NEW YORK-While other cellular carriers are going national and international, Three-sixty Communications Co. sees advantages in taking the road less traveled, through clustered regional markets in the United States.
“We are strictly a domestic company,”said Dennis Foster, the company’s chief executive officer, at a New York Society of Security Analysts meeting, May 6. “I am very bullish on U.S. prospects. There are a lot of opportunities here.”
Just two weeks earlier, Three-sixty, the Sprint Cellular Co. spinoff, announced it had agreed to acquire the cellular operations of Independent Cellular Network, which is privately held by the Crown family of Chicago. ICN provides service to more than 120,000 customers in Pennsylvania, Ohio, West Virginia and Kentucky. Most of these markets adjoin properties already held by Three-sixty, and therefore advance its strategy of regional market clustering and domination.
“I don’t want to be part of a national play,” Foster said. “Even with a regional approach, I can still take a phone to San Francisco, for example, and get a call. We’ve already worked that out.”
The ICN acquisition is expected to cost about $130 per pop, according to Michael Small, chief financial officer. ICN’s 20 markets cover 3.2 million pops.
When asked why Three-sixty didn’t swap one of the markets in which it holds a minority stake in exchange for ICN, Gary Burge, senior vice president of finance, said, “there is no good way to do it on a tax-free basis, although it certainly is an objective of ours to get out of our minority stakes.”
According to Foster, Three-sixty holds minority interests in cellular markets in major cities including New York, Chicago, Orlando, Fla., and Houston, and it makes money from these properties. “If the opportunity comes, we would take it, but not at fire sale prices,” Foster added.
Meanwhile, Three-sixty is gearing up for its commercial introduction in the Las Vegas metropolitan area of Code Division Multiple Access technology. The roll-out would make Three-sixty one of the first cellular carriers to make the digital technology available in the United States.
“The most significant barrier to our CDMA launch is getting phones of consistent quality from batch to batch,” Foster said. “We would like to have 500 handsets before we launch CDMA. I’ve got a promise, but I don’t dare tell you what it is.”
Motorola Inc., which is supplying the network, also is developing prototype handsets that should be available commercially in the third or fourth quarter of this year, said Kevin L. Beebe, Spint’s vice president of operations. A Sony-Qualcomm joint venture also will supply handsets, and Three-sixty “expects at this point in time we’ll offer both to see which works best,” he said.
Motorola also is developing from scratch “bench set test gear” used by engineers to determine how end users experience the system, Foster said. The process has been slow because this is brand new technology, according to Beebe.
Another problem, which should be resolved within the next few weeks, is the failure of several cell sites to hand off to each other, according to Foster and Beebe.
One of the advantages promised by CDMA is enhanced spectrum capacity.
