Midrange and regional mobile operators are falling in numbers in the US, as the national players bolster their coverage and spectrum positions. The latest it Cincinnati Bell, which is exiting the wireless business and selling its spectrum to Verizon for $210m.
Cincinnati Bell will continue to offer wireline and IPTV services, and even electricity, to customers in its regions in Ohio, Kentucky and Indiana but has given up on a mobile business which has shrunk from a peak of almost 600,000 subscribers in 2008 to 340,000 at the end of last year.
‘It has become economically challenging for us to invest in our wireless business at the levels necessary to deliver best-in-class service to our customers,’ said CEO Ted Torbeck in a statement. The company will continue to offer its GSM/HSPA services to existing customers for 8-12 months after the deal is completed, likely to be in the second half of this year.
For Verizon, the acquisition is not about these subscribers, most of whom are likely to find a new provider during the handover period, but about boosting its LTE spectrum. The smaller carrier has licences in Ohio in the PCS, AWS and 700MHz bands, including 50MHz in the Cincinnati metro area and 40MHz in Daytona. These are in line with Verizon’s own spectrum holdings, although its 700MHz roll-out is in a different part of the band from that of the rural cellcos, and currently incompatible.
Deutsche Bank analysts had foreseen this move in a March research note, in which they speculated that Cincinnati Bell would not be able to justify investment in LTE. Many smaller carriers are being snapped up by Verizon and AT&T, and even the relatively large Leap is being bought by AT&T. However, those which do want to move forward independently into LTE are being helped by the large cellcos’ partnership programs, notably Verizon’s Rural LTE initiative and Sprint’s alliance with the Competitive Carriers’ Association, which represents the smaller operators.