Wireless chaos

New Mexico Business Journal, August, 2000 by Paige McKenzie

Although it might seem that cell phones are ubiquitous, they aren't--yet. Perhaps because we're confused.

TDMA, CDMA, iDEN, GSM, 3G. No, it's not secret code from the Los Alamos hard drives, but for most Americans it is equally confounding. These are digital network standards, and there are about as many as there are types of mobile communications. Analog, digital, cellular, wireless. If the confusion has left you reluctant to plungie headlong into the wireless revolution, you're not alone.

Though mobile phones are no longer the status symbol they used to be, as they now turn up everywhere from grandmom's pocketbook to the hips of 14-year-olds, But U.S. market penetration is nowhere near the percentage levels of Europe and other countries. In Finland particularly, kannys (a Nokia trademark that has come to mean an extension of the hand) are more plentiful than banner ads on the Web. Last year 78 percent of Finland's 2.35 million households had at least one mobile phone, according to a research company, compared with only 28 percent of the American population. As one analyst recently observed, although the wireless revolution is set to change all our lives, toothless reindeer herders in Finland know more about it than most U.S. executives.

It's not surprising, considering that Nokia has passed Motorola as the No. 1 maker of cellular, or wireless, phones. Many assume Nokia is a Japanese company, but Nokia put its homeland headquarters of Finland on the global commerce map. And in Finland, as throughout much of Scandinavia, mobile phones are replacing traditional land-line phones almost altogether. It makes sense. The large and remote geography of the Nordic countries restricts the ability to install traditional land lines, but fosters the need for reliable communication. This led Scandinavian countries in the early 1980s to agree on a common phone standard, which evolved into what is known as Global System Mobile communications, or GSM.

While Europe is connected with the one digital standard of GSM, which has been adopted by 105 countries, mobile communication in the United States continues to operate on a patchwork system of multiple standards: CDMA, or Code Division Multiple Access; TDMA, or Time Division Multiple Access; GSM and iDEN, or Integrated Dispatch Enhanced Network. This also means most Americans cannot use their phones overseas, while someone in Greece doesn't need a new phone to call up someone in France.

The list goes on with reasons for the U.S. lag, but one of the biggest may be sheer confusion. Confusion over the expense and rate plans, confusion about digital versus analog, confusion about which combination of the innumerable features is the best choice for your particular lifestyle, confusion over which company is now which other company.

For example, recently within a 30-day period in New Mexico, two big mergers occurred in the wireless phone industry. Cellular One became Alltel, and Bell Atlantic, GTE, Vodafone AirTouch plc and PrimeCo became Verizon Wireless. This merger pushed Verizon (pronounced verRIzon) into the No. 1 slot as the nation's largest wireless company, joining the two other national companies, Sprint and AT&T

Why is the wireless industry such a hotbed of merger activity? Scott Brown, regional marketing manager for Sprint PCS, explains that it is one more way for companies to become bigger players. "These companies are trying to acquire the same national presence that Sprint, ATT and now Verizon have." But consumers win, too, according to Shawntel Wells, New Mexico market manager for Worldcom Wireless. "When a company merges with another, there is more money available to offer customers better rate plans." Wells says. "You're going to see a couple more mergers and there will be three or four major players in the U.S. It will be another five years before the dust settles. We're no different from the banking industry in that respect."

Rate plans might quite possibly be the biggest source of all for confusion, though they've become much simpler. Most companies have done away with the old plans, which offered different rates at different times on different days for both local and long distance service and roaming charges. These days you will likely find no more than three to six basic plans at any company. These plans usually include a basic per-month fee starring as LOW as $10 for a minimum amount of minutes, whether local or long distance, and no roaming charges. The monthly fee increases incrementally with increased numbers of minutes, and you can get a no-frills phone for free if you sign a service contract.

Even when long-distance service is more expensive, promotions of free long distance or free weekends are available more often than not. "As the year goes on," Wells says, "there will be lots of hot promotions, just like Dillard's during the holidays. Most people are surprised when they see the changes in the cost of mobile service. "A lot of people still have the impression that it's still expensive, but prices started to tumble in the early 1990s," Wells says.