A C-block enterprise created by two Alabama telephone companies is methodically slipping into position to rival big-name wireless players in the Gulf Coast area.
The telephone companies believe if they are going to lose landline customers to wireless offerings, they want to lose business to a company they own.
DigiPH (pronounced Digif) is the creation of Millry Telephone Co. and Gulf Telephone Co. It holds personal communications services C-block licenses for eight contiguous basic trading areas in Florida, Alabama and Mississippi.
DigiPH recently signed an equipment contract with Siemens Stromberg-Carlson for Global System for Mobile communications network systems valued at $74.9 million. Siemens is providing financing, although the companies won’t say how much.
Network construction is scheduled to begin this summer, and service should be available in all basic trading areas by the end of the year.
“The population in these markets is concentrated along the coast, beaches and interstate highway,” said Edd Williams, DigiPH president and chief executive officer.
“We’ll only have to cover 15 percent of the geographic area to cover 80 percent of the pops, so at launch date, we’ll have covered the area we’re required to cover,” Williams said.
DigiPH has been acquiring sites for the past year, with the two telephone companies funding the cost of operations and capital expenditures. That arrangement should continue until the network begins to make money, Williams said. Financing from Siemens was important to the plan.
DigiPH owes the U.S. government about $75 million for eight licenses, which must be paid off in 10 years. DigiPH bid in the auction as Mobile Tri-States L.P.
Williams has the wireless experience. In the late 1980s, Millry Telephone was in a consortium of Alabama telephone companies that acquired the Alabama RSA 4 and RSA 6 by lottery. Williams was general manager of Millry at the time, which was selected to be the operator.
He was instrumental in building out the analog system for Southeastern Cellular, which Williams said became a very profitable operation.
“That company was so small, I acquired about 75 percent of those cell sites myself. And talked to vendors. It proved to be an invaluable experience,” Williams said.
Millry sold its interest in the RSAs to Alltel Mobile Communications Inc. in June of last year, to avoid any conflict between the RSA service areas and the Mobile C-block license.
Millry and Gulf’s landline telephone operations only touch five of the eight BTAs. Most of DigiPH’s customers won’t be local phone customers, so they won’t be familiar with the company’s Southern roots.
Still, DigiPH thinks it has an edge over nationwide competitors, such as Sprint PCS.
“We understand the buying habits and the economics of the region,” Williams said.
The cost of living in that area is low, and even if per capita income is also low, Southerners in that area generally have more disposable income, he said.
Cellular competitors now operating in the Gulf Coast region are BellSouth Cellular and GTE Mobilnet Inc.. Williams said if BellSouth or GTE customers can’t be switched to DigiPH, the company can get by with just acquiring new wireless users.
PrimeCo Personal Communications Inc., a 1900 MHz operator, has a system in Florida. PCS operators AT&T Wireless Services Inc. and Sprint Spectrum L.P. are expected to launch in the Gulf region in the near future.
Powertel Inc. operates GSM 1900 MHz markets on three sides of DigiPH’s territory; Williams said DigiPH has letters of intent for GSM roaming.
DigiPH’s primary target market is Mobile, Ala., a city of about 350,000 in a bay off the Gulf Coast. Mobile is the city that DigiPH went to auction to acquire.
“We added the other BTAs for economy of scale,” said Williams, who handled the bidding for the venture. The paper and pulp, and chemical industries operate throughout the rivers in that area.
DigiPH also is licensed to offer service in two Florida Panhandle markets just east of the Alabama state line-the city of Pensacola and Fort Walton, the site of Eglin Air Force Base.
The company also has the Mississippi markets of Biloxi, Gulfport and Pascagoula, which is the home of the Ingalls shipbuilding company, the largest industry in the state of Mississippi.
In addition, DigiPH will serve the inland Mississippi cities of Hattiesburg, Laurel, Meridian and Columbus-Starkville. The Starkville region houses Mississippi State University, the state’s largest college.
Gulf Telephone Co. operates both landline and long-distance service in south Baldwin County. Millry Telephone Co. provides local telephone service in portions of Washington and Choctaw counties.
