What Verizon’s SureWest and Alltel deals have in common
It’s always fun to interview someone who has a good answer to every question—and Steve Oldham, CEO of Sacramento-based SureWest Communications, recently provided that kind of interview. I talked to him about the company’s strong take rates for triple-play services and about one service the company won’t be selling any time soon—wireless.
Previously a regional wireless player, SureWest found it impossible to compete in that market and sold its wireless business to Verizon Wireless earlier this year. Oldham said the quad play will have its strongest appeal when service providers begin to support converged fixed/mobile services. He believes carriers that only have wireless assets in a market will want to partner with a company like SureWest for the landline part of the offering.
It’s true that some of the most appealing converged fixed/mobile services rely on tight integration between the wired and wireless networks. Take femtocells, which are essentially scaled down cellular base stations installed at the customer premises and connected to customers’ landline broadband service, shifting cellular calls within the home onto the broadband link. Although viewed today as a means of reducing airtime charges, femtocells eventually will be able to deliver some compelling new services. When customers walk in the front door, for example, any photos they’ve taken on their cellphones could be automatically downloaded to their home computer. But without a tight partnership between the network operators, such services may not be possible.
IP multimedia subsystem (IMS) also is expected to usher in exciting converged services such as multimedia conferencing. But any IMS service with a fixed and mobile component will require the fixed and mobile operators to interconnect their IMS infrastructure.
Ultimately, a carrier-agnostic approach may not work for converged fixed/mobile services—and that realization could drive a wave of partnerships of the kind Oldham anticipates. Picking up wireless assets from a company like SureWest, into whose wireline network the business already has numerous hooks, could be a great way for a company like Verizon to prepare for that eventuality in areas not served by its landline business. And for a company like SureWest, a joint fixed/mobile offering could boost broadband penetration rates and average revenue per user.
A similar factor may be at play in Verizon Wireless’ announcement last week that it would purchase Alltel Wireless. Sure Verizon gets more spectrum, more customers and a decrease in rural roaming charges. It also gets into some markets that it doesn’t serve now on the wireless or wireline side but where Windstream, the Independent that once was part of Alltel and serves some of the same markets, may be available to provide the broadband link for FMC partnerships.
With the advent of FMC, Verizon and its chief rival AT&T will need to find a way to provide the landline link outside their home turfs. What they do on each other’s turf remains to be seen. But in the 20% or so of the country not served by either one of them, the model that Oldham suggests could be a great solution.
E-mail me at JoanEngebretson@cs.com.
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