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WIRELESS RESELLERS WILL BE BIG WINNERS IN FUTURE, ANALYST PREDICTS

NEW YORK-As unlikely as it may seem at first glance today, an affinity marketing company and an airline reservation system offer a glimpse into the future landscape of the wireless telecommunications industry.

Working Assets, a cause-related marketer, is a successful example and role model for “a one-stop-shop virtual carrier, a `switchless’ reseller that outsources everything but its billing,” said Jerome G. Lucas, president of TeleStrategies Inc., McLean, Va.

The privately held company, headquartered in San Francisco, offers Internet access, long-distance phone service, paging, “and will eventually offer wireless (telephony),” Lucas said March 11 at a seminar titled, “Making Sense of the New Telecommunications Market for Financial and Strategic Planners.”

Working Assets donates 1 percent of its revenues, which it reported as $120 million last year, to environmental and other “liberal” causes, Lucas said. It has 250,000 customers, mostly in California.

“It’s apparently profitable. It’s growing like crazy. Its churn rate is extremely low,” he said. “You get free calls to Congressmen. Paying your bill is a happy event. The bills come on recycled paper printed with soybean ink, so if times get tough, you can eat your bill.”

Potential retail groups that are likely to emerge in the bundled service role include regional Bell operating companies, interexchange carriers, competitive local exchange carriers, wireless carriers, universities and real estate developers.

“By 2002, one-stop-shop will have been attempted by almost every carrier; some will win, some will lose and some will focus on wholesale only,” Lucas said. “AT&T Corp. will leverage its more than 800 business locations to create nodes providing personal communications services, facilities-based and direct fiber access, and will acquire cable systems… Ameritech (Corp.) will acquire (LDDS) WorldCom, or GTE (Corp.) will, or a foreign investor will.”

To achieve the goal of transformation into versions of a virtual, bundled services carrier, another ingredient is necessary-an operations support system/intelligent network gateway. The OSS/IN provider will offer start-up personal communications services carriers and PCS resellers the means to use or support number portability, caller identification and other services requiring a wireless intelligent network.

“You don’t have to be a carrier to become an OSS,” Lucas said. However, he added that he doesn’t think equipment vendors will enter this particular area because they “do very well just selling equipment.”

A role model from the airlines industry already exists, “the SABRE Reservation System, American Airlines’ gateway to other travel reservations systems,” Lucas said. “Most of American’s profits come from SABRE, and the company has been called a reservations system that happens to own a few airplanes.”

The large companies Lucas said might consider stepping into this role, which would require a significant capital investment, include: Andersen Consulting, IBM Corp., Bellcore (Bell Communications Research Inc.), EDS Personal Communications, Perot Systems, Lockheed Martin Information Systems and Technologies, GTE Corp., Teleport Communications Group Inc. and Illuminet-the latter owned by about 300 small, independent telephone companies.

Within a decade, Lucas said he thinks that 95 percent of the airtime minutes in wireless will belong to AT&T, MCI Communications Corp., Sprint Corp., “and a fourth wireless GSM (Global System for Mobile communications) consortium that merges with WorldCom.”

The recent debate in the wireless industry has been over whether the number of airtime minutes is a better indicator of success than the traditional benchmark of number of subscribers. But Lucas said that minutes won’t be a reliable criterion in the not-to-distant future.

“If you measure winning by airtime minutes, the big four will win,” Lucas said. “But if you measure winning by profits, the wireless reseller will be number one in the decade ahead.”

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