Allstream not interested in buying wireless providers, may deploy fixed wireless

The rebirth of AT&T Canada as Allstream Corp. may feature some fixed wireless equipment to deliver service, but the company has no plans to enter the commercial wireless market. Vice-chair and CEO John McLennan told a news conference late last month that the rechristened telco will concentrate on the large enterprise sector. "Combining cellular business and wireless with enterprise customers is anything but trivial," he stated. "It is not like the consumer business. It is very, very different. Enterprise customers buy their cellular services and wireless services very, very differently." McLennan was asked if Allstream would be interested in purchasing Microcell Telecommunications Inc. He praised the Montreal-based wireless carrier, but added that his firm and Microcell serve a completely different customer base. Finding common ground is difficult, he said. (Microcell and Sprint Canada have since formed a co-marketing alliance for offering a bundled wireless/wireline service.) " you’re going to have a combination and bring two companies together, you have got to create immediate synergies off the bat," McLennan remarked. "You’ve got to be able to pop your combined business dramatically or it really is a struggle to do it." After lauding Microcell, the Allstream CEO turned his attention to Telus Mobility. He spoke highly of the firm and its president and CEO, George Cope. "That is a great company and one of the best performing wireless companies. We do have a bit of a background in the wireless industry ourselves here," he said, "so we do understand a little bit about where the opportunities are and where they aren’t. When you take an infrastructure like we have in this company and start redirecting it into something that’s so different as that, you really have to have your act together if you want to make that a success." Allstream president and COO John MacDonald is taking responsibility for the infrastructure development of the telco. He was coy when asked if fixed wireless or Wi-Fi could play a part in the future of the company. "We have not made a decision as of yet, but they are two of the disruptive technologies that one could consider part of the soup," MacDonald said. McLennan backed his president and COO up, saying the company is actively investigating both technologies. MacDonald raised the possibility of partnering with various carriers’ carriers to roll out service. "One of our plans this year is to look at alternative forms of access to the customer. And that would include our own technology," MacDonald stated. "You talked about fixed wireless, for example, as an alternative. We’re also exploring opportunity with a cable company or a municipality or whatever." If Allstream decides to deploy fixed wireless infrastructure to expand its network, it won’t need to acquire spectrum to do so. The company, under the AT&T Canada Telecom Services Company banner, acquired a significant chunk of high-capacity airwaves in the 1999 Industry Canada auction of 24 GHz and 38 GHz spectrum licences (RoW, Nov. 29/99). The company told Report on Wireless in November 1999 that it didn’t need licences in the major urban centres due to dense fibre concentration in those areas. Dean Prevost, Allstream’s senior VP strategy and corporate development, said at the time that landing licences in the Niagara region was critical to the company’s strategy of serving the Greater Toronto Area. It’s for that reason Allstream didn’t feel the need to bid heavily for licences in Toronto proper or other major centres, he added. For one telecom analyst, the actual technology used in the infrastructure is irrelevant. Peter Rhamey of BMO Nesbitt Burns says any telephone company can control quality if it runs its own network. That is particularly true for Allstream. "If you look at the basic business case for fixed wireless, there are some situations where it is attractive," he tells Report on Wireless. "But they should be, I’m not sure if I can label them with this, I think they are technology agnostic here." While Allstream has no plans to buy a wireless company, it is the subject of persistent takeover rumours. McLennan denied that the firm is in talks with anyone but noted that his corporate responsibilities require him to assess any offer that does come in. Telus Communications Inc., the most frequently mentioned white knight for Allstream, says it is not in discussions with the CLEC. Some outside analysts speculate that the western telco is unlikely to enter the market at this time, having overpaid for Clearnet Communications Inc. three years ago (RoW, Sept. 5/00). Shares of Allstream rose on stock markets following the announcement of the new name. Rhamey believes some people bought the stock hoping to profit on a takeover while others are endorsing the business plan of the telco since it emerged from protection under the Companies’ Creditors Arrangement Act.

Allstream not interested in buying wireless providers, may deploy fixed wireless

News | July 9, 2003

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