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Cellular Phone Leaders Ally to Build a Nationwide Service

October 21, 1994|MARTHA GROVES | TIMES STAFF WRITER

SAN FRANCISCO — The headlong consolidation of the booming wireless communications business continued Thursday as four cellular telephone powerhouses announced that they will join forces to build a nationwide service and bid on licenses for a new generation of mobile communications services.

AirTouch Communications, the former Pacific Telesis subsidiary, will join with the Baby Bell telephone companies Bell Atlantic, Nynex and US West in an alliance that could pose a formidable challenge to the firms' one-time parent, AT&T Co., and its newly purchased cellular subsidiary, McCaw Cellular Communications.

The quartet aims to offer seamless cellular service for customers traveling around the country and plans to jointly develop a name, a marketing strategy and a common "look and feel" for wireless products and services.

In addition, the companies will likely bid aggressively in the Federal Communications Commission's December auction of licenses for the next-generation wireless services known as personal communications services (PCS). Bell Atlantic and Nynex, which had previously agreed to merge their cellular operations, had been in negotiations to join with long-distance carrier MCI in the PCS auctions, but that deal has apparently collapsed.

Sources said those discussions hit a snag over MCI's insistence that its name brand, marketing prowess and national presence should warrant concessions from the other players.

With a presence in 15 of the nation's top 20 markets and more than 4.1 million customers, the alliance announced Thursday is well positioned both to upgrade existing cellular networks and to spend the billions of dollars that will be needed to acquire PCS licenses and then build PCS networks, analysts said. AirTouch and US West had previously agreed to jointly manage their cellular operations.

"The more cooperation there is among the Bells, the less they have to bid," said Sharon Armbrust, a senior analyst with Paul Kagan & Associates, a research firm in Carmel. "That makes it much less risky."

Times staff writers Leslie Helm in Seattle and Jube Shiver in Washington contributed to this story.

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