NEW YORK-Within two years, AT&T Corp. and Sprint Corp. “will be the dominant wireless players,” said Michael Elling, senior telecommunications analyst for Prudential Securities Inc., at a press conference Sept. 26.
Today, he said, the United States telecommunications market is balkanized like the former Yugoslavia. Within five to 10 years, however, there will be “four to six nationwide, facilities-based Super Telecom Networks … (resembling) the AT&T of old, which was broken up in 1983-1984.” In addition, there will be hundreds of resellers exploiting profitable niches.
The convergence of paging, cellular, long distance, local calls, data, cable and video will be driven by the advent of end-to-end digital networks-whose higher installation expense will be offset by vastly superior carrying capacity. It is also being driven by the new Federal Communications Commission regulations, which Elling characterized as “great policy, well written and bulletproof.”
Today’s $200 billion telecommunications pie will grow to a $500 billion market within the next decade, driven by unit price declines that increase demand for a wide variety of communications services.
“In wireless and data, the growth is exploding,” Elling said. “Today, there is only 15 percent wireless penetration in the U.S.; we predict 48 percent penetration by 2003.”
Elling said the data market today is a $20 billion domestic market. In five to seven years, he said it could grow to a $50 billion to $100 billion market, and American companies will dominate the virtual data world internationally for the next 20 years.
“The way you justify a $500 billion telecom market is by moving from a real to a virtual economy,” Elling said. “Ten years ago, they said cellular would never happen. That’s why MCI (Communications Corp.) dumped McCaw (Cellular Communications Inc.).”
In the wireless sector, Elling said Nextel (Communications Inc.) and “its Canadian cousin” Clearnet (Communications Inc.), “have the single best idea in wireless”-that is, working group applications. “Clearnet has the best wireless frequency in North America, if not the world,” Elling added.
He also said he is optimistic that Paging Network Inc., the only telecommunications company of any kind in the United States with nationwide digital service, will succeed eventually with two-way messaging. “It’s not fully perfected yet, but will be in a few years.”
With respect to alphanumeric paging, Elling said technologies are on the horizon that will multiply the carrying capacity of the 30 existing networks to 6 million users from today’s maximum of 150,000.
For similar reasons of enhanced capacity, he also predicted that in personal communications services Code Division Multiple Access will overtake Global System for Mobile communications. “GSM will be physically constrained by the number of calls it can inherently handle,” Elling said. “In capacity rich CDMA networks, there is nothing to limit them because it’s all in software changes.”
