NEW YORK-Some interesting twists are ahead on the road to roaming for personal communications services carriers as they seek to emulate their cellular counterparts, which reap between 15 percent and 20 percent of their gross revenues from long-distance wireless calls.
Last year, subscribers of all wireless services in the United States spent nearly $3 billion to roam outside their home markets, according to the Telecommunications Resellers Association. TRA asked the Federal Communications Commission earlier this month for access to this lucrative market, now the sole province of facilities-based carriers.
Coverage is king in wireless, so the saying goes. New PCS entrants, whose networks are focused largely on urban areas, see roaming as a revenue source and way to fill coverage gaps.
“In the coming year, you’ll start seeing some interesting variations on roaming,” said Ken Woo, external communications manager for AT&T Wireless Services Inc., Kirkland, Wash., a Time Division Multiple Access carrier with cellular and PCS properties.
“There will be a fundamental shift away from roaming to larger home calling areas (for high-usage customers), not just by us but by other carriers, because of the value added in terms of customer retention, (which is) more efficient than getting new customers.”
In fact, at least one PCS player-Powertel Inc. of West Point, Ga.-launched service with just that type of enlarged home-zone strategy. The Global System for Mobile communications carrier, with a footprint in a dozen Southeastern states, has so far built out 23 urban areas and the major highways connecting them, said Jim Murrell, vice president of business development. Personal and business customers can buy bundles of flat-rate minutes that can be used anywhere within its coverage area.
“The cost differential is reduced enough to where people are making calls on the way home instead of waiting until they get home. That’s what we mean when we talk about wireline replacement,” Murrell said.
Terry Yen, international roaming team leader for the CDMA Development Group, also said he sees the expansion of home zones as a means for PCS carriers to compete against other wireless and wireline telecommunications providers.
Already, Yen said he can obtain from Sprint Spectrum L.P. a $50 monthly Sprint PCS calling package that includes 375 minutes, which can be used in a calling area that reaches from Los Angeles to Long Beach, Calif., 30 miles south. That computes to about 13 cents per minute, compared with 7 cents for a toll wireline call. But since the wireless minutes are part of a paid-for, use-it-or-lose-it bundle, it makes sense to use the PCS phone, he said.
If Sprint succeeds in its nationwide strategy, it will be in a class by itself among PCS carriers, able to offer a seamless network with flat rates that are cheaper than roaming charges, said Stuart R. Taylor, senior manager of the communications consulting group at Andersen Consulting, Boston. That would give Sprint an advantage in competing as a PCS carrier for la creme de la creme-the multinational corporate customers that cellular providers have all but locked up so far, he said.
“To me, roaming is important but a lot of the emphasis that’s on it is unnecessary, especially in PCS, which is targeting localized markets-consumers and small and medium business customers, who don’t roam more than five miles,” Taylor said.
Offering roaming as a feature to local customers, even if they’ll never use it, is a market differentiator that quickly is becoming a standard feature as wireless carriers compete against each other for customers, Yen and Taylor said. Given equal prices and usage plans, consumers tend to buy the service that offers roaming.
“The market for roaming coverage isn’t so much always an absolute business proposition targeted to a particular customer group. We’ve seen the phenomenon already in Asia, where roaming is a perception, and it’s happening more in the United States,” Yen said.
Of the 1,500 users and non-users of wireless services it surveyed, The Strategis Group, Washington, D.C., found that roaming is very important to 49 percent and somewhat important to 25 percent, said Kent Olson, a consultant for Strategis. Business customers surveyed said roaming accounts for 21 percent of their usage, while personal customers said it comprises 13 percent to 14 percent of their usage.
Tovin Monaco, manager of the technology development group for Western Wireless Inc., a cellular and PCS carrier based in Issaquah, Wash., said PCS roaming seems to tap the trend of an increasingly mobile society. This development means that roaming, an essential feature for world business travelers, is likely to become an ever bigger factor is the usage mix, even for personal subscribers.
Whether or not local customers roam out of the area, it also is important for PCS carriers to offer this option to reap revenues from high-end wireless users who roam into their network, said Laurence Swasey, senior analyst for Allied Business Intelligence, Oyster Bay, N.Y. Such customers are an important part of the wireless equation that the top 20 percent of subscribers account for 80 percent of revenues.
However, it also is important to proceed carefully in offering roaming services, said George Schmitt, president of Omnipoint Communications Services Inc., Cedar Knolls, N.J. The GSM carrier had 33 international and seven domestic roaming agreements as of mid-January. Nevertheless, Schmitt said Omnipoint will be cautious in its introduction of PCS-Advanced Mobile Phone Service roaming so as not to surprise and annoy customers with unexpected roaming charges.
“If you call at a hole in AMPS and continue into my territory, you’ll still be paying roaming charges,” he said.
“Because of the different pricing, we will sell the new dual mode GSM-AMPS phones only in one of our (own) stores where they can be explained.”
