As the entrepreneurial block auctions for broadband personal communications services get underway this December, the first broadband PCS services also are scheduled to become reality. But a later rollout schedule is par for the course among major PCS license holders, resulting in part from technology delays.
Within the next few months American Personal Communications, awarded a pioneer’s preference license by the Federal Communications Commission, plans to introduce its PCS service-based on Global Systems for Mobile communications technology-initially covering 65 percent of the population in its Washington, D.C./Baltimore major trading area.
“I think they can stay within their timetable,” stated Peter Nighswander, director of PCS market research at Washington, D.C.-based Economic and Management Consultants International Inc. The rollout will serve “as a blueprint for things to come,” he added.
But despite APC’s expected early arrival to market, many companies don’t intend to launch service before the end of 1996, with most estimating dates between then and mid-1997. For many, the technology choice of Code Division Multiple Access is a major factor in schedule delays and uncertainty. CDMA, hailed for its superior transmission quality, efficient use of spectrum, security and privacy, has experienced delays to market.
But Nighswander warns, “Current market conditions dictate they [A-and B-block winners] roll out as quickly as they can…the middle to later part of next year.”
Jeff Keller, spokesman for GTE Mobilnet, said, “Our preferred technology is CDMA,” but noted the question of whether it will be available by GTE’s Corp.’s network launch scheduled for the end of next year. In the event CDMA isn’t ready, GTE will activate the network using Narrowband Advanced Mobile Phone Service, with infrastructure supplied by Motorola Inc., and later upgrade to CDMA.
Technology was a key factor in selecting a supplier, said Keller. Since Motorola produces equipment for various technology standards, GTE is provided the flexibility to upgrade its network in time. The company will introduce service in stages starting in the more populous urban areas of its four licensed markets, said Keller.
Sprint Telecommunications Venture intends to use CDMA technology as well, in part selected for its compatibility with cable transmission, an integral part of its planned network. The consortium of Sprint Corp. and cable partners Tele-Communications Inc., Cox Cable Communications and Comcast Corp. has positioned itself as a full-service integrated telecommunications company. STV won PCS licenses in 28 markets across the nation, but declined comment on when service would be available in those areas.
Last month, the venture signed letters of intent with eight more cable companies to become STV affiliates. Together the 11 cable companies currently serve nearly 40 million homes.
Assuming CDMA is available, PCS PrimeCo L.P. plans to launch service in all of its markets during the second half of 1996, said PrimeCo spokeswoman Stacey Mironov, using equipment supplied by AT&T Corp. and Motorola. Despite the branding conundrum cited by image firms of the broadband big hitter, PrimeCo asserts a competitive advantage. Not only did it win licenses in 11 markets, the cellular systems operated by its constituents U S West Inc., AirTouch Communications Inc. and Bell Atlantic Nynex Mobile will be compatible with the PCS systems, creating an enormous footprint. PrimeCo customers as well as the affiliated cellular customers can purchase dual-mode handsets, said Mironov.
AT&T Wireless Services plans to launch PCS using an upbanded Time Division Multiple Access technology, Interim Standard-136, which offers features including text messaging, sleep mode, over-the-air activation and extensive battery life. AT&T’s cellular and PCS markets will offer customers compatibility, as well, using dual-mode TDMA/analog and dual-band cellular/PCS phones.
Service is set to begin early to mid 1997 in about 17 cities among the company’s 21 licensed MTAs, said AT&T spokesman Bob Ratliffe. Equipment will be provided by both AT&T Network Systems Inc. and Ericsson Inc. Ratliffe noted an Ericsson switch has been installed in Atlanta and an AT&T switch in Chicago.
“We’re working hard to get the systems up and running,” said Ratliffe, adding AT&T already has leased several hundred sites.
SBC Communications Inc., whose three PCS properties are concentrated in the South and Southwest, declined comment on plans for market entry. Spokesman Walter Patterson did say, however, “I think we’re making good progress…We have a lot of experience building systems.” SBC will use IS-136 TDMA as well. Currently, the company’s digital cellular systems use TDMA, with equipment supplied by Ericsson and AT&T.
Unique to Pacific Bell will be an integrated wireline and PCS offering, said Pac Bell spokesman Lou Saviano. Other regional Bell operating companies hold cellular properties in their home territories, prohibiting them from offering PCS in those markets. Pac Bell plans to have service, based on GSM, widely available in its San Francisco/Oakland and Los Angeles/San Diego markets by early 1997. The company has signed a 5-year GSM equipment contract with Ericsson valued at $300 million, said Saviano. Pac Bell will spend an additional $600 million on network buildout. Ericsson will be a handset supplier for Pac Bell as well. Pac Bell has roaming agreements with Omnipoint Corp., to operate in the New York City MTA; APC, in the Washington D.C./Baltimore MTA and BellSouth Corp., planning PCS networks in two Southeastern markets.
For obvious reasons PCS players won’t divulge their marketing strategies, but most wireless giants holding both cellular and PCS properties indicated they would not extol the technological benefits of either service. Rather, on a market-by-market basis, wireless providers plan to promote specific service benefits as deemed important by customers, such as call quality, coverage, security, enhanced service offerings and cost benefits. SBC’s Patterson commented, “It’s [PCS] more spectrum; it’s more opportunity to meet customers’ needs.”
Nighswander forecast slightly more than a half million people will become broadband PCS users in MTAs by the end of 1996. There will be an initial surge of new PCS subscribers in the first year of service, predicted Nighswander, a small percentage of which will be derived from the existing cellular customer base, but primarily comprised of users from middle-income households who are somewhat price sensitive. Price points of PCS service, Nighswander said, will be feasible for occasional users.
The number of new mobile phone subscribers will disproportionately choose PCS as opposed to cellular in the next few years, commented Nighswander. But he predicts PCS growth will level off three to five years after it is introduced. Nighswander expects PCS subscribers, including those in basic trading areas not yet licensed, to reach almost 27 million by 2005, representing a 30 percent share of the U.S. mobile phone market. He anticipates cellular will hold strong at 65 percent market share in 10 years, with enhanced specialized mobile radio accounting for the remaining portion of the market.
World Information Technologies Inc. of Northport, N.Y., reported, “More than $32 billion will be spent in the United States between 1995 and 2004 on equipment to develop an infrastructure for personal communication systems.” Further, the firm said this investment is expected to generate more than $82 billion in service revenues.
Pioneer’s preference winner Omnipoint of Colorado Springs, Colo., plans to launch service in its New York City market near the end of 1996, commented spokesman Mike Kovas. Qualified as a small business, the company also plans to participate in the C- and E-block entrepreneur’s auction scheduled for December.
Cox Cable Communications has PCS licenses for the Omaha, Neb., and Los
Angeles/San Diego MTAs. As in the Sprint-cable venture, Cox will use CDMA technology on its networks. The company plans to start its California PCS service fourth quarter next year, with Omaha following. Spokeswoman Ellen East said that STV will become the sole owner of the Omaha license and part owner, with Cox, of the Los Angeles/San Diego license.
