SAN JUAN, P.R.-In a move that could become a role model for other pocket phone carriers struggling to activate their cell sites, Centennial Cellular Corp. has executed an end-run around the state-run Puerto Rico Telephone Co. monopoly in its bid to deploy personal communications services here.
First, Centennial, doing business as Centennial de Puerto Rico, received authorization late last year to become a competitive local exchange carrier, the only CLEC in the commonwealth at present. Second, it tapped into a substantial investment by its parent company, Century Cable Television, to install a new, fully digital fiber optic ring around Puerto Rico, which is roughly the size of Rhode Island.
The company plans to launch its Code Division Multiple Access technology-based service before the end of the year, said President Rudy Graf.
Puerto Rico isn’t an island in terms of the possibilities for replicating this strategy on the United States mainland. Here too, the necessary prerequisite is that the Federal Communications Commission resolve a number of issues, company officials said.
At present, the two incumbent cellular providers in Puerto Rico have about 325,000 customers, Graf said. With PCS licenses covering a population of 3.7 million in Puerto Rico and another 300,000 in the Virgin Islands, Centennial sees PCS as a launch pad for its ambitious goal to become a full-service communications provider: fixed and mobile voice and data communications, cable television, video conferencing, local wireline and long distance calls.
“We are talking about the difference between reinvention and incrementalism. Cellular equates to mobility,” Graf said. “PCS is toll-like in quality, can be used anywhere, anytime. We will have no peak and off-peak rates … that teach people not to use the phone. There will be no roaming surcharges. This is not a phone for the wealthy.”
In “redrawing industry boundaries,” Graf also said Centennial’s goal is to participate in what he termed co-opitation. “Many of our customers are our competitors. The idea of creating your own monopoly fiefdom is passe.” Centennial has site sharing arrangements with Puerto Rico Telephone Co. Its parent, Century, is leasing fiber optic lines to link two parts of Tele-Communications Inc., a competing cable carrier.
The Commonwealth government expedited cell site approval processes and assisted in recruiting and screening more than 200 employees for Centennial, many in the sales and customer service area. But it did not offer any direct financial incentives or assist in constructing the network, which Lucent Technologies Inc. is supplying. “Lucent’s 5ESS switch means that Lucent is the only vendor in the world today able to provide a platform for wired and wireless service,” Graf said. “It’s first, but it certainly won’t be the last.”
Amaury Rivera, general manager of Centennial de Puerto Rico, said the company paid $54.6 million for its PCS license. To date, it has spent about $25 million on cell sites, of which 53 of 94 planned for full deployment were in operation by mid-November, and about $15 million on switches. The company anticipates spending more than $400 million total within four years, including landline and wireless infrastructure.
Marcos Rodriguez, president of