Not wanting to be elbowed aside by rival new suitors, cellular carriers are beginning to serenade subscribers with their own chorus of “Digital! Digital! Digital!”
But unlike emerging personal communications services networks that are digital by design, incumbent cellular carriers have some unexpected leeway in timing their digital service rollouts.
“In 1987, when they started talking about digital there was a panic on the part of carriers over capacity problems,” according to Herschel Shosteck, president of Herschel Shosteck Associates Ltd. “But engineers have learned to optimize systems, and new technologies have evolved to increase capacity,” he said, lessening the need for a digital solution.
“Our quarterly surveys show that in the top 10 markets, quality of service rankings went up from 1989 to 1995 despite a 10-fold increase in subscribers,” he noted.
Mirva Anttila, a wireless analyst at New York-based Northern Business Information, agrees the rationale for introducing digital has changed.
“In general, it’s not the capacity issue. In some very large markets it might be, but most of the time analog capacity is not a problem,” she said.
“With digital, a carrier’s long-term operating costs are lower. The per-channel costs are much less,” she noted. “And they want the ability to offer enhanced services and be able to compete with PCS.”
As to the technologies carriers plan to deploy, the die has been cast.
BellSouth Cellular Corp., Southwestern Bell Mobile Systems and AT&T Wireless Services Inc. already have upgraded a number of their systems to Time Division Multiple Access technology, primarily using Interim Standard 54.
“Many of the TDMA carriers have systems that already are digital ready-the switches and cell sites are upgraded-but they don’t yet have enough market interest. It’s not economically justifiable to turn them on,” Anttila said.
BellSouth has TDMA service available in Houston and Los Angeles, and temporary service is available for the Olympic games in Atlanta.
“All of our markets are digital ready but service will be introduced as part of our marketing strategy, which takes into account not only the PCS networks but also the competitive strategy we might develop against the other cellular carrier in a market,” said spokeswoman Nicole Lipson.
Southwestern Bell Mobile Services has four markets offering IS-54 service-Chicago, Dallas, Washington, D.C., and St. Louis.
But Kris Rinne, executive director of technical strategies, said all of her company’s major metropolitan areas are equipped with the more advanced IS-136 TDMA technology.
“We’ve been in the process of testing IS-136 functionality,” she said. Rather than being a response to digital competition, “Ours is driven more on assuring that it meets quality standards for our customers.”
Service in the four current TDMA markets will be upgraded to IS-136 before the end of the year, along with systems in Boston and Tulsa, Okla. Plans call for the rest of Southwestern Bell’s markets to be upgraded by the end of 1997.
AT&T Wireless has been notably the most aggressive with its digital rollout, having launched IS-54 TDMA service in 25 of its markets-about 92 percent of its coverage area.
“We have north of half-a-million digital subscribers,” said Todd Wolfenbarger, AT&T Wireless’s vice president of corporate communications. “In some markets, digital accounts for 85 percent of new activations.”
And the company just launched IS-136 service-billed as Digital PCS-in Dallas.
Subscribers are offered the handset for about $200 without a contract requirement.
“The customer told us they understood there’s a price to be paid for the handset and they would rather pay for it up front than pay for it in the service contract,” said an AT&T spokesperson. A higher upfront cost also sends a signal of higher value to the market.
There are several rate plans. The Advantage Flex 60 “starter” plan costs about $45 per month for the first 60 minutes of airtime. Additional minutes cost 36 cents per minute for daytime use and 3 cents per minute for nights and weekends. AT&T said it anticipates offering IS-136 to most of its existing cellular markets by the end of the year.
Only one IS-136 handset is currently being offered, the 2160 from Nokia Mobile Phones Inc.
“By the fourth quarter there will be more supply and there’ll be an enormous push driven not by need but by marketing hyperbole,” Shosteck said.
“We’ll see $100-$200-$300 digital terminals vs. giving it away for analog. But tariffs will be lower for digital,” he said.
Shosteck projects a rapid rollout for digital service.
