Bell Atlantic to Sell 96 Markets

Want to add Tampa to the areas that you serve? How about San Francisco or San Diego? Maybe Chicago and Cleveland are more to your liking. Take your pick because thanks to FCC spectrum regulations, Bell Atlantic will be selling off cellular and PCS licenses during the coming weeks in 96 markets, including Albuquerque, NM; Cincinnati; El Paso, TX; Houston; Miami; Mobile, AL; San Antonio and Seattle.

The sales are necessary because a merged Bell Atlantic, GTE and Vodafone AirTouch will own licenses exceeding the 45MHz of spectrum that the FCC allows any one carrier to own in a single urban area. Combined, the trio will overlap in 22 markets with a total of 49 million POPs and 3 million customers, including those in areas served by PrimeCo, which is jointly owned by Bell Atlantic and Vodafone AirTouch. The spectrum cap in rural areas was raised to 55MHz late last year.

The Department of Justice approved the Bell Atlantic-Vodafone deal provided that the companies first sell enough of their combined turf to get back under the spectrum caps. The Bell Atlantic team has until June 30 to shed the properties entirely. The Justice Department will allow the merged companies to retain 10MHz of PCS spectrum in areas where they choose to sell PCS properties, however, and the companies may opt to trade the overlapping markets for assets in markets that they haven't penetrated. At least one 30MHz license, however, must be sold in markets such as Albuquerque, NM; Cleveland; El Paso, TX; Las Cruces, NM; San Diego and San Francisco, while other overlaps are in markets including Cincinnati, Miami and Seattle. PrimeCo-related overlaps are in major markets such as Chicago, Houston and Tampa, FL.

Many analysts figure that a major carrier, such as AT&T Wireless, might have some interest in Bell Atlantic's cellular license in San Francisco, where it already owns a good chunk of the market. Others point to regional carriers such as SBC and BellSouth as likely bidders for the licenses despite the fact that the cellular markets use CDMA.

Bids also could come from Europe, where many wireless carriers are eager to match Vodafone AirTouch's global presence, one analyst said. But others believe European players won't be interested in purchasing pieces of CDMA spectrum, which likely don't mesh with their GSM operations.

"European operators have shown more of an interest in investing in whole companies," said Crispin Vicars, Yankee Group wireless-program manager.

Exactly who will have the greatest interest in the markets and how much they'll be willing to spend is a much tougher call to make, Vicars said. Clearly, cdmaOne carriers will have interest in markets with CDMA networks already in place. But non-CDMA operators aren't likely to want to bear the additional cost of the network or replacing an entire network in an area. Bell Atlantic also isn't likely to let the markets go at fire-sale prices, Vicars said.

"It really depends on who is interested in the markets and for what purposes: spectrum augmentation, footprint and brand expansion," Vicars said.