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Battle for the
Wireless World
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Business New Haven
9/7/1998
By: Fiona Phelan
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If you're in the market for a wireless digital handset there's plenty of personal communication services and plans to choose from. But before you make the final choice, read the plan's fine print and make sure you're comparing apples and apples - something that's not all that easy.
Wireless digital handsets allow you to combine the benefits and features of a telephone, answering machine and pager all in one. There may come a time when all you'll need is your wireless digital handset - at home or on the road.
These compact devices are being used to make static-free, secure phone calls, to send and receive faxes, check e-mail, leave voice-mail messages, page co-workers and clients, forward calls from the home or office phone, and check the weather, sports or the stock market. It's like having the office with you all the time.
“People are using their wireless digital handsets more than their traditional phone,” says Ernie Lindblad, Sprint PCS area vice president for New England and Albany. “In some parts of the country where our network is very well established, people are giving up their landline phone service and choosing to use only a digital personal communication service for all their phone needs.”
When you're shopping around for the best service for your needs, these are some items to compare: how many free minutes of local air time are included; whether additional minutes are rounded to the next minute or the second; are there roaming charges for use outside the local area; is there a minimum service contract period; are taxes included in the rates; and, of course, the cost of the handset if it's not included in a special promotion package.
Getting the best deal, according to Mobile User Survey conducted by Boston-based consultants Yankee Group, is the most important factor in choosing a wireless phone. The 1998 survery also notes that wireless phone penetration has moved from 27 percent to 35 percent of all U.S. households. There are more than 60 million wireless phone users in this country.
“Wireless phones are becoming a commodity product,” notes Yankee Group Program Manager Philip Redman. “We're going to see growth in the industry because of pricing of the product and, at the same time, I think we'll see consolidation in the market as the players with the deeper pockets are able to sustain the competition.”
A 1997 survey conducted by Washington D.C.-based Peter D. Hart Research Associates found that digital wireless phone users are more likely to be young male professionals, while users of cellular or analog phones is evenly divided between men and women. However, both PCS users and cellular users, according to the survey, use their handsets in similar ways: making personal rather than business-related calls and local rather than long-distance calls. One noted difference in the survey showed that cellular phone users are more likely than digital users to make rather than receive calls.
No matter who the wireless carrier is, consumers are satisfied with the service they receive from their wireless phone company, according to the Hart Associates survey. Among cellular users, 74 percent are satisfied with their carrier and 74 percent of personal communication service users are satisfied with the service they receive.
“Picking a cellular service used to be a choice between two companies, each offering the same technology and essentially the same service,” notes a report by the Washington D.C.-based Telecommunications Research & Action Center. “Today, a growing array of providers and technologies are available and consumers need more information and sophistication to make smart choices. It's not easy to make the best choice.”
Naturally, each of the five wireless service providers in Connecticut want to be the best choice. Bell Atlantic Mobile (BAM) and Southern New England Telephone (SNET) began offering digital service alongside their existing analog network last year. Sprint PCS arrived here a year ago and built the area's first 100-percent digitial system. Following Sprint's arrival, Nextel Communications began offering service and, in June, Omnipoint Communications joined the race. Yet to jump in is AT&T, which does have a license to market digital wireless service in Connecticut.
“The market will dictate who remains,” Lindblad says of the competition. “It's good that customers in Connecticut have a choice; that will help to lower prices.”
“In the end,” he adds, “the mighty will prevail.”
Sprint PCS is optimistic that it will be among the mighty. After all, Lindblad points out, the Sprint PCS network is being built from the ground up and is 100-percent digital nationwide.
Sprint PCS offers service in more than 800 markets across the country, that means, Lindblad notes, that a customer can go anywhere in the country and use the Sprint PCS service without incurring roaming charges. Sprint PCS aims to complete its digital network by next fall.
Of the nine personal communication service providers tracked by the Yankee Group, Sprint PCS has by far the largest number of subscribers: 810,000, compared with 508,000 for its closest rival, PrimeCo. Among cellular service providers, AT&T has the most subscribers with more than 7.5 million customers.
