The consolidation of C-block personal communications services license holders has begun earlier than expected as five licensees have combined to form one partnership.
Aer Force Communications L.P., Fortunet Wireless Communications L.P., High Country Communications L.P., New England Wireless Communications L.P. and Southeast Wireless, which together hold 31 C-block licenses scattered across the country, have formed Fortunet Communications L.P.
New York-based Fortunet Wireless is the general partner and Lynch PCS Corp. A of Greenwich, Conn., is the limited partner. The other four companies now hold ownership interests. Lynch, a public company with ownership in multimedia and telecom companies, held interests in all five companies.
“There were relationships between the five in terms of ownerships. It made more sense for financing, development and other purposes,” said Bob Hurwich, secretary of Lynch.
“Frankly, this (consolidation) is earlier than I had anticipated,” said David Kerr, director of wireless programs with Strategy Analytics. “I really expected that to happen toward the middle of next year (when the majority of C-block carriers launch service) … I anticipated that as the smaller players realized what they were facing, the motivation to seek partners would increase significantly.
“Given the conditions of C-block players, it is inevitable that we will see consolidation,” said Kerr. The large amount of money C-block licensees paid for permits along with the cost of building networks and starting service later than other carriers all are negative strikes against these carriers, he said. “The biggest thing this will allow these companies to do is gain volume in purchasing and get financing for buildouts.”
Fortunet Communications has not publicly indicated what technology standard it will select, and none of the five companies had announced their selections since the C-block auction ended last year in May.
The new company’s markets lie in Connecticut, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Michigan, Minnesota, New Mexico, New York, New Hampshire, Oregon, Pennsylvania, Texas, Virginia and Wyoming.
Since these markets are not so neatly positioned, “the smart thing for [the company] to do is to look at low-tier solutions or jump onto the TDMA (Time Division Multiple Access) wagon and become part of the AT&T (Wireless Services Inc.) North American Network,” said Kerr.
Just one C-block carrier, Indus Inc., has aligned itself with AT&T Wireless, but more are expected to follow. Indus won the Milwaukee license and will use the AT&T Wireless brand name in that market, a move that strengthens AT&T Wireless’ quest to provide nationwide wireless service.
Code Division Multiple Access technology may be another option for the company once the World Trade Organization agreement that allows carriers to take advantage of more foreign capital goes into effect, said Kerr. The Southeast Asian community, which is scrambling for a piece of the wireless action, tends to favor CDMA technology, he added.
