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GCI, ACS to combine cellular networks, shoring up against Verizon

Ben Anderson

Alaska's two major telecoms, General Communication, Inc. and Alaska Communications, have joined forces in the battle for cell phone supremacy to pre-empt the looming entry of global wireless provider Verizon, which is preparing to burst onto the scene. On Tuesday, GCI and ACS announced they hope to combine networks to form the Alaska Wireless Network covering 95 percent of the state's population.

ACS and GCI, traditionally, have been competitors in Alaska for phone, cable, and cellular service. But in the face of big, national carriers entering the Alaska market, the two have become the mom-and-pop telecoms, despite each being a relatively sizeable company.

Verizon Wireless, the nation's largest cell phone service provider, is poised to enter the Alaska mobile phone market late this year or early in 2013, according to previous statements from the company. GCI spokesman David Morris called the wireless merger a "competitive response" to Verizon, which will offer coverage in every U.S. state and territory --  in addition to international locales -- once it comes to Alaska.

"They measure their revenue in billions, where we measure in millions," Morris said of Verizon compared to GCI. "They measure their customer base in the millions, where we measure ours in the thousands."

ACS spokeswoman Heather Cavanaugh said that ACS has been "preparing to compete with Verizon for quite a while." Cavanaugh said that the new GCI-ACS partnership will form a very competitive network, even stacked up against the likes of Verizon.

Until now, Verizon subscribers in Alaska have principally roamed over the ACS network. But that's poised to change, as Verizon continues construction on an Alaska headquarters in midtown Anchorage, a location extremely close to ACS property. Morris also said that Verizon is already "skirmishing" for space on cell towers in Alaska, primarily along the road system.

That's where GCI and ACS believe they have the edge -- there aren't a lot of options for Alaska communities off the road system, and the combination of assets between ACS and GCI strengthen those carriers assets in rural Alaska.

That includes the huge, $88 million Terra project that GCI has undertaken in Southwest Alaska, bringing fiber optic communications to a region that has for years relied on satellites for much of its telecommunications needs.

And while ACS customers could eventually benefit from that newfound asset under the Alaska Wireless Network, GCI customers may find themselves better connected in regions of Southeast Alaska, where ACS has some better coverage, Morris said. More than 250,000 Alaskans are already subscribed to the ACS or GCI plans, according to the companies.

Additionally, ACS and GCI have been competing for high-speed services in recent years, with both carriers looking to beef up their next-generation wireless networks (often referred to as "4G" services, though that's not entirely accurate), allowing them to compete with AT&T and Verizon. Now both companies will be able to boast of a bigger weapon in that arsenal.

Under conditions agreed upon by the boards of directors for both companies, GCI will own two-thirds of Alaska Wireless Network, with the remaining third belonging to ACS. GCI will purchase $100 million in assets from ACS, adding them to the network, a press release announcing the venture said.

A joint statement from Anand Vadapalli and Ron Duncan, CEOs of ACS and GCI, respectively, played up the benefits of the new network for Alaska.

"By combining our respective wireless assets, GCI and Alaska Communications can provide a state-of-the-art wireless network owned and operated by Alaskans for Alaskans," the statement read.

What does it mean for current subscribers? Well, some people may not see much of a change, while others may see an improvement in coverage when they're at home or traveling around the state, depending on their carrier. Additionally, Morris said there is potential on the expanded network for improved roaming service when GCI or ACS subscribers travel to the Lower 48.

But it's not all a love affair: Cavanaugh said that ACS and GCI will continue to compete on the retail side of things despite sharing wireless network technology. That means competition when pricing mobile phone service packages. Each company will retain their retail storefronts and their own customer service centers.

A persistent rumor has been that Verizon would purchase ACS in order to gain a toehold in the Alaska market. It seemed possible due to Verizon's relatively deep pockets.

But, Cavanaugh said, “It’s always been just a rumor and nothing more than that.”

The Alaska Wireless Network still faces regulatory hurdles, though, with approval from the Federal Communications Commission and other organizations pending. The companies don't anticipate the process being completed until the middle of 2013.

Contact Ben Anderson at ben(at)alaskadispatch.com