy expenses related to the transition.
Bear Sterns also noted that losses from newly acquired subscribers were offsetting positive additions from Alltel’s legacy network, leading to a higher-than-expected churn rate of 2.37 percent during the third quarter. Alltel’s churn rate for the same time last year was 2.33 percent.
By Dec. 28, Alltel said customers on PSC’s and Cingular’s legacy network must switch to a new carrier, or all services except 911 calls will be unavailable.
“We’re encouraged by the reaction we’ve gotten, especially in the recent days and weeks,” White said. “They have to make a decision, and obviously we want that decision to be us.”
Besides Alltel’s CDMA network, the former PSC Wireless area also is served by GSM-based carriers Cingular and T-Mobile USA Inc., as well as CDMA networks run by Verizon Wireless and Sprint Nextel Corp.
