More Information - Tech News
Verizon Wireless closes Alltel acquisition
Overtakes AT&T to become largest national wireless provider
by Doug Allen
Wed. January 14, 2009 
National mobile powerhouse Verizon Wireless has successfully closed its US$28.1 billion ($5.9 billion in equity and $22.2 billion in Alltel debt) acquisition of regional wireless operator and sometime rival Alltel Corp, just weeks after its target completion date of year-end '08 and six months after the proposed merger was first announced last June. The resulting company has earned bragging rights as the largest wireless provider in the U.S., even surpassing AT&T Mobility who previously held that distinction with 74.9 million customers as of Q3 '08.
With Alltel’s customer base of 12.9 million on board, the new Verizon Wireless boasts 83.7 million subscribers and a blanket national coverage of 290 million people. That number will fall somewhat, though, because of the planned divestitures of key markets where both Verizon and Alltel overlap in service coverage. Alltel network assets in areas already covered by Verizon customers will be sold off as part of the Department of Justice and FCC restrictions on the deal to address market competition and antitrust concerns in 105 markets across 24 states over the proposed merger, a loss of about 2.1 million Alltel customers (see DOJ to Verizon Wireless: you can have Alltel, but we have a few notes )
The pre-merger Verizon Wireless will also have to make some concessions by divesting from four markets, as well as the Rural Cellular Corporation operations in southern Minnesota and western Kansas acquired last August under the Unicel brand.
On the always difficult matter of integration, there is some good news. Both Verizon Wireless and Alltel run CDMA-based networks, so there won’t be any impact on customer service from the usual network cut-overs caused by protocol conversions. The problems are likely to come from back-end processes such as billing, operations, and service claims. The transition will likely take a year or more to fully complete, but Verizon Wireless spokespeople say the new company expects to obtain synergies with a net present value, after the cost of integration, of over $9 billion, spurred by combined capital increases and opex savings, as well as a workforce reduction of up to 3,000 Alltel executives made “redundant” by the deal.
The Alltel brand will remain in effect until its operations can be gradually brought under the Verizon Wireless banner, a process that the new carrier says will take several months, “as it works to integrate networks, convert billing systems and upgrade high-speed wireless broadband service.” That timeline may be optimistic however, since the company’s official statement also points to the re-branding effort taking place in stages, beginning in Q2 09 and continuing through the third quarter, primarily due to billing conversions.
The new Verizon Wireless says it will continue to support Alltel plans, pricing and services for the foreseeable future, and will notify customers by mail of any impending changes to available services. No handset swap-out will be necessary due to the common technology platform of both operators. Moreover, the new company will maintain Alltel’s existing GSM networks “to continue serving the roaming needs of GSM carriers’ customers.”
Verizon Launches 'Hub' VOIP Phone
Verizon Wireless launched a VOIP-based, Linux-powered home phone on Friday, the Verizon Hub. The Hub plugs into a home broadband line and acts as a family calendar, limited Web browser, messaging center, digital picture frame and, of course, a phone.
The Hub is based on OpenPeak's OpenFrame design, which we saw at the Consumer Electronics Show in 2008. The OpenFrame – or the Hub – is an 8-inch, 800x480 touchscreen device which sits on a table or kitchen counter. It has a single DECT 6.0 cordless phone that snaps into the base.
The Hub's home screen shows floating, Web-based widgets such as a calendar and the weather, along with details about missed calls and visual voice mail.
Verizon dressed the OpenFrame up with their own proprietary services. The device can stream movie trailers and other video from V CAST; send directions to phones using VZ Navigator; track children's cell phones using Chaperone; view local traffic information, and send and receive text, picture, and video messages. The Hub doesn't require that you get your broadband from Verizon, though – it works with any Internet connection.
When we tried the OpenFrame, it also had a way to view movie trailers, an RSS reader, and YouTube and Flickr clients, though it's unclear whether those clients will be available on the Verizon Hub.
By touching buttons on the OpenFrame's panel, you can sync it with the various contact lists and calendars in your life, view TV schedules, send an IM or SMS, check the weather, surf the Web, watch streaming video, play music or do a range of other things. The devices are based on Freescale MX31 processors, with two 600-MHz ARM11 chips doing the heavy lifting.
Last year, OpenPeak chief executive Dan Gittleman said the OpenFrame is based on an "open" platform, but it's not open by any normal person's interpretation of the word. While the device's custom OS is based on a hacked Linux kernel, all of the software above the kernel is closed and proprietary. OpenPeak will offer a full API for developing third-party apps, but only to carriers, not to consumers.
Verizon has been coping with a loss of landline subscribers even as the company's wireless business booms. This isn't Verizon's problem alone; every year since 2000, the number of home phones has declined as people go wireless-only, according to the FCC. During the third quarter of 2008 alone, Verizon gained 2.1 million wireless customers and 225,000 high-speed Internet customers, but lost 571,000 residential landline customers, according to the company.
AT&T has also tried to stem the collapse of its landline business with a sexy home phone. The $499.99 AT&T Home Manager is a 7-inch touchscreen device produced by Samsung with many similar features to the Verizon Hub. But it's not as attractive as the Hub, it's only available in nine cities, and it doesn't integrate as fully with AT&T's wireless services as the Verizon Hub does. The HomeManager is also a traditional land-line phone rather than a truly VOIP voice phone.
Verizon did not announce pricing or service plans for the Verizon Hub, but said all would be revealed before the product goes on sale on Feb. 1.
Verizon Omnia Testimonial
