NEW YORK-The ongoing fight for dominance of the U.S. wireless market flared up once again last week as Bell Atlantic Corp. and Vodafone AirTouch plc said they will commence this year an initial public offering of Verizon Wireless, the joint venture that combines the U.S. wireless holdings of Bell Atlantic, PrimeCo Personal Communications L.P. and Vodafone AirTouch.
Verizon is the new name and brand of the company created by the merger of GTE Corp. and Bell Atlantic, which was obliged to create a different name for the company without the word “Bell” in it, according to the companies’ merger agreement.
The joint venture will give Verizon Wireless approximately 24.5 million customers and 4 million paging customers-usurping AT&T Wireless Services Inc. from its No. 1 position in the U.S. market and moving the company ahead of newly-merged BellSouth Corp./SBC Communications Inc., which will hold the No. 2 spot.
Although now the No. 3 wireless services provider in the United States, AT&T Wireless seemed only slightly rattled by the potentially dangerous threat Verizon Wireless poses on its market share.
“It doesn’t come as any surprise. This is following our lead as far as establishing a national and international presence. We’re going to let the market decide,” said Ken Woo, director of corporate communications for AT&T Wireless.
Verizon Wireless will mirror AT&T Wireless’ Digital One Rate plan in launching a single-rate plan of its own. There are five plans to choose from and prices range from $35 per month for 150 minutes to $150 per month for 1,500 minutes. AT&T Wireless has four plans that start at $60 per month for 300 minutes and go up to $150 per month for 1,400 minutes.
Dennis Strigl, president and chief executive officer of Verizon Wireless, said the company will invest $3 billion in its nationwide network during 2000 to increase capacity and further expand the company’s digital footprint, but Woo expressed doubt as to how much of that money would actually go toward network expansion.
“Systems integration consumes a lot of resources as far as manpower and economic resources. There is a lot of work ahead of them,” Woo said. “It’s never as easy as it sounds.”
Verizon Wireless will continue its grudge match with AT&T when it eventually launches its IPO. Unlike AT&T Wireless, Verizon Wireless will not be a tracking stock, which only is intended to track the results of a unit and does not convey any direct ownership.
AT&T will sell off 15 percent to 17 percent of its wireless unit at the end of the month or in early May, and expects to raise $10 billion to $13.2 billion. The Wall Street Journal last week valued Verizon Wireless at between $120 billion and $150 billion. Consequently, if Verizon Wireless were to sell off the same portion of its company, it could raise more than $18 billion.
In the coming months, Verizon Wireless also will launch two-way short messaging and a prepay service, and establish a nationwide Internet portal through InfoSpace.com, according to Strigl, who also vowed Verizon would be the first to bring third-generation services to the U.S. market.
“We will continue to provide the best network going forward,” Strigl said during a press conference last Tuesday. “Today the U.S. market is significantly underpenetrated … and we see tremendous opportunity for continuing to move and migrate voice to wireless services.”
In related news, Verizon Wireless said it will work with General Motors Corp. to make Onstar-GM’s in-vehicle communications system-standard on approximately 1 million vehicles by the end of the year. A base Onstar subscription will cost $200 a year and customers will be charged on a per-minute basis. The Onstar system will be connected to the Verizon Wireless network.
