As a continuing national success story, the cellular telecommunications industry for 12 years has enjoyed phenomenal growth in a duopoly market-highlighted in 1994 by 50 percent growth, 24 million subscribers and record revenues totaling more than $14 billion.
Now the cellular industry stands poised to enter a new era, an era marked by the reality of upcoming competition from a new generation of wireless services, competing digital networks, a push toward deregulation and mobile data services that are beginning to come into their own.
“I think 10 to 20 years from now, this period will be part of an important time line in the history of the industry,” said Tom Ross, a wireless telecom analyst with market research firm Economic and Management Consultants International Inc.
The wireless telecommunications industry will experience a profound transformation when personal communications services are introduced in the next two years, agreed EMCI analyst Peter Nighswander. PCS will compete directly with well-established cellular operators that have operated for a decade in a duopolistic marketplace. Fresh competition will spur the entire mobile market to expand as new telephony services are created, Nighswander said.
There are nearly 25 million cellular subscribers in the United States. Last year, cellular operators began targeting the consumer market heavily through retail distribution and the effort has paid off, according to research analyst Herschel Shosteck of Herschel Shosteck Associates Ltd.
Subscriber growth increased by nearly 51 percent in 1994, and Shosteck predicts that subscriber penetration will rise to 12.8 percent by year-end 1995, up from 1994’s year-end penetration rate of 9.3 percent.
Cellular service is expanding from use as a business tool to a consumer product designed to make people’s personal lives a little easier-whether it’s used to place a fast-food order for chicken or to call in a song request to a radio station.
“Cellular now is going after the consumers who don’t want to spend a lot, so we can expect to see new pricing plans targeting that group,” Ross said.
One company, Bell Atlantic Nynex Mobile, is targeting consumers through its TalkAlong service. Marketed as the “affordable portable,” TalkAlong service in the Washington, D.C.-Baltimore area costs $15 per month when calling in any of five metropolitan areas and 35 cents per minute.
This new competitive, dueling market is a continuation of the divestiture process that began 13 years ago with the break up of AT&T, commented EMCI’s Ross. “We’ll see more competition on local fronts in cellular and even video,” Ross explained.
Meanwhile, government regulations have had a difficult time keeping pace with technological evolution. “The industry is just catching up with the changes technology is making,” Ross said.
And while some cellular carriers have been slow to make commitments to digital technology, a great deal of testing has transpired. “Although certain carriers have been aggressive, the digital networks aren’t rolling out as well as the industry would like. Some of the larger markets that have capacity problems are slowing their subscriber growth because of it,” Ross said.
All operators will keep analog on line. “I don’t think you’ll see a time when all cell sites will be digital, especially in the RSAs. They just don’t have a capacity problem,” Ross said.
Fraud continues to be a battle for the cellular industry, but sophisticated technology solutions are continually being developed.
And while Cellular Digital Packet Data service has been deployed in 32 cities to date, other companies are continuing to find ways to improve circuit-switched cellular data transmission.
