Wireless carrier CMS St. Cloud, which is operating a cellular network in St. Cloud, Minn., under the name Cellular 2000, is ahead of many rural carriers in deploying digital technology on its network.
Needing to upgrade its switch and other equipment, the company in 1995 decided having a digital control channel might be useful in the future. So it replaced all of its radios with dual-mode AMPS/Time Division Multiple Access radios.
“We didn’t push TDMA [to consumers], though,” said General Manager Bill Casto, who noted concerns about voice quality prompted the company to wait for improvements before marketing it to customers. “It kind of sat there in the weeds for a while. Then when voice-quality improvements came along, we began to push TDMA.”
It turned out to be a smart decision, he said, because when digital-like features became available on AMPS networks, the company already was one step ahead. Cellular 2000 also was able to address some capacity constraints by offloading some of its analog customers to the TDMA network.
Some analysts, however, say most small and rural market cellular carriers have yet to upgrade their networks to digital technology, although many are looking into it.
“There is not a tremendous amount of [upgrading] going on,” said Mark Lowenstein, director of wireless/mobile communications at the Yankee Group. “During the first quarter, 50 percent of cellular pops had digital available to them, and that was heavily concentrated in the cities.”
Cost is the main reason small carriers are waiting to deploy digital services. While their urban market counterparts have large subscriber bases to share the cost, small carriers have fewer subscribers to pay for a network that costs them about the same price to build as larger carriers. Small carriers may be at an even bigger cost disadvantage because building out a smaller network provides for less volume discounts than building out large networks, say analysts.
Lowenstein estimated it costs about $8 to $10 per pop to convert an analog network to digital in urban areas and is even more expensive in rural markets.
“The prices for digital networks continue to come down,” added J.P. Mark, a telecom analyst with Dain Rauscher Wessels. “There’s kind of an incentive for them to wait.”
“You can only do so much at one time,” said Paul Etheredge, sales and marketing manager at Pine Belt Cellular Inc., which operates as Pine Belt Wireless in Alabama RSA 3B2. Etheredge said his company is focused on building out PCS licenses it won.
“As long as we market ourselves in our area, it doesn’t appear to be an issue,” he said. “It’s not like our customers are screaming for digital. There aren’t a lot of people in our markets saying they need to carry on conversations that are more secure.”
Cellular 2000 managed its digital costs by installing a minimum number of base transceiver stations and supplemented those with repeaters, said Casto. Another way rural carriers can implement digital systems without throwing large amounts of money into the project is to build out the highest-use areas first and then build digital into the other areas in a phased approach, said Cedric Taylor, senior manager, AMPS/TDMA, Wireless Networks at Northern Telecom Ltd.
Rural carriers also are waiting to upgrade to digital because analog networks still play an important role in providing expanded coverage to urban subscribers who are roaming.
“Digital is still a capacity technology, and analog is still a coverage technology,” said Brian Cotton, senior telecom research analyst at Frost & Sullivan. “Digital upgrades do not affect coverage that much.”
While rural carriers themselves are not dealing with capacity problems and don’t necessarily have to provide digital features to their subscribers to be competitive, they are beginning to feel pressure from their urban affiliates to upgrade their networks so that customers have digital features while roaming.
“Customers are looking for ubiquity everywhere,” said Curtis Knobloch, operations manager for rural carrier Brazos Cellular Communications and chairman of the Rural Cellular Association’s Technical & Roaming Committee. “A large portion of our revenues are driven by roaming, so we tend to look at their customers like our own.”
“As larger carriers try to preserve their differentiation as a purely digital network, feature transparency while roaming becomes important,” said Madan Jagernauth, senior manager, GSM, Wireless Networks at Nortel.
Rural carriers also are faced with technical challenges associated with building out digital networks.
“Analog is a forgiving technology,” said Cellular 2000’s Casto. “If you go out on the fringes of the network, it gets scratchy, but you can still have a conversation.
“With digital networks, when you get out on the fringes you start sounding like Mickey Mouse or Donald Duck, and parts of words starting getting lost. Then people start bringing their phone back wanting analog again,” he added.
Casto noted digital deployment is complicated by the fact that many rural networks are built out to accommodate three-watt mobile phones with external antennas. In order to support handheld wireless phones, carriers have to add more towers.
“There’s no way you can cover your entire territory with digital towers-they just don’t have the range,” said Etheredge of Pine Belt. “We have to focus on larger areas first and accept the fact that there are going to be gaps.”
Unlike their urban counterparts, rural carriers often choose technology based on which technology their affiliates and neighbors are using.
Cellular 2000 won a PCS license for its St. Cloud market and is building out that network with Code Division Multiple Access technology, said Casto. The reason: Cellular 2000’s main roaming partner is AirTouch Communications Inc., a CDMA carrier.
“It definitely makes sense to have your technology match your neighbor’s if you want to roam,” said Cotton of Frost & Sullivan. The rural carriers “are much more sophisticated about these things than we give them credit for.”
Paul Sergeant, senior marketing manager, CDMA, Wireless Networks at Nortel, said this year has been the first year many rural operators have taken an interest in deploying digital networks. The PCS licensees tend to take the lead, and cellular carriers are responding to that competition, he said.
“We’re encouraging carriers to be proactive,” he said. “You may not have a competitor today, but competition probably is coming.”
Casto agreed.
“If [other rural carriers] don’t see it now, they’re in trouble,” he said.
“Many of them are located along interstates and a big percentage of their revenue comes from roaming. As the national carriers begin to build out along the highways, these rural carriers are going to see their revenues shrink, and customers in those areas are going to like the new services they are seeing and want them.
“If they don’t do something, I’m afraid these major players might leave them in the dust,” he said.
