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Wireless Winning Out, As Verizon Sells Hawaiian Landlines: Page 2 of 2

Mitchell, who is directing analyst of telecommunications at Infonetics, said the RBOCs may not be making money--or much money--in landlines, as competition from wireless and cable intensifies. The RBOCs are unloading more of their rural lines to conglomerates that specialize in such operations.

Verizon has been negotiating for months to sell off more than 2.5 million landlines in upstate New York. While the RBOCs have a tremendous advantage over their long-distance competitors because they have the landline assets, those assets are gradually declining in value. Several months ago, individual lines were selling for about $3,000 per line, while their price today is heading towards $2,000 per line.

Another RBOC, SBC Communications, has been negotiating to sell landlines in Texas and Michigan. The negotiations are in abeyance because SBC has had to deal with a strike by its Communications Workers of America employees in recent days. SBC, too, has been raising capital to fund its Cingular Wireless operation. Cingular--60 percent owned by SBC and 40 percent by BellSouth--needs some $30 billion to fund its recent acquisition of AT&T Wireless.

SBC has said it has enough resources to fund the AT&T Wireless acquisition without resorting to the sale of landlines. "The numerous companies and private capital groups interested in acquiring rural access lines believe that they may be more valuable to them than to SBC," the firm said last month. "This belief is based in part on the regulatory constraints imposed on SBC that are often not imposed on smaller carriers."