Atlanta a prime example of the wireless industry's future

Mobile Phone News, Feb 16, 1998 by Mike Maynard, John Sullivan, Gregory Twachtman, Stephen Bouvet, Ellen B. Mullally

As the wireless industry gets ready to gather in Atlanta for Wireless 198, attendees will be seeing, discussing, and in some cases creating, the future of the industry. However, the industry's strength will be seen in other places besides the Georgia World Congress Center. Atlanta itself makes an excellent symbol of the new world the wireless industry is creating.

With somewhere between 25,000 and 30,000 attendees expected, along with more than 660 exhibitors covering more than eight acres of floor space, the sheer scale of the show is a clear sign of how far the wireless industry has come.

One reason Wireless 198 is in Atlanta is that the World Congress Center is one of the very few convention centers in the United States big enough to hold it. According to CTIA spokesman Jeffrey Nelson, there are now only seven U.S. cities with enough convention space to host one of its shows, and four of those have other problems that make them unsuitable.

New York and Chicago are considered prohibitively expensive. Las Vegas has the space, but already hosts many of the largest trade shows in the nation, making it nearly impossible to book space during CTIA's time window. Orlando, Fla., has hosted previous shows, and has a large enough convention center. However, it has become difficult to find enough blocks of hotel rooms in the popular tourist destination.

That leaves CTIA with three cities on its list for future shows: New Orleans (site of next year's Wireless 199), Dallas and Atlanta. "We'll be going to Dallas, Atlanta and New Orleans for the foreseeable future," said Nelson. "Different communities are talking about enlarging their facilities, and as that happens, we'll be considering them as well."

... An Exemplary Wireless Market

However, the main reason Atlanta makes a good showcase for the industry is the widespread use of wireless service and the scale of competition there. By any standard, Atlanta is an exemplary wireless market. Even discounting surrounding suburbs, Atlanta offers some 3.2 million potential customers, and boasts one of the highest wireless penetration rates in the nation-estimated by some analysts at above 20 percent. Atlanta also has five active digital wireless providers, using all three major digital standards. More providers are on the way.

On the cellular side, Atlanta is served by BellSouth Cellular Corp. [BEL] and AirTouch Communications Inc. [ATI]. Both have upgraded their original analog networks to digital standards.

BellSouth became the first digital provider in Atlanta when it upgraded its network to IS-136 TDMA for the 1996 Olympics. AirTouch, through its AirTouch Cellular of Georgia subsidiary, launched its Powerband digital service in Atlanta last October using IS-95 CDMA. Atlanta was the fifth U.S. city to gain access to the service; the first four were San Diego, Los Angeles, Seattle and Detroit.

Additional competition comes from Nextel Communications Inc. [NXTL], the specialized mobile radio provider that offers iDEN based service primarily to business users. PCS providers have begun launching service in Atlanta as well. AT&T Wireless Services Inc. [T] launched its "Digital PCS" service last July, using IS-136 TDMA at 1900 MHz. Most recently, Powertel Inc. [PTEL] gave Atlanta its first GSM provider when it launched service on Dec. 2, 1997.

... An Interesting Launch

Powertel's Atlanta launch was among the more interesting PCS launches of the 1997 boom. Most PCS providers launched core coverage in their major markets, covering downtown areas and major transportation corridors. Outlying areas were usually left for second phase deployment. Powertel, however, spent most of the second half of 1997 surrounding Atlanta with launches in smaller outlying markets. Only when the city was completely encircled, did Powertel invade Atlanta itself.

A Powertel spokesman said the company felt it was important to have outlying cities covered before launching, instead of "building an island." Powertel had a very successful fourth quarter in terms of subscriber addition, and credited Atlanta with much of that growth, even though it had less than 30 days of active service there.

Still more major competition will come to Atlanta when Sprint PCS [FON], which holds the 10 MHz D-block PCS license for the city, launches service later this year. Sprint, which uses IS-95 CDMA at 1900 MHz, will be the sixth digital provider in Atlanta, assuming it beats E-block licensee Alltel Mobile Communications Inc. (AT) and F-block licensee NextWave Personal Communications Inc. into the market. Neither of those companies has announced specific plans for Atlanta at this point.

Some other, less glorious, truths of the wireless industry can be seen in Atlanta as well. Atlanta's C-block licensee is General Wireless Inc., which has placed its license-holding subsidiaries in Chapter 11 bankruptcy. It is unclear exactly what will happen to the licenses of such companies, but the most likely result is an eventual reauction.

NextWave is another PCS provider facing financial uncertainty, although the company has so far avoided bankruptcy. NextWave is likely to return a number of its C-block PCS licenses to the FCC for reauction. NextWave's Atlanta license is in the F-block, however, and the company generally paid much more reasonable prices for those licenses. Observers disagree on whether NextWave will ever launch in Atlanta. If it does however, it could represent the next evolutionary step for the wireless industry. NextWave's business plan is a "pure resale" model. Instead of selling service directly to customers, NextWave plans to wholesale airtime to a large number of resellers which would use their own marketing and business models. If NextWave can pull it off in Atlanta, the number of competing wireless providers could be very large indeed.