Spokane’S Thin Air A Crowded Place With Six Wireless Phone Companies Vying Locally, Consumers Will Likely See Lower Prices

Western Wireless Corp.’s entry into Spokane’s wireless phone market raises the question: How many wireless carriers can this area support?

AT&T Wireless Services and AirTouch Communications Inc. — the longtime dominant players here — have seen GTE Wireless, Sprint PCS, Nextel Communications Inc. and now Western Wireless, or VoiceStream, install tower sites near their own.

Most of the developments have come within the past two years.

A seventh carrier, U S West Wireless, confirmed long-term plans to offer service in Spokane, but did not disclose a start date.

If U S West Wireless does enter the market, Spokane would have the same number of wireless providers as the Seattle area.

This flurry of competition — which mirrors the situation nationally — has been a bonus for consumers.

Companies have worked to improve their network-coverage areas, while prices for wireless phone use have plummeted.

For some carriers, however, the fierce battle could pave a path to consolidation.

Yet, others feel that customer growth and new wireless technologies could let all players have a piece of the market.

Gene Smart, Western Wireless’ market manager in Spokane, said his company spent $12 million preparing its digital network in Spokane for last week’s launch.

While calling the local market “saturated,” Smart said, there is still business to be had, noting that 75 percent of Western Wireless’ customers are newcomers to wireless phone service.

Although there is no way to tell exactly how many in the Spokane area use a wireless phone, Smart believes about 25 percent of the region’s 415,000 residents own one.

Tim Ayers, a spokesman for the Cellular Telecommunications Industry Association, a Washington, D.C.-based trade group, said some 68 million Americans use a wireless phone.

Ayers also thinks even mid-sized markets will be able to support a half-dozen competitors as the role of wireless networks expands into data transmission.

He cites a projection by a California research firm that predicts 90 million to 100 million people will be using wireless phones in the U.S. by the end of next year.

Scott Robinson, AT&T Wireless Services marketing manager in Spokane, said it’s still too soon to tell how competition will shape the wireless landscape and whether shake-outs will occur.

Other industry professionals in Spokane said the competitive environment will foster consolidation.

Dawnell Scroggin, a marketing manager for GTE Wireless in the Inland Northwest, said to create economies of scale and cut overhead, regional and national carriers will merge.

In some areas, it’s already happening, said Scroggin.

Phillip Redman, a wireless analyst with the Yankee Group, a Boston-based consulting firm, said, “There’s very little chance that six competitors can provide service (in a market like Spokane) and succeed.”

Smaller providers, like Western Wireless and others, may create a service niche to increase their chance of success, Redman said.

As competition continues to run rampant, Redman said, wireless carriers will mainly distinguish themselves in two ways: pricing and coverage area.

A Yankee Group report released last year found that 42 percent of mobile-phone users pick a carrier based low cost.

In larger markets, like New York and Atlanta, Redman said, “Most customers are finding one service is similar to another.”

The result, he added, is an all-out price war.

Considering Spokane is a more isolated “island market,” Redman noted that carriers could also set themselves apart by investing in networks and offering coverage where their competitors run thin.

Mike Smith, an area manager for Sprint PCS, added another factor that customers will look for - simple-service plans.

Last year, AT&T Wireless Services unveiled its Digital One Rate plan. The plan won a 1998 Wireless Week magazine excellence award. AT&T’s Robinson said the plan’s popularity continues to grow.

Although bullish on the wireless phone business, Smith believes the industry will shrink to a handful of strong regional and national players in the coming years.

Adds Smith: “It’s a sure thing that the earlier you get into a competitive market, the more advantageous it is.”

Sprint is one of several companies that uses PCS technology, which is transmitted on a different digital spectrum and usually yields higher quality.

Other companies, such as AirTouch, have networks that allow users to switch from digital to analog service, depending on which coverage areas they roam into.

Despite the new players entering the market, AirTouch, which has offered service in Spokane since the 1980s, remains the largest provider.

AirTouch is being acquired by Britain’s Vodafone Group in a deal expected to close in the second half of 1999. The deal will create the world’s largest cellular phone service.

How many wireless firms will survive and prosper? “That will be a decision the markets make,” said Ayers of the Cellular Telephone Association.