AT&T has announced its intention to acquire the last remaining pieces of Alltel that were left behind after Verizon Wireless acquired most of the company in 2008.

AT&T will pay $780 million in cash to Atlantic Tele-Network, Inc., and add 585,000 Alltel customers to the AT&T family in six states: Idaho, Ohio, Illinois, Georgia, and North and South Carolina.

Prior to the Verizon sale, Alltel used to operate in 34 states, targeting small and medium sized cities. The company was well-regarded for its innovative plans and features that distinguished it from its larger rivals. Among them: Alltel Family Finder helped parents keep track of children, My Circle allowed customers to make and receive unlimited free calls to and from any number in a calling circle, including landlines, and U Prepaid offered customers the chance to make unlimited calls to one number of their choice.

Alltel’s cellular network is based on CDMA technology, incompatible with AT&T’s GSM network. Alltel subscribers are expected to receive credit towards the purchase of new GSM equipment as Alltel’s network is retired.

AT&T says its acquisition will allow Alltel customers to enjoy a better wireless experience and also benefit AT&T customers who roam in Alltel service areas. But customers will likely lose access to Alltel’s service plans and will eventually be asked to choose a different plan from AT&T, potentially at a higher price.

The acquisition further reduces competition in the American wireless marketplace.

Plateau Wireless customers can expect to be eventually herded to Verizon Wireless’ all or nothing plans as early as 2013.

Verizon Wireless this week announced the acquisition of another regional wireless carrier — Plateau Wireless — formerly owned by the Eastern New Mexico Rural Telephone Cooperative. At risk are the co-op’s innovative and inexpensive calling and unlimited smartphone data plans for customers in communities like Roswell, Carlsbad, Artesia, and Hobbs.

Verizon’s purchase includes the co-op’s cellular, PCS, and AWS wireless spectrum that covers more than 26,000 square miles in eastern New Mexico.

“We are excited to expand our presence and coverage in rural New Mexico and to welcome Plateau Wireless’ customers to the nation’s most reliable network. We believe the strength of our network enables people to live better and stronger lives,” said Andres Irlando, president of Verizon Wireless’ southwest region.

Customers’ bank accounts may not have the strength to withstand the pricing and technology changes Verizon has in store as early as 2013. Plateau’s current GSM network will be dismantled as Verizon converts the network to CDMA for voice service and EV-DO (3G) and LTE (4G) for data services, leaving customers’ current smartphones and handsets useless. Verizon has not said whether it will provide free replacement equipment to Plateau customers at the time of the network conversion.

More importantly, Plateau Wireless’ current service plans, which include numerous options for customers on tight budgets — are destined for the scrap heap as the company unleashes its all-or-nothing contract service plans.

Plateau Wireless was a co-op owned regional wireless provider serving southeastern New Mexico.

The most important service at risk is Plateau’s unlimited data plan. The company charges customers $29.99 a month for unlimited smartphone data when inside Plateau’s home coverage area. Customers on family plans have an even better deal. They can extend unlimited data to every other phone on the account for a flat additional fee of $10/month. For just under $40 a month total, four family members each with their own smartphones or other wireless devices can have unlimited data when bundled with a calling plan starting at $19.99 a month ($9.99 for each additional line).

The same data plan under Verizon Wireless’ Share Everything Plan costs $220 a month for four phones, but it is not unlimited. All four users have to share a collective allowance of just 2GB of data per month.

Remember when your cell phone company offered you calling plans that fit your budget instead of their desired bottom line? Plateau Wireless still does, for the moment:

All Plateau Wireless Plans are eligible for the Family Plan and Data Features. Unlimited text messaging is $4.95 a month. Carryover of unused minutes to future months and free loyal customer minutes available. 

Plateau Wireless’ customers will have to decide for themselves whether Verizon’s acquisition is good or bad news for them.

Earlier this month, the Federal Communications Commission awarded nearly $9.5 million to Plateau to expand 3G and 4G service in central and southeastern New Mexico over the next three years. Verizon Wireless can use the funds to effectively expand their network in the area at taxpayer expense.

