Never has an industry been so vastly underestimated as the cellular industry in its formative
years.
When the industry celebrated its 10th birthday in late 1993, industry watchers joked about how wrong the
early subscriber forecasts were, while putting out new subscriber forecasts that underestimated the market just as
severely.
Basing their predictions on a 1 percent or 2 percent projected cellular penetration, many early estimates
said cellular subscribers wouldn’t even number 1 million by 1990, and analysts in 1993 forecasted the cellular market
could reach 25 million subscribers by 1997 with penetration in the top few markets reaching 13 percent to 19 percent
by 2004.
But cellular surprised even its most ardent fans, reaching the 1 million-subscriber mark less than four years
after its commercial launch in Oct. 1983, growing to more than 13 million subscribers after a decade and now
surpassing 60 million subscribers in the United States.
The industry has experienced monumental change in its first
15 years.
The companies that led RCR’s list of the top 20 cellular operators in 1988, the first year the list was
compiled, included PacTel Cellular, Lin Broadcasting Corp., Ameritech, Metromedia and GTE Mobilnet. Today’s list
look’s more like a who’s who of the former Bell system, with the list dominated by AT&T Wireless Services Inc., Bell
Atlantic Mobile, SBC, BellSouth and AirTouch Communications Inc.
The industry also has grown from a handful
of employees and a few hundred cell sites to nearly 120,000 employees and 60,000 cell sites as of last year, according
to the Cellular Telecommunications Industry Association. Service revenues have increased from $354.3 million in 1985
to nearly $30 billion last year.
While many industry veterans believed whole-heartedly in the new service they were
working to create, the industry also had its fair share of doubters.
Robert Rosenberg, president of Parsippany, N.J.-
based Insight Research Corp., recalls the opportunity he let slip away:
“Every time Insight Research wins
kudos from a client for our ability to accurately predict change in the marketplace, I temper any tendency toward hubris
by recollecting that in 1983 I was offered a license to mint money, and I walked away.
“At the time, I was
enrolled in a telecommunications program at the University of Colorado Engineering School. One of my professors,
who had just left the policy analysis group at the (Federal Communications Commission), stood in front of our seminar
and offered to write an application for a cellular license for $1,000. What made it most interesting was that he was
almost willing to guarantee that anyone who took him up on the offer would indeed be granted a license.
“I
often look back on that offer to move out onto telecom’s unsettled frontier and ask myself, ‘What would life have been
like if I had made that trip?’ “
Many people did make the trip, and they recall endless hours and long nights
feverishly working to build the systems that would revolutionize the way people communicate.
“We were
flying by the seat of our pants,” said Robert Maher, first president of CTIA. “There was no real blueprint
for what we were doing.”
Joey Wolff, who worked for Advanced Mobile Phone Service Inc. (AT&T’s cellular
operation before divestiture) recalls nearly crying when she found out AT&T was giving its cellular operation to the
Bell operating companies after working so hard to get it started.
Gary Pellegrino, network director at Bell Atlantic
Mobile, said the industry was so small in the beginning that just about everybody knew each other by first
name.
Tom Brogan, network operations director at BellSouth Mobility, was one of the company’s first employees
hired in 1982 to build its system. Brogan said BellSouth’s cellular operation at the time was so small it operated out of a
two-bedroom apartment.
“I could count the number of employees on one hand with no problem,” said
Brogan, who noted the company’s cellular operation required all of a multistory building within 18 months.
Despite
overwhelming demand early on, cellular remained small enough in the first few months that often intercarrier traffic
was settled via invoices faxed back and forth between companies, and many subscribers received bills that were hand
typed.
While the industry continued to grow, the size of the phones began to shrink.
Oki Cellular Telecom
Division was one of the early manufacturers of cellular phones and supplied phones for Illinois Bell’s system trial.
After the service went commercial, Illinois Bell asked Oki to collect and destroy all of the trial phones, recalls Mal
Gurian, then president of Oki Cellular Telecom and now chairman at Authentix Network Inc.
“We threw them
all in a dumpster and when the garbage truck came to pick them up, there were so many phones and they were so heavy
that when the truck tried to lift the dumpster, its wheels came off the ground,” said Gurian.
Kathy
McLaughlin, vice president and general manager for Canada’s Microcell Solutions’ Western Region, was working for
Cantel when it first launched service July 1, 1985.
“The fully transportable phone that wasn’t attached to a car
was an exception,” said McLaughlin. “It was the size and shape of a very large lunch bucket, and at $2,500,
it wasn’t a big seller.”
Marty Cooper, now chairman of ArrayCom, did some of the very first work on portable
handsets with Motorola Inc. Cooper said the company staged a demonstration in New York 10 years before the
commercial launch of cellular. The company’s first call was to Bell Labs, which also was working on a portable
handset, he said.
“Some people thought I had a portable phone growing out of my head,” said Cooper.
“Back then I told people that within five years of commercial launch more than half of the cellular phones would
be portable. They laughed at me then, but it happened a lot sooner than that.”
The early customers were a little
unsure of the new service.
“People thought they had to stand completely still to use their phone,” said
Microcell’s McLaughlin. “We had to learn to walk and phone at the same time.”
BellSouth’s Brogan
remembered customers thinking they had to be moving for the service to work, and the faster the better, he said.
Customers also tried to get out of speeding tickets by claiming the cellular signals interfered with police radar.
Early
on, cellular carriers didn’t have nearly the problems siting towers as they do today, but they did run into their own
hiccups.
Tom Case, president of Alltel Mobile in 1985 and now senior vice president of customer relations at Alltel
Communications Inc., said the company erected one of its first radio towers using strobe lights that could be set either
on constantly bright or bright during the day and dim at night.
“One day I got a call from a farmer, and he said
he appreciated the fact that we had good cellular coverage, and he used his phone all the time, but the lights on our
tower were keeping him up all night,” said Case. “Sure enough, for miles around everything was lighting
up every two seconds.”
The industry hasn’t slowed down since the first phone commercial phone call was
made from Soldier Field in Chicago to Alexander Graham Bell’s grandson in Germany on Oct. 13, 1983.
Maher,
who now runs MTL Communications, his own consulting firm, remembers the first show CTIA hosted was held in a
parking garage and was limited to four booths. Maher said he had a difficult time convincing the equipment vendors to
come. This week, CTIA will host its 14th annual trade show including 650 exhibitors and several thousand
attendees.
“I’m surprised today that we’re still
working at the same fast pace,” said Bell Atlantic’s
Pellegrino. “You would have thought by now we would have gotten a little breather.”
