Alexandria, Minn.-based Rural Cellular Corp. said it plans to offer personal communications services and cellular service to customers in portions of Minnesota, North Dakota and Wisconsin through a joint venture with American Portable Telecom Inc.
The two companies have signed a letter of intent to form Wireless Alliance L.L.C., which will construct and operate Global System for Mobile communications PCS networks to provide service in Duluth, Minn., Fargo and Grand Forks, N.D., and Superior, Wis. RCC will be the 51 percent owner and manager of the joint venture and APT will hold a 49 percent ownership. The Federal Communications Commission is expected to approve the agreement within two to three months, said RCC.
The PCS areas are contiguous with RCC’s six cellular rural service areas in northern Minnesota, which will allow the company to link its analog cellular networks with the GSM networks to provide seamless coverage. Customers will use dual-mode handsets. RCC said Wireless Alliance also will offer cellular service in the PCS markets through reselling agreements with AirTouch Cellular, the B-side cellular operator in the Minneapolis market.
The joint venture will use 20 megahertz of APT’s 30 megahertz broadband spectrum within the Duluth-Superior, Fargo and Grand Forks portions of APT’s Minneapolis major trading area license, said RCC.
The network for Duluth-Superior is expected to become fully operational by late 1997, followed by system rollouts in Fargo and Grand Forks.
“The initiative will be not to cut over PCS service until we have 80 percent local service compared to the local cellular providers,” said Scott Donley, RCC’s vice president of sales and marketing. Donley said the venture plans to garner customer support in the Duluth-Superior market by offering cellular service prior to the introduction of PCS.
APT said the joint venture is a win-win situation for both companies because it allows RCC to expand its market and APT to increase its GSM footprint and provide service to rural markets significantly ahead of schedule.
David Kerr, director of mobile communications at Giga Information Group, said the joint venture announcement has set a trend large PCS providers will follow in major cities and rural areas. Big carriers are motivated to build out their networks so they’ll be looking for strong partners to provide localized knowledge base and expertise, he said.
“If you can get a rural company with good operating expertise, you’ll have much lower churn rates because of [the company’s] proximity to the customer.” Churn is clearly a big concern, Kerr added.
