Wireless Mergers Expected to Aid Fed Agencies

By Jennifer Freer, Staff Writer

Government agencies soon will see lower prices on wireless services, more choices in offerings and better service as a result of two new wireless companies formed earlier this month, according to industry analysts.

Bell Atlantic Corp. of New York, and British wireless carrier Vodafone AirTouch Plc of Newbury April 3 completed the merger of their wireless businesses to create a joint venture company, Verizon Wireless.

Two days later, SBC Communications Inc. of San Antonio and BellSouth Corp. of Atlanta said they would merge wireless operations. The new companies will be the two largest wireless companies in the United States.

The larger venture, Verizon Wireless, is expected to reach 96 of the top 100 U.S. wireless markets. Once Bell Atlantic's planned merger with GTE Corp. finalizes in the second quarter, GTE's wireless operations will join Verizon Wireless. Bell Atlantic is changing its name to Verizon when the merger with GTE is complete.

These deals will lead to more robust national wireless options for federal customers, said Warren Suss, president of Warren H. Suss Associates of Jenkintown, Pa., a consulting firm specializing in telecommunications and information technology.

"The new companies will have the financing to introduce more wireless data options, which is important for federal agencies," Suss said. "New competition will stimulate wireless data services, and federal agencies will benefit and see price reductions."

The wireless merger will benefit government customers as well as commercial customers, said Gary Schulman, president of Verizon's mid-Atlantic region. The biggest impact is adding another major player to the market with aggressive lower pricing, he said.

"The federal government is a large consumer already of wireless services, and their demand is growing," he said. "It can help the government improve productivity and allow the government to take advantage of our pricing."

Verizon already provide tens of thousands of lines to agencies in all branches of government, federal, local and military, said Schulman, who would not provide specifics on existing customers.

The Bell Atlantic and GTE merger is expected to receive regulatory approval later this spring. Barring regulatory delays, the Bell Atlantic and Vodafone merger also is to wrap up in spring. The company said it would launch an initial public offering as part of a plan to track stocks for the wireless operations.

Bell Atlantic also plans to spend $3 billion to expand its network and increase capacity for voice and data services.

After the merger of SBC's and BellSouth's wireless divisions, SBC will continue competing for government contracts, said Larry Meltzer, an SBC spokesman.

SBC will own 60 percent of the new company, and BellSouth the remainder. The new company will run independently from both parent companies, and a new chief executive and headquarters will be announced soon. The merger is expected to be completed by fall.

Both of the new wireless companies will compete aggressively against AT&T Corp.'s wireless operations and Sprint PCS.