Deutsche Telekom AG, parent company of T-Mobile USA today confirmed it was in talks with MetroPCS Communications, Inc., to merge their two wireless businesses to achieve the greater scale both need to compete with Verizon Wireless and AT&T.

Bloomberg News reports DT’s supervisory board will meet tomorrow to approve the transaction.

The sixth largest wireless company in the U.S. is about to merge with the fourth largest, according to news reports.

The combination would inject an additional 9.3 million current MetroPCS customers (the sixth largest wireless carrier) into the T-Mobile USA family. That would more than make up the 2.76 million former T-Mobile contract customers that fled the carrier during the last two years, especially after learning the company was planning to merge with AT&T.

But some challenges are likely to remain after the merger gets government approval:

• T-Mobile remains largely a postpaid, 2-year contract-oriented company while MetroPCS operates a no-contract, prepaid offering. T-Mobile could transition its prepaid division to MetroPCS’ branding, or fold MetroPCS into T-Mobile and eventually discontinue the MetroPCS brand;
• MetroPCS operates a CDMA network incompatible with T-Mobile’s GSM network. Both carriers are moving towards adopting 4G LTE service, but legacy customers will not be able to use existing phones on each other’s networks.

MetroPCS currently offers home coverage in 19 metropolitan markets and surrounding areas including New York City/Northern New Jersey, Atlanta, Bakersfield, Boston, Dallas, Detroit, Jacksonville, Las Vegas, Los Angeles, Miami, Orlando, Philadelphia, Providence, Riverside, Sacramento, San Francisco, San Bernardino, San Jose, Shreveport, and Tampa.

[flv]http://www.phillipdampier.com/video/CNBC T-Mobile Deal For PCS in the Works 10-2-12.flv[/flv]

CNBC reports on the planned merger of MetroPCS and T-Mobile USA, the first major wireless merger deal since the rejected merger of T-Mobile USA and AT&T.  (3 minutes)

Alltel Service Areas Sold by Verizon Wireless to AT&T

When Verizon Wireless won approval of its takeover deal with formerly-independent wireless carrier Alltel, the federal government required Verizon to divest itself of Alltel’s assets in areas where the combined company would have a mega-share of the local wireless market.  The majority of affected customers, particularly in Montana and the Dakotas, were eventually acquired by AT&T, which uses a completely different network standard.  Customers were handed new phones that work on AT&T’s GSM network, but have since discovered those phones have little use in wide areas where AT&T simply doesn’t deliver a signal.

Even worse, Verizon’s robust network across the region is off-limits for roaming purposes, forcing customers that were perfectly satisfied with Alltel ready to throw their AT&T phones off Mount Rushmore.

“We got stuck with AT&T, which doesn’t care about the rural areas,” Mark Freeman of Harlowtown, Montana told a visiting reporter with the Wall Street Journal.

In the Black Hills, where AT&T’s network is as spartan as the landscape, some customers waited months before they could actually make and receive phone calls in places where Alltel’s old network (and their roaming agreement with Verizon Wireless) suited local residents just fine.

“We’ve been getting dropped calls, missed calls, and [have trouble] servicing [ATM] machines,” said Bill Huffman, an armored car worker in Sioux Falls frustrated by AT&T.  Area ATM machines depend on AT&T’s wireless network to alert drivers when local cash machines run low.  But AT&T’s network isn’t dependable, according to Huffman.

Ironically, customers are flocking to the carrier that would have been their new provider to begin with if not for the federal government divestiture order: Verizon Wireless.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/WSJ In South Dakota Dropped Calls and Dead Spots 11-27-11.flv[/flv]

Verizon Wireless stores in the region have suffered periodic equipment shortages ever since AT&T switched on their own, less satisfactory network.  That’s because AT&T customers are dropping their contracts at a rate rivaling the number of calls AT&T itself drops across the region.  The Wall Street Journal visits with perturbed local residents in Montana and South Dakota.  (4 minutes)

Verizon Wireless is expected to enter the Alaskan mobile market sometime in 2013-2014, according to incumbent competitors, who expect Verizon’s largest impact will be to bleed AT&T of customers.

