Verizon’s Alltel acquisition: What are the ramifications?

Now that analysts and industry pundits have had 24 hours to rehash yesterday’s announcement about Verizon’s $28.1 billion acquisition of Alltel, there is lots of debate about how this deal will impact the industry and Alltel customers. Here’s a roundup of the latest:

Alltel subscribers: Alltel customers are worried about Verizon’s commitment to rural coverage and whether the deal will lead to reduced competition in rural markets. They are also concerned about the possible demise of the firm’s popular MyCircle’s rate plan that lets them have unlimited calling to 5, 10 or 20 numbers for a monthly fee. Alltel CEO Scott Ford says that there will be not rate plan changes right away.

What does this mean for other operators? Most of the speculation surrounds Sprint, which now moves to a more distant third place behind Verizon and AT&T. Some believe Verizon’s acquisition of Alltel increases the chance that Sprint will be acquired by Deutsche Telekom. Technology Business Research believes the acquisition of Alltel will place new burdens on AT&T and cause it to search for possible acquisition targets. That may be tough since prospects are limited.  Possible acquisition targets would include U.S. Cellular, Centennial, and unlimited local service providers Leap Wireless and MetroPCS.

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Cricket comes to St. Louis

Starting tomorrow, Leap Wireless will begin offering Cricket unlimited wireless service in St. Louis. The coverage area extends from Warrenton, Mo., to Keyesport, Ill., and includes 2.4 million new covered POPs bringing Cricket’s national covered POPs to about 6.7 million.

The carrier will launch in St. Louis with nine retail stores and more than 80 authorized dealers. Plans will range in cost from $30 per month to $60 per month.

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T-Mobile sues Starbucks over free WiFi

T-Mobile USA isn’t a fan of the new free WiFi promotion from AT&T and Starbucks. The carrier, which has offered paid WiFi access to Starbucks customers for the past seven years, filed a lawsuit against Starbucks accusing it of breach of contract because it’s allowing AT&T to provide customers with free WiFi access in its cafes. The AT&T promotion provides two hours of free WiFi to Starbucks customers who purchase a Starbucks Reward Card with a minimum of $5 credit on it. Customers must use their Starbucks Card at least once a month.

Starbucks announced in February it was ending its exclusive relationship with T-Mobile in favor of a new deal with AT&T and the transition is under way. In the complaint filed in New York State Supreme Court, T-Mobile says the coffee maker secretly devised the promotion with AT&T to provide free WiFi in its stores even though T-Mobile still has the right to exclusively sell and promote its WiFi service in Starbucks until the transition to AT&T is complete. Currently only two Starbucks stores have made the transition, the lawsuit says.

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Sprint adds 4 new PTT phones

Sprint Nextel will launch four new Direct Connect phones in about 47 markets on June 15. The phones will be powered by Qualcomm’s QChat next-generation push-to-talk technology that uses Sprint’s EV-DO Rev. A network. The phones offer new features such as Call Alerts (a repeating alert that lets users notify another user that they are trying to reach them) and Group Connect, which lets customers quickly connect to up to 20 other Direct Connect users at once.

The new Direct Connect phones include the LX400 by LG, the Sanyo Pro-200 and Pro-700 and the Samsung Z400, which is the first Direct Connect phone offered by the handset maker. The phones range in price from $50 (with a two-year agreement and a $50 rebate) to $80 (with a two-year agreement and a $50 rebate). 

The new Direct Connect handsets are critical to Sprint, which has been losing iDEN customers in droves. The firm hopes that the new QChat technology and handsets will prevent more customers from leaving the carrier.

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Verizon to FCC: nationwide ETF policy is best

At today’s FCC hearing, Verizon Wireless testified that the wireless industry would be better off if the FCC devised a nationwide policy on early termination fees instead of allowing states to inconsistently regulate the fees. “Faced with the prospect of multiple state policies on this issue, Verizon believes that appropriate federal action to establish a national policy is preferable,” said Tom Tauke, Verizon executive vice president of public affairs.

