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Baby Bells get set for a cell phone explosion

April 5, 2000
Web posted at: 5:58 PM EDT (2158 GMT)

By Michael Eskenazi

(TIME.com) -- As far as tech-stock watchers are concerned, Wednesday's joint wireless venture between Bell South and SBC couldn't have been timed better. Right when the death knell was sounding on the dot-com craze, wireless technology has emerged as "the new new thing," with new players popping up left and right and a host of IPOs on the horizon. Tech analysts say there are two trends driving the boom: Cell phones have finally come way down in price, making them widely available to the masses, and they will soon become much more versatile, offering a host of digital services. "Early on the U.S. trailed way behind Europe in making these things cheap because the federal government got so caught up in regulating cell phones," says TIME business editor William Saporito. "But consumers know what's going on in Europe and they've demanded lower prices, and the market responded. The big issues right now are standards and geography. The first question cell phone users ask is 'Can I take it everywhere?'" To give them the answer they want to hear, cell phone providers are in a mad dash to provide service to more and more corners of the nation — and the Baby Bells are pooling their resources. Just two days after Vodafone and Bell Atlantic merged their wireless services to become the largest cell phone provider in the U.S, Bell South and SBC sewed up their deal Wednesday, making them number two and knocking former industry leader AT&T Wireless into the "show" position.

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This is all music to Wall Street's ears. Both Verizon (the joint Vodafone/Bell Atlantic venture) and AT&T Wireless have IPOs planned for the coming months that are expected to raise in excess of $10 billion apiece. Executives from Bell South and SBC say their venture could have a similarly huge Wall Street debut. What's more, industry experts expect the number of U.S. cell phone users (currently around 80 million) to double within five years. The cell phone market is expected to grow substantially this summer, when the FCC plans to auction off several billion dollars' worth of wireless licenses. Of course, there's a major downside to this boom — pretty soon, it seems, there will be absolutely no refuge from all that incessant cell phone chattering.

Copyright © 2000 Time Inc.