21st Century Telesis Inc. said it is making a significant step toward becoming the first U.S. wireless carrier to commercially deploy Personal Access Communications System technology.
Costa-Mesa, Calif.-based 21st Century, which holds C-, D- and F-block personal communications services licenses covering some 8 million pops, hoped to launch this year, but the Federal Communications Commission’s decision regarding C-block debt restructuring coupled with lack of vendor financing and the decision by large German manufacturer Siemens Stromberg-Carlson to back away from being a major PACS vendor have caused setbacks.
Now company Executive Vice President Philip Chasmar says 21st Century is “very close to making a major announcement regarding financing … We’re rather shocked it has taken so long.”
Kal Ganesan, assistant vice president for wireless and PACS with Hughes Network Systems Inc., one of the technology’s primary developers, said Hughes is negotiating a financing agreement with the PCS carrier.
“Financing deals have lots of issues … We are evaluating [a deal] at this point and are very anxious. This will be a significant launch for the technology,” he said.
More than two years after PACS technology was introduced as a low-tier mobility option for U.S. PCS carriers, few carriers have adopted the technology. Those who back the technology say other carriers are waiting to see how successful 21st Century will be at offering the service before they embrace the technology.
PACS technology is a low-tier, low-power technology based on microcells that can be readily installed at relatively short distances from one another at costs far below what is required for other high-power PCS technologies. In addition, PACS technology easily can be integrated into pocket phones that use other accepted standards.
The service is based on Personal Handyphone Systems pioneered in Japan and on Bell Communications Research Inc.’s wireless local loop replacement, or WACS. PACS technology, which has gone through rigorous testing for several years, is more sophisticated than PHS technology. Its proponents say it allows cell-to-cell handoffs at vehicular speeds of up to 65 miles per hour. The technology also offers a 32-kilobit voice coder, 64 kbps data transmission and various custom calling features.
Siemens dealt a blow to PACS technology this summer when it announced it would no longer be the primary marketer and systems integrator for the technology in North America. The manufacturer initially had planned to provide financial assistance to PCS licensees. Other members of the PACS Providers Forum, which was formed in 1995 and includes Hughes, Bellcore, General Communications Inc. and NEC America Inc., have vowed to push ahead with the technology.
Hughes’ Ganesan insists that Siemens’ move did not damage the technical nor manufacturing aspects of PACS technology, but did admit that the decision hurt the technology’s image, and market momentum has slowed because of it.
Siemens spokesman Tom Phillips said his company pulled out because project financing was a problem due to market conditions. “PACS didn’t develop as we really expected it to. It hasn’t caught on quickly,” he said.
Some analysts agree. PACS technology sounded attractive two years ago when developers said it could provide longer battery life and superior voice quality. Now, fast-moving developments to other digital technologies are quickly undermining that, said Mark Lowenstein, director of wireless mobile communications with the Yankee Group in Boston.
“Our view is that PACS should pack it in,” said Lowenstein. “There’s very little commitment to PACS. Customers of PACS would really be on an island. There are no plans for widespread availability, no infrastructure or devices for economy of scale. The U.S. is not going toward low mobility solutions … Most wireless users want a mobility factor. They want knowledge the phone will work beyond the local calling area.”
“There is nothing technically wrong that will hold PACS back,” said Brian Cotton, analyst with Frost & Sullivan in Mountain View, Calif. “But, it’s difficult to enlist support for something like this. Everyone is spending energy on the three standards.”
Another analyst contacted for this article thought the technology had been scrapped altogether.
Nevertheless, 21st Century is ready to push ahead with the technology, which has been field tested by several telephone companies and chosen by Alaskan telco GCI for its statewide PCS rollout. The carrier plans to build systems in New York state, Nebraska, Indiana, Mississippi and Pennsylvania, launching South Bend, Ind., first.
“We’re going to cover 70 percent of the population-where they live, work, play, shop, eat and all the points in between,” said 21st Century’s Chasmar. “We’re going to offer a phone that will have six hours of talk time and standby time of 168 hours. We’re not competing with cellular companies or the high-tier PCS companies … This would be an enhancement for cellular companies. This phone will appeal to a much wider audience because of the pricing plans we will introduce, which will have extraordinarily high usage. We also in the very near future will be offering second lines into the home on a fixed basis. PACS has the data capabilities immediately, and the vertical service offering implications are very, very exciting.”
Peter Nighswander, wireless analyst with The Strategis Group in Washington, D.C., believes a niche for PACS exists for campus environments and even residential areas, but pricing will be essential for success.
“We’ll have to wait and see. I think that it’s not impossible. There are a lot of applications that are best suited for low-tier technologies. It may be that 21st Century can get in there and offer these services. They could offer both residential access and wireless for a flat rate, and offer things like wireless Internet.”
The technology may prove attractive to telephone companies that eventually will find themselves competing with mobile phone operators for residential customers. Hughes said an independent telephone company with cellular operations in Louisiana will conduct a commercial trial of PACS technology early next year.
At any rate, the technology’s success may rest on 21st Century’s shoulders.
