Verizons Options and Advantages
In addition to potential buyout of Vodafones share, she said parent Verizon could make a bid for rival Qwest Communications, and also predicted that Verizon Wireless may try to acquire competitors including Alltel or U.S. Cellular. In either case, Weldon said, it is "imperative" that Verizon figure out a way to become more tightly aligned with its wireless subsidiary."The [incumbent local exchange carriers] are finally realizing that the notion of wireless substitution isnt as threatening and that they have to live with it, so these companies need to figure out how to take better advantage of their wireless assets." Read more here about the implications of single ownership for Cingular. The idea that telecommunications convergence has gone from a mere concept to business reality is the lesson to be taken from the AT&T deal, and Verizon will need address that in some manner, whether through pulling Verizon Wireless closer back into its operations or by some other means, the analyst said. The only downside Weldon could see in a move by Verizon to buy Vodafones stake could be the loss of some international reach, but she said the benefit to customers offered by a more integrated Verizon and Verizon Wireless would probably outweigh those considerations. Lisa Pierce, analyst with Forrester Research, based in Cambridge, Mass., said the AT&T deal is sure to speed up talk among other players on the U.S. wireless market that could lead to more consolidation. Cingular being owned by one company based on the AT&T-BellSouth merger, she said, ups the ante for Verizon specifically. "Business customers love the idea of tighter synergy between fixed and mobile," Pierce said. "Sprint has this down already, while Verizon [Communications] has never focused as much on wireless; Cingular is no longer going to be in this weird place theyve been in, and legacy AT&T customers get a lot more wireless expertise." According to Andy Belt, a consultant with Boston-based telecommunications research specialists Adventis, Verizon has not been put in what he would describe as a tough position by the AT&T-BellSouth deal, but he said the companys relation to its wireless joint venture is something of a "market anomaly." Belt said that rather, the AT&T deal simplifies any questions about Cingulars management, which could force Verizon to do some housework of its own to manage customers perceptions of how the two firms stack up competitively. "The deal throws a little bit more pressure on Verizon to clean up its messy model with Verizon Wireless, but its certainly not a disastrous situation," he said. "Unlike Cingular, Verizon Wireless does not have major constraints on its day-to-day decision-making based on its ownership, but ultimately Vodafone does have a major say in key strategic initiatives, and the change in Cingulars situation may throw all of that into more of a focus going forward." Check out eWEEK.coms
"The integration between Verizon corporate and Verizon Wireless is still very hands-off and I dont think they can afford to continue to do that in the current world of convergence," Weldon said.