Son Of Cellular Poised To Leap Competition Is Expected To Heat Up As New Generation Of Technology Hits The Market

Haters of cell phones, beware. Son of Cellular is on the horizon.

Personal communications services will likely be introduced into the Spokane market by late next year or early 1997.

PCS backers say their networks will eclipse existing cellular systems in price and quality of service. PCS, they say, has the advantage of digital vs. analog technology, and a frequency better able to handle enhanced services like paging and caller ID.

The current cellular service providers say modernization will improve their decade-old technology as well, making it equal to anything PCS has to offer.

“PCS is a fancy word for cellular at a different frequency,” said Ken Woo of AT&T Wireless Communications. “A phone is a phone.”

Both sides agree the added competition will lower the cost and enhance wireless communication services just as the technology is breaking out of its niche as an expensive business tool or personal toy.

Telephones tethered to a desk or wall will be a step closer to extinction.

“Everybody, eventually, will be on wireless,” said Peter Mayer, a communications consultant with the Spokane accounting firm McFarland & Alton.

The industry estimates cellular subscriptions, now about 28 million, will double in five years. PCS will leapfrog from zero today to 14.8 million in the year 2000 to 39.4 million in 2005.

One- and two-way paging will also skyrocket.

Even though no PCS system has begun operating - the first, in Washington, D.C., will be up in a few months - the stakes are already high for license holders.

In March, they bid a total $7.7 billion for the rights to provide PCS in 51 U.S. market areas from New England to Guam. One for the New York City-Albany-Hartford area alone brought $442.5 million.

The two for Spokane, among the least expensive markets, sold for a combined $11.9 million.

One of the successful bidders, the Sprint Telecommunications Venture, recently appointed Steven Kingwell of Vancouver, British Columbia, to direct engineering and network operations in Spokane.

Besides Sprint, the venture includes Cox Communications, Telecommunications Inc., and Comcast Corp., all of whom are major players in cable television.

The consortium was the most active bidder for PCS licenses, buying a total of 29.

Kingwell has been an executive with BC Tel Mobility Cellular Inc. in Canada, where he most recently was responsible for network deployment in the Wireless Service Group.

He said he has already hired four engineers who will help design a network for the area, and is negotiating for office space.

The operation will eventually employ about 45, Kingwell said.

He said the configuration of the Sprint PCS system around Spokane will not be determined until an equipment vendor has been selected.

But he added that discussions with the owners of some potential antenna sites have already begun.

He and company spokesman Mark Bonavia declined to be specific about the ultimate cost of the system, but noted that estimates normally peg expenditures at somewhere between $15 and $30 per user.

Rates, they said, will be competitive with cellular. The average cellular bill nationally is about $50 a month.

The other successful bidder for a Spokane license was Lubbock, Texas,-based Poka Lambro, a telephone company.

But Poka Lambro last week agreed to sell its license to a group including Elltel Wireless, a subsidiary of Ellensburg Telephone, and GTE Macro Communications Corp.

Officials were reluctant to discuss their plans in much detail because federal regulators must approve the license acquisition, but they said they expect to be operating in about a year.

Laurie Douglas, spokeswoman for GTE, said the newcomers understand the challenges ahead.

But tests in 15 markets with PCS-like service coupled with conventional telephone service have been enthusiastically received, she said, and GTE will be entering PCS markets with a similar linkage.

GTE provides telephone service in North Idaho, and won a PCS license in the Puget Sound area, but Douglas said officials are unsure how or if they will bring those resources to bear in Spokane.

Cellular providers, meanwhile, are responding with more services, lower rates and advanced technology.

“When networks are not in place, promises are very easy to make,” said Lisa Bowersock, a spokeswoman for US West Cellular.

She said the technology is less important than how customers put it to use.

The cellular industry has spent the last 10 years raising consumer awareness, Bowersock said. Now that the message has been driven home - US West Cellular subscriptions boomed 61 percent last year - the emphasis has shifted to adding more services like paging.

She said competitors will have to offer those same enhanced services, plus coverage, customer support, and pricing, to compete with cellular services.

If they focus on just one or two, she said, they will fail.

Bowersock added that US West Cellular and AT&T Wireless plan to adopt the digital technology that PCS officials say will distinguish their service from cellular.

AT&T’s Woo said PCS providers will have difficulty matching the broad coverage cellular can offer in Washington, while cellular companies meantime adopt some of the digital technology that was to set PCS apart when the new service was envisioned in the late 1980s.

he cautioned against what he said will be the exaggerated promises of some new entrants into the telecommunications marketplace.

“There’s going to be a lot of hype out there,” Woo said. “You should approach this as if you’re buying a car.”

Picking up on the car analogy, a spokesman for the Personal Communications Industry Association likened cellular phones to the Model T when paired with a PCS unit.

A comparatively light PCS handset will provide for paging as well as voice communication, battery life will be longer, and networks will drop fewer calls, Jonathan Osmundsen said.

PCS will be handicapped initially by the isolation of its markets, he said, but the tide will turn as coverage increases.

“It’s going to be an ugly fight,” he said.

To solidify their position, Osmundsen said, cellular services are cutting rates to maximize market share.

“They realize they’d better get as many people on the system as possible,” he said.

“Cellular service is fighting to hold its footing,” agreed McFarland & Alton’s Mayer.

Providers have lowered rates to rock bottom, he said, and they have stopped building out their networks.

Today’s cheap rates leave a bitter taste among early cellular subscribers who may bolt when they finally have an alternative, Mayer said.

Also, he said, even though PCS may itself not be very profitable, bundling the service with conventional telephones, cable television and long-distance service will amplify provider bottom lines.

He predicted the Spokane area would eventually support three wireless carriers, with some additional niche servers.

A Maryland-based consultant said a wake for the cellular industry would be premature.

Jane Zweig, vice president of Herschel Shosteck & Assoc., said the advantages of PCS are the residue of the days when cellular handsets were bulky and expensive, and signals were poor quality.

Surveys of cellular quality done by Shosteck show across-the-board improvement in recent years, she said, adding, “The cellular operators are in very good shape.”

Zweig said PCS, while slugging it out for a slice of the broad telecommunications market, may find a niche in private networks serving hotels, airports and hospitals.

“We think they’re going to have a really hard time,” she said.

GTE’s Douglas was undaunted.

“we’ve been moving very, very quickly,” she said. “There is a pent-up demand.”

, DataTimes