The Alaska telecommunications industry is set may undergo some significant changes in 2013.
By mid-year, Verizon Wireless is expected to enter the market, and during the same time General Communications Inc. and Alaska Communication Systems Group Inc. hope to merge infrastructure
If approved by regulators, GCI and Alaska Communications will still sell their own phone plans in 2013, but customers of both will access the Alaska Wireless Network, or AWN, infrastructure created when the two companies' assets are combined.
The move should make both more competitive when Verizon enters the market.
"Verizon is the largest company in the U.S. in terms of subscribers," GCI spokesman David Morris said when the announcement was made in June. "They measure their customers in the millions, and they have the purchasing power that comes with that. To effectively compete against that, the Alaska-based providers decided to pool their capital expenditures to compete against the big boys."
For now, Alaska Communications carries Verizon traffic in Alaska, receiving payment from Verizon for the roaming phones. Once Verizon enters, that portion of its income will diminish, making the AWN deal more crucial to future operations.
GCI will own two-thirds of AWN and its chief operating officer, Wilson Hughes, will head the operations, with Alaska Communications owning the other third. As part of the transaction, GCI will pay Alaska Communications $100 million and Alaska Communications has said it will use that money to pay down debt.
Either company could, however, opt out of the deal after approval, due to issues with lender or union approval, or because it receives a better offer. Executing such an offer would require paying a premium to the other telecom, but lender or union issues in the first 120 days would not, according to the agreement.
If it goes through as planned, the merger will likely save on both capital and operating expenses in the future. The combined network would reach 95 percent of Alaska, and have a customer base of 257,000. That's likely still fewer customers than AT&T has in Alaska, although that company doesn't release an exact breakout for the state.
Verizon is expected to enter the market with fast 4G LTE service, for which construction has already begun.
Verizon has said it won't announce its complete coverage area until closer to its entrance into the market, but tower construction was seen last summer in Fairbanks, Anchorage and Juneau. The company also has agreements with Matanuska Telephone Association and Copper Valley Wireless, which will extend its reach to other parts of the state.
AT&T, ACS and GCI each launched 4G LTE in some communities this year, and also offer HSPA+, or High Speed Packet Access Plus, in other parts of the state.
For now, 4G LTE is available in Anchorage, Fairbanks, Juneau and parts of the Mat-Su, with carriers saying they'll add additional communities in 2013.
By MOLLY DISCHNER
Alaska Journal of Commerce