Wireless will need work: Regulations will drive shuffling of GTE and Bell Atlantic

Merging Bell Atlantic and GTE's wireless networks may sound simple because both systems use code division multiple access and both carriers operate cellular digital packet data networks. But close examination of network overlap and industry regulations shows the companies have some significant issues to settle before merging their wireless businesses.

Combined, the companies cover nearly 1 million pops in markets where they both operate cellular systems. According to regulations, the new company can operate only one cellular system per market, so one must be sold. A Bell Atlantic spokesman said the companies will determine which network to retain by comparing their successes and technological strengths.

In other markets, Bell Atlantic and GTE have cellular and PCS networks that overlap. Here, the issue is the amount of spectrum the merged company will own-regulations prevent a carrier from owning more than 45 MHz in a market. The companies likely will return spectrum in these markets, said the Bell Atlantic spokesman.

This spectrum could add to a growing amount of returned spectrum-resulting from merger mania-that may affect the market.

"Some of these mergers might be bad for CDMA," said Ira Brodsky, president of Datacomm Research. The spectrum ultimately could be used in a number of ways, he noted. New owners could choose to deploy a different technology or use the spectrum for an application other than a consumer-based wireless network.

Bell Atlantic also must comply with terms of its contract with AirTouch as an owner of PrimeCo Personal Communications. Under the contract, Bell Atlantic agreed not to compete with AirTouch.

"GTE does compete with them in many places," said the Bell Atlantic spokesman. Bell Atlantic has a number of options and is confident that the PrimeCo business won't be an issue, he said. Bell Atlantic could dissolve the partnership or set up a separate company to represent Bell Atlantic's investment in PrimeCo. AirTouch could also decide to accept the competition, he said.

Aside from these issues, the merged wireless business looks impressive. Combined wireless customers of the merged company surpass the customer base of any other wireless carrier today. And the extensive combined coverage area could lead to cost savings for roaming customers, said a GTE spokeswoman.

In the future, other possible mergers could fill the new company's coverage area even further. Adding southeastern states would be a good idea for Bell Atlantic, said Becky Diercks, senior director of telecom and wireless research for Cahners In-Stat Group. That piece of the puzzle might be more difficult to add, though.

"BellSouth hasn't been very open to suitors," Diercks said.