Omnipoint Communications jumped into the Connecticut market in early June. Its niche may be its overseas capabilities. Omnipoint uses an international technology known as GSM (Global System of Mobile communications). This, according to Omnipoint spokesperson Ellen Webner, is the most widely used technology in the world. More than 80 million people use GSM technology, including two million in North America. Omnipoint has almost 200,000 of those customers. The company's network stretches from Florida to New Hampshire.
Because it uses GSM technology, Omnipoint customers can take their handsets overseas by simply installing a different SIM (Subscriber Identity Module) card. A SIM card contains the subscriber's personal information, phone settings, subscriber authorization to use the Omnipoint network, phone number, personal security key and data that makes the handset function. Additionally, the company is also offering a Bosch World 718 handset that is capable of operating in more than 100 countries, including the U.S.
“We've been building out in Connecticut for the past year,” notes Webner. “We're a regional wireless phone company but we can offer you service around the world with roaming agreements with 37 different countries.”
\drop cap\Meanwhile, Nextel Communications is offering a unique digital handset that can also operate much like a two-way radio. Like Sprint PCS, Nextel is building its 100-percent digital network from the ground up.
To date, the company has more than two million subscribers and offers service in more than 400 cities across the country. That means customers don't pay roaming charges (extra fees) when they use their handsets away from home.
Unlike the others, Nextel is focusing its eyes on just the business market. BAM, Omnipoint, SNET and Sprint PCS market their services to consumers and businesses.
“We're adding customers at a clip that exceeds any other wireless provider,” proclaims Joseph Kobylak, Nextel's vice president and general manager for the Connecticut/Massachusetts Market. Nextel relies on direct sales to individual companies and cable television, magazine and billboard advertising.
The feature that makes Nextel different from the others is its Direct Connect feature. Not only does the Nextel handset work like a digital phone, it also works like a walkie-talkie. By entering a three-digit code and pressing a button on the side of the handset, the Nextel customer can be in immediate contact with a co-worker.
Nextel's business networks - where handsets are programmed to accept calls from one another - can be as small as one other phone or as large as 100.
SNET is based in Connecticut and Massachusetts but has agreements with other vendors around the country that allows customers to use digital service for a roaming fee. Because SNET initially invested in an analog network its digital service is not completely seamless. But in areas where SNET does not have digital network capabilities, the handset will switch over to analog. Those calls will be earn the same rate as digital calls.
Before the end of the year, SNET expects to expand its digital network by 30 percent and plans to continue offering analog service for the foreseeable future. SNET estimates that it has more than 474,000 wireless service customers, including both analog and digital users. So far, SNET has concentrated on deploying digital service to highly trafficked areas like Hartford, New Haven and Fairfield counties.
Bell Atlantic offers the same analog technology back-up feature as its competitor, but its network is larger than SNET's. Bell Atlantic Mobile offers service up and down the eastern seaboard from Georgia to Maine. Like SNET, Bell Atlantic has roaming agreements with telecom companies outside its own network area.
According to Bell Atlantic's mobile director of marketing for the northeast region, Chuck Murphy, 25 percent of BAM customers are purchasing digital handsets. The company estimates that it has more than five million customers.
Each of the five companies offering personal communications services notes that it has been challenging to establish networks in Connecticut. For one, the hilly topography of the state makes siting network towers problematic. And naturally there is competition among the providers when it comes to sharing existing towers.
While some companies work together, others do not. For instance, SNET and Bell Atlantic both state that they share network towers. But Sprint PCS notes that these two companies will not agree to providing back-up analog service for Sprint PCS digital customers in Connecticut.
“A lot of the carriers work together. We all need sites to put our equipment, and it's better for everyone if we can share existing facilities or work together to build new ones,” says Nextel's Kobylak. “Our highest priority is to finish building out our network in the U.S. and North America. If we can work with someone else to achieve that goal, then we will.”
While they're all working to upgrade their networks, switching from one carrier to another is not necessarily economical.
For one thing, a Bell Atlantic Mobile phone cannot be used with SNET digital service, so those doing so must trade in their old handsets and buy a SNET-compatible phone. The same is true for the other companies, which use different technologies that render handsets incompatible.
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