Alaska’s two primary local providers — Alaska Communications, Inc. (ACS) and General Communications, Inc. (GCI), are telling shareholders to relax because they don’t expect to see Big Red in the Alaskan market for at least 2-3 years.  Both companies reported net losses for the quarter, and GCI lost 2,400 subscribers recently when more than 4,000 soldiers at Fort Wainwright in Fairbanks were deployed to Afghanistan.

Both ACS and GCI have been using the current poor economic climate and their respective stockpiles of cash-on-hand to retire debt or reissue long-term-debt at more favorable low interest rates.  Both companies are also hurrying to outdo each other’s 4G wireless network deployments before Verizon Wireless shows up, making use of spectrum it acquired last August to enter the Alaskan market.  Government rules require Verizon to sign-on its new network by June 13, 2013.  But Verizon admits it will take up to five years after that to completely build a new network from scratch.

Right now, Verizon Wireless customers taking their phones to Alaska roam on ACS’ network, for which the company is compensated with an increasing amount of extra revenue.  ACS boosted earnings in part on that roaming revenue, even as it lost more of its own customers.  When Verizon switches on its own network, that roaming revenue will rapidly decline, but ACS executives reassured shareholders their knowledge and experience of construction seasons in Alaska guarantee Verizon won’t be able to get its network together until 2013 at the earliest.

But when Verizon opens their doors, Ron Duncan, CEO of GCI expects a hard fight on his hands.

“We recognize ultimately they’ll be a significant competitor, although I see AT&T share more at risk because Verizon’s main claim to fame when they get to Alaska is going to be devices. We’ll still outpace them on coverage. We’ll continue to be the only ones with statewide coverage,” Duncan said. “People who want to buy the coverage buy from us today; people who want devices buy from AT&T because AT&T gets much better devices than we do.”

Just months after Verizon announced they were headed north, both ACS and GCI accelerated plans to roll out respective “4G” networks for wireless customers, although each company is deploying different standards.

GCI

GCI’s cell phone network is a combination of some of its own infrastructure, the acquisition of Alaska Digitel, and a resale agreement to use parts of AT&T Wireless’ coverage it acquired from Dobson Communications Systems.  In and around Fairbanks, Anchorage, Glennallen, Valdez, Prudhoe Bay, Wasilla, and Kenai, GCI offers CDMA service.  In those communities and many other rural regions in western Alaska, GCI relies on AT&T Alascom GSM networks.  GCI pitches its CDMA network’s 3G wireless data capabilities, which offer faster wireless data speeds, if you can get coverage.  For wider coverage in Alaska’s smaller communities, GCI markets GSM phones, which currently only offer 2G EDGE/GPRS data speeds.  If you use a cell phone mostly for voice calls, the wider coverage afforded by GCI’s GSM network is a popular choice.  But if you want faster data, CDMA 3G data speeds are required.

Eventually, GCI’s 4G network may help deliver coverage and faster speeds in both urban and rural areas, particularly as GCI plans to invest up to $100 million to construct more of its own network, instead of relying on resale agreements and acquisitions.

GCI has chosen HSPA+ for 4G service on the GSM network, and will introduce the service in Anchorage later this month.  That’s the same standard used by AT&T and T-Mobile in some areas.  It’s not as fast as LTE service from Verizon Wireless, but is much cheaper to deploy because cell sites need not be linked with fiber optic cables — an expensive proposition.

ACS

Alaska Communications has a large 3G CDMA network in Alaska all its own.  Its coverage is primarily in eastern Alaska adjacent to major cities like Anchorage, Juneau, and Fairbanks, and where it does provide 3G data coverage, the company claims it extends further out than GCI.  ACS doesn’t offer much coverage in small villages and communities in western Alaska, however.

ACS expects to skip incremental upgrades and launch its own 4G LTE service in the future.  It may help the company regain its second place standing, lost to GCI last year, and protect it from Verizon Wireless poaching its customers.