Bell Atlantic/Vodafone form wireless giant

Bell Atlantic and Vodafone AirTouch last week announced a blockbuster joint venture that could deliver an array of new digital service options to wireless customers across the U.S. But don't expect to see many such services from the venture until it takes care of the daunting network integration project it faces.

The yet-to-be-named venture, which the companies expect to generate $15 billion in revenue next year, will combine Bell Atlantic's and Vodafone AirTouch's domestic wireless businesses.

The venture, owned 55% by Bell Atlantic and 45% by Vodafone AirTouch, will have 20 million customers from the start - double the number of customers using the AT&T Wireless or Sprint PCS nets.

But there is one thing that Sprint PCS and AT&T Wireless have that the joint venture won't have immediately - an integrated network that uses a common billing system.

Currently, Bell Atlantic offers a national wireless service, but Vodafone AirTouch does not. Vodafone AirTouch calling plans vary from region to region, as does the company's billing system.

"There will be a lot of digestion woes following this merger," says Bob Egan, an analyst at Gartner Group, a Stamford, Conn., consulting firm.

Having an integrated network and billing system will let the joint venture offer advanced billing options. Sprint PCS, for instance, can offer pooling of minutes, which lets a business share a certain number of minutes among all its employees regardless of their location.

One thing in the joint venture's favor, however, is that the networks being united are based on Code Division Multiple Access technology.

While the joint venture should stir up even more competition in the already hotly contested U.S. wireless market, customers may not see much of an impact on pricing. That's simply because wireless prices have already dropped so far over the past year, down to 10 to 15 cents per minute for many business customers.

The joint venture is more likely to compete by delivering innovative services, observers say. Bell Atlantic, which is in the midst of acquiring GTE and its GTE Internetworking ISP, will be in a good position to offer wireless Internet access services through its new venture.