NEW YORK-Like late night talk show host David Letterman, Jerome Lucas, president of Telestrategies Inc., McLean, Va., has a top 10 list-this one for wireless telecommunications industry trends.
In the near term, the biggest winners won’t be the behemoths. Instead, they will be the small and nimble “cell-centric entrepreneurs that come to an area with a good idea and market it, striking deals with universities and the like and using other [carriers’] services,” Lucas said June 3 at a Telestrategies seminar on wireless competition. The carriers most likely will be personal communications services providers.
By 2001, however, wireless companies won’t any longer have to permit resale of their services, according to provisions of the 1996 Telecommunications Act. MCI Communications Corp. is the largest virtual carrier today in the United States.
“MCI’s strategy is great as long as it has wholesalers,” Lucas said. “None of the C-block (PCS carriers) are looking to resell MCI; that is why you see MCI petitioning the [Federal Communications Commission] to help out the wholesalers.”
Before the five-year resale sunset imposed by the new federal law, MCI may acquire all of its wholesalers. “Wireless wholesalers will exist, but I don’t see how they can make money on low-cost airtime,” he said. “They will continue to build out until MCI buys them.”
AT&T Corp. will continue its role as a major player, expanding its cellular and wireless local loop services and its national and international business.
“Sprint will need a lot of money, and is a target for Deutsche Telekom (AG) or Cable & Wireless plc,” Lucas said. “If it lasts two years, that would be a miracle.”
Cable television companies will have a role in wireless telecommunications evolution, particularly in wireless local loop service, for which personal communications services are better suited technologically than cellular. But how cable company participation plays out remains to be seen.
Those like Comcast Corp. and Cox Communications Inc., which have hybrid fiber/coaxial feeder lines in urban areas, are most likely to hook up in some way with wireless services, Lucas commented. “Some will be aggressive and some will back off and just offer dark fiber cable. I can see the cable companies acting as wholesalers and letting AT&T, for example, take the risks with wireless local loop.”
Among Lucas’ other top 10 picks for bellwethers in wireless are the regional cellular carriers that hold PCS licenses. “They are trying to operate across both bands, and many companies have looked at this and say it doesn’t make sense,” he said. “A strong PCS player will look to offer local and long-distance service, and will split apart its cellular and PCS operations.”
Regional PCS operators like Omnipoint Communications Inc. and American Personal Communications are likely to merge “to compete with one technology against companies like AT&T,” Lucas said. “It doesn’t make sense to have three [Global System for Mobile communications] operators in the United States.”
Finally, Lucas predicted that small cellular and PCS operations “will go the way of the mom-and-pop carriers” that provided wireless services before cellular markets were carved up into duopolies.
