During the past 20 years, two overriding factors have shaped the wireless carrier landscape: customer growth and carrier consolidation. The number of wireless customers has grown from less than 100,000 subscribers after the first full year of availability in 1984 to nearly 120 million subscribers today. While the number of subscribers has risen, the number of carriers those customers deal with has declined to the point where today the top eight wireless carriers serve more than 80 percent of the country’s wireless customers.
The current big eight includes six “nationwide” carriers-Verizon Wireless with 28 million customers, Cingular Wireless with 21 million subscribers, AT&T Wireless Services Inc. with nearly 18 million customers, Sprint PCS with approximately 13 million subscribers, Nextel Communications Inc. with around 8 million customers, and VoiceStream Wireless Corp. with 5 million customers-and the two largest regional wireless operators-Alltel Corp. with 7 million subscribers and U.S. Cellular Corp. with 3 million customers.
Together, these eight carriers add as many customers per quarter as what many in the industry early on thought would subscribe to wireless service by the end of the century.
“Here in the United States, the market will grow to over 2 million subscribers by the end of this century,” foretold Donald Porter, director of marketing for Telephone and Data Systems in early 1984.
At the time, Porter’s claim seemed boastful. With only a handful of markets online and less than 50,000 customers signed up for wireless service, Porter’s belief was held by many in the wireless industry.
Expectations were so modest that AT&T Corp., the-800 pound gorilla of the telecommunications world at that time, decided to let loose its cellular holdings equaling half of the total spectrum available at the time when the government ordered it to lose some weight. Those holdings ended up in the hands of the regional Bell operating companies, which looked at those wireless assets as a nice side dish to their main course of local and regional wireline services.
“We didn’t have to make it or break it with wireless, we still had our wireline operations to fall back on,” said George Page, Northeast regional president for regional telecom operator Alltel Corp.
Looking back, AT&T’s move is often viewed as foolish, but given the uncertainty surrounding cellular service at the time, it was a move AT&T could justify to its shareholders.
“People often look back and say what a mistake AT&T made,” said Dick Lyons, president of Cellular One Group. “But at the time no one knew how big the cellular industry would become.”
With AT&T out of the picture, the 50 megahertz of wireless spectrum the government set aside for commercial service was split in half, with wireline incumbents getting 25 megahertz and new competitors getting the other 25 megahertz.
“When AT&T broke up, their cellular service was casually tossed out and guys like us were left scrambling to get a piece,” remembers Jim Dwyer, an active participant in pushing the Federal Communications Commission to allow independent companies to win spectrum licenses. Dwyer also was a founder of the Cellular Telecommunications & Internet Association.
