A view of the competitive landscape: PCS vs. cellular in the Washington area

Mobile Phone News, Jan 22, 1996

Now that the vapor-ware has become hardware and software, public policy, for a change, seems to be in harmony with technology: Droves of people who never seriously considered signing up for cellular service now carry numerous boxes of PCS phones out of the local Radio Shack, Best Buy and other retail stores in the Washington-Baltimore corridor.

Indeed, this has been a pleasant surprise for American Personal Communications Inc. (APC), the A-block broadband PCS licensee that operates under the Sprint Spectrum brand name in the Washington MTA. APC, of course, was the first to turn on a PCS system in the United States.

In response, the incumbent cellular carriers - Bell Atlantic Nynex Mobile (BANM) [BEL & NYN] and Cellular One (Southwestern Bell Mobile Systems [SBC]) - smugly point out that although you can take your PCS phone out of the box, you cannot take it out of the Washington MTA. BANM, in fact, sends this message in one of its advertising campaigns.

But this argument appears to be disingenuous in that it may be only a matter of months before other PCS systems are turned on in other MTAs. APC is affiliated with the Sprint Telecommunications Venture (STV) that holds 29 A/B-block licenses, while the Bell Atlantic and Nynex PCS properties are part of the PCS PrimeCo L.P. alliance that owns 11 such licenses. Together, STV and PrimeCo hold roughly 40 percent of the MTA licenses.

It is difficult to believe that STV and PrimeCo - as well as the Cellular One network of affiliate carriers - will not cooperate with one another beyond mandatory interconnection agreements to bring portable wireless telecommunications to the public.

...Competitive Nature of Sprint Spectrum

So why are cellular carriers pitching the transparent shortcomings of Sprint Spectrum? The obvious answer falls under the umbrella of that overused buzz word "competition." Sprint Spectrum offers lower prices, no service contract, no credit hassles, user-friendly distribution through retail outlets, and a convenient "800"-number to call for turning on the service.

Cellular service, the other hand, continues to be relatively expensive: The average monthly bill is $52.45, according to the most recent Cellular Telecommunications Industry Association (CTIA) survey (MPN, Sept. 25, 1995, p. 1). In addition, you are locked into a one- or two-year service contract, and credit can be a problem.

For example, two Radio Shack clerks recently said that Cellular One (Radio Shack distributes both Cellular One and Sprint Spectrum phones) would not provide service unless they put up $700 each. Hence, both clerks opted for Sprint Spectrum's Ericsson [ERICY] Model CH-337 PCS phone ($149 plus tax) and the $15-per-month "Talk 15" plan - with no credit check.

Notwithstanding the raging debate between proponents of time division multiple access (TDMA) and code division multiple access (CDMA) technologies, the basic problem with analog 800 MHz cellular service today - at least in the Washington area - appears to be network capacity.

...Personal Experiences with Cellular

My analog cellular phone is the Nokia [NOK/A] Model No. 232. In my opinion, it is the best designed, easiest-to-use 800 MHz phone on the market. But it is an analog phone, and I have great difficulty in placing or receiving calls on weekdays from 5 p.m. to 7 p.m. - the peak "rush hours" in Washington.

On Jan. 11, furthermore, federal government employees in the nation's capital were required to report to work for the first time in a couple of weeks - in the wake of the budget crisis and a winter storm that dumped two feet of snow in the metro area.

The result was chaos on the roadways and the airwaves. My normal 30-minute commute took three hours. I attempted to call my office more than two dozen times, between 9 a.m. and 11 a.m., without getting so much as a dial tone. The apparently overloaded cellular network never even recognized that I was attempting to place a call.

At this point, industry experts would say that I should opt for a digital phone since the cellular networks in Washington have been upgraded to support digital technology.

Several weeks ago, however, I returned a pair of digital cellular handsets because they just did not operate consistently. First, the post-dial delay was incredible. Second, when calling my landline phone's voice mail, the wireless signal sometimes would "lock on" so that I could hear only a loud "echo" and could not terminate the call without pulling the battery out of the phone. Third, on various occasions, I could not even turn on the phone.

No doubt digital cellular performance will improve rapidly. But it would not be practical for me to switch to digital for quite some time - thanks largely to the hefty price-tag on the phone.

(Paul Shultz, managing editor of Phillips Business Information's Wireless Group, 301/340-7788, ext. 2014; or pshultz@phillips.com)

RELATED ARTICLE: Cellular Wish List

What do I, as a customer, want from the cellular industry? Following is my wish list:

(1) Give me a reasonably priced digital handset. Give me a discount for trading in my old handset.