Not surprisingly, Verizon suggested the FCC adopt ETF guidelines similar to what the operator has already adopted. For example, carriers should offer opt-out or trial periods for new contracts; provide pro-rated ETFs; and offer no ETFs for contract renewals unless the consumer gets a new device as part of the deal.

Early termination fees are a hot topic at the FCC because they were among the five most common complaints by cell phone users, who filed more than 20,000 service-related complaints with the FCC in 2007. Carriers have pushed the FCC to rule that cancellation fees are part of the rates carriers charge their customers, as opposed to a fee. That type of definition would preempt lawsuits that are occurring in state courts.

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Nokia’s iPhone killer “Tube” will debut in 4Q

In a research note, Avian Securities analyst Matt Thornton says he thinks Nokia is on track to deliver its first touchscreen device, the Tube, in the second half of the year–probably in the fourth quarter. This device, which has been pegged as Nokia’s answer to the iPhone, is both Java and Flash-enabled. 

Thornton’s insight is timely, considering Nokia has been taunted for not having a handset that effectively competes with Apple’s 3G iPhone. When Apple CEO Steve Jobs debuted the 3G iPhone earlier this week, he took some swipes at the Finnish manufacturer by pointing out that the iPhone 3G managed to download a website in 21 seconds while the Nokia N95 took 33 seconds to load the same page.

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Cell phone study shows adverse testes results

Male cell phone users who carry their devices like 21st century six-shooters might want to reconsider where, exactly, they put them. A new study from the Center for Reproductive Medicine at the Cleveland Clinic has suggested a link between cell phones and sperm damage. Specifically, the study said, when in close range to the testes and in talk mode, the cell phones damage sperm.

Studies were taken on 32 men with similar sperm health. One group was placed for an hour within 2.5 centimeters of a cell phone in talk mode at 850 MHz. The transmission, the study said, led to an increase in “oxidative stress” which, in laymen’s terms, apparently means damaged sperm. Even worse, there may be a relation to testicular cancer as well.

This isn’t the first time this particular medical team has found a link between cell phones and sperm problems. A previous study of 361 subjects showed men who use their cell phones more than four hours a day have “significantly lower sperm counts.” A CTIA spokesman, while supporting “good science,” also pointed to other studies that show no link between wireless usage and adverse health effects.

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Study says businesses aren’t convinced of iPhone yet

According to a new study released this week, Apple faces an uphill battle trying to usurp the BlackBerry in the business world. Investment house Sanford Bernstein, as part of a broader study on IT spending, analyzed responses from some 105 chief information officers. Just two planned to roll out Apple’s iPhone 3G handset in the businesses over the next year.

“Our CIO survey suggests that corporate iPhone use will be driven by employees purchasing their own iPhones, rather than company-wide deployments,” wrote Toni Sacconaghi, an analyst at Bernstein Research. “If this persists, it may ultimately limit iPhone penetration into the corporate space.”

The question is: Is the penetration of iPhone in the business market critical for Apple to reach its goal of 10 million units sold this year?

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Hospital techies worry about white spaces

Hospital technology groups and vendors in the sector are urging the FCC to be careful on how it approaches the white space spectrum issue because opening up some of those spectrum channels could lead to interference with medical devices. The FCC has allocated channel 37 to hospital groups about a decade ago, but older systems still use some white space spectrum.

“If a new white space application that’s operating thousands of times more powerfully came online, either in the hospital or outside the hospital, it could very well directly interfere with the telemetry system and prevent patient monitoring,” Tim Kottak, engineering general manager for GE Healthcare’s systems and wireless division, told CNET in a recent interview. While GE also owns NBC, a key player in the National Association of Broadcasters, Kottak said he speaks only for the Healthcare unit of GE.

Unlike NAB, however, the hospital tech groups are looking for a compromise: The FCC should keep a few channels off-limits and just require device operators to tell hospitals when white space devices become operational nearby.

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