NEW YORK-VoiceStream Wireless Corp. is prepared to wage war on two fronts in the battle of the titans for transnational control of wireless telecommunications, John Stanton, VoiceStream’s chairman and chief executive officer said.
Although focused on expanding its domestic footprint through acquisitions of carriers and spectrum, the Bellevue, Wash., carrier also is alert to international alliance possibilities.
“Fundamentally, the United States is behind. But Mannesmann-Vodafone (AirTouch plc) was the starting gun in the race to create global franchises through alliances and cross ownership,” Stanton said.
Thus far, the United States’ “fragmented licenses and what I view as schizophrenia over standards” has confused outside players more accustomed to the nationwide licenses other countries award.
“Less obvious is the fact that the fragmentation has created opportunities for new players … Our operating strategy is to get more. We have the financial resources to compete nationally and, ultimately, globally,” he said.
Two of VoiceStream’s major shareholders are Hutchison Whampoa Ltd., a Hong Kong-based conglomerate with wireless interests in a dozen countries, and Sonera, the Finnish carrier and manufacturer, which owns parts of wireless companies in six nations. When VoiceStream closed its Omnipoint Corp. acquisition in February, it raised $4.75 billion in equity and loans, some of which Hutchison and Sonera contributed, Stanton said.
“We recently invested in (Canada’s) Microcell (Telecommunications Inc.), but our focus is on North America, especially the United States. Once we complete that task, we will look outside our borders,” he added.
As a consolidator of domestic Global System for Mobile communications companies, VoiceStream also sees a strong linkage to most of the world’s mobile wireless customers. Of the 400 million subscribers today, about 250 million use GSM networks. The next most-used technology is analog cellular.
“We have enough spectrum in uniform [personal communications services], more than 25 megahertz average in the 220 million pops we serve. We’re not straddling the 800 fence,” Stanton said.
Nevertheless, in line with its “get more” strategy, VoiceStream will pursue opportunities not only in the 700 MHz auctions but also in any potential re-auction of the C-block licenses of NextWave Telecom Inc. It also continues to look for other cash or stock purchases of existing carriers.
“There clearly is a need for us to fill out our footprint, but not with the dysfunctional relationships other national carriers have with affiliates, which live for roaming revenues,” Stanton said.
The VoiceStream chief executive also made two other unflattering comparisons about his competitors.
“We won’t be strangled like AT&T (Corp.) and MCI WorldCom (Inc.), (which are) preserving a (wireline) business that has become commoditized and will be decimated by the Internet,” he said.
“But the most important thing that differentiates us from Bell Atlantic (Corp.), AT&T and BellSouth (Corp.) is that we are the only one to view wireless as a replacement for wireline.”
VoiceStream is focused on Generation X and other members of the “crossover segment,” who see and use their wireless phone as their only phone. Its strategy is based on the projection that this group will account for two-thirds of all new customers in the next two years.
“AT&T, Sprint (PCS) and Nextel (Communications Inc.) are fighting for the business customer and taking (those) customers from each other,” Stanton said.
VoiceStream closed 1999 with just under a million subscribers, nearly half of them new additions. During the fourth quarter, its subscribers racked up 1.5 billion minutes of use on its network. This is an average of 450 per customer per month, or more than three times the domestic industry average, Stanton said.
Robust networks are key to keeping customers happy in this high-volume usage environment. Omnipoint is not up to snuff in this regard. Consequently, VoiceStream plans to add more than 500 cell sites this year within Omnipoint’s coverage area, Stanton said.
Short message service is old hat to VoiceStream, which debuted the service in Hawaii four years ago and now handles more than 1 million such messages daily in its territories.
By the third quarter, Stanton said he anticipates a limited debut in most VoiceStream markets of General Packet Radio Service “with a data card for laptop use and fast download.” Assuming adequate handset availability, the carrier hopes for a full-scale launch by year-end.
“Japan so far is the only market that has the three key elements of successful data: a fast, reliable network; good relations with content providers, (and) handsets that make it easy for the customer to use,” he said.
“We will roll out data when it’s ready … We will be two-to-three quarters ahead of competitors with fast, robust data. But some of the offerings aren’t ready … The key issue for all carriers is delays by the handset makers, which are challenged by various issues.”
As it juggles all these balls in the air and awaits Federal Communications Commission approval of its Aerial Communications Inc. purchase, VoiceStream is engaged in one other major endeavor.
To weave its acquisitions into an enterprise seamless in its interaction with customers, VoiceStream is “integrating its seven call centers into one virtual call center and changing to an Amdocs common billing platform for simplified processing and better distribution,” Stanton said.
