Mass hooks up with wireless PCS phones - mass merchants, personal communication system

Discount Store News, Oct 7, 1996

NATIONWIDE DSN REPORT - Retailers may have missed out on the first go-around in wireless communications, but they should make it up on the new PCS (personal communications system) technology just starting to reach the mass market.

While many mass retailers have run cellular programs, they were never major players. That technology tended to reach market through local Beepers "R" US-type operators that generally gave the phones away and made money on rebates from service providers. Mass retailers had a hard time providing the service.

With PCS, and possibly with the newly mature cellular industry, the model will much more closely resemble the traditional telephone industry. The customer buys a telephone at retail, then signs up for service from local and long-distance service providers.

The new technology is just in the process of rolling out nationwide after extensive early tests. Pacific Bell will launch service in San Diego on Nov. 1 and will roll out to the rest of California and Nevada in '97. According to PacBell vp of sales Lester Lee, most of the United States should have service by this time next year.

PCS (it will have several different names nationwide) delivers to consumers a technology much like cellular, with added benefits. Sound quality is, according to Lee, landline-like, with added services such as paging, call waiting, voice mail, Caller ID and a variety of billing options that will make it affordable to the average consumer.

Most important, a PCS telephone, once the nationwide network is established, will ring at more than one location (example: home, office and car). And although the phones are small, travelers can leave them at home, simply by removing a smart chip within the phone and installing it in a loaner at their destination.

A consumer could theoretically have a single telephone number for home, office, car, pager and voice mail, and in the near future, can have calls forwarded to any telephone they happen to be near.

Unlike the cellular market, most PCS service providers intend the product to be available at mass retail locations from inception. According to Lee, phones will be available in San Diego for about $149 at Kmart, Longs Drugs, Staples, Office Depot, Sears and Circuit City.

Pacbell will offer a simple activation system geared toward mass consumers. "There will be no credit checks, no forms to fill out," he said. A single call to our customer service line will activate the phone."

Lee sees the new technology as a major force in the telecommunications market in the near future, in large part because cellular has already trained most consumers. "Cellular has only a 13% penetration rate today, but it's growing at 30% a year or so," he said. Most of that growth is coming from the consumer end.

Pacbell will offer a line of telephones from major wireless names like Nokia, Motorola and Ericsson, although only one sku, a 7-oz. Ericsson model, will be offered at launch. It will also provide a full line of accessories.

Consumers have proven that they'll pay a fair price for PCS," Lee said. We're not going to be giving the phones away and making it back on the service; the consumer will not go for that approach." According to Lee, experience in the Washington, D.C. area showed that consumers, who were offered a selection of phones ranging from $149 to $249, tended to choose the middle ground, with phones in the $199 range selling best.

As an indication of the mass potential for wireless, Gemini Industries, the audio/video/PC/telecom accessories manufacturer, recently signed a wide-sweeping deal with AT&T Wireless Services to provide branded accessories to both AT&T Wireless authorized dealers and the mass market. In essence, said Gemini vp, telecommunications Bob Schumacher, the company will act as AT&T Wireless, accessory division.

While Schumacher refused to put a dollar amount on the deal, it is expected to be worth as much as $100 million per year, particularly as PCS rolls out. According to Schumacher, the program will include original OEM products from manufacturers like Nokia and Ericsson, whose names will appear on the packaging where appropriate.

"This is not a niche market anymore," Schumacher said. "By the year 2000, we expect to see about 100 million subscribers to some form of wireless communications. It's not just a tool of businessmen anymore."