This article reported today is an indication of the changes happening in the telecommunications industry. It is old news that the number of ILEC access lines has been decreasing in past years, while the number of mobile subscribers has been increasing. This is due in part to competition from mobile carriers and penetration of broadband service (both ILEC and CATV based). This topic has shown up in earlier posts on this blog.
In focussing on rural and suburban areas with its wireline business, Alltel had built a company that was largely immune from (wireline) competition by CLECs that characterized the late 1990s. With competition from wireless carriers and CATV providers, Alltel faced greater competition. Clearly, they felt that maintaining an integrated company was not consistent with shareholder value.
I find this move by Alltel a bit peculiar in that Sprint/Nextel has recently made some noise by allying themselves with CATV providers in support of a "telecom triple play" (also discussed earlier in this blog), and the moves by Verizon and AT&T (aka SBC) in this direction. Further, Alltel does not have the wireless footprint or subscriber base to compete with the big three.
Alltel is clearly marching to the beat of a different drummer ... are they right? What are good rationales for this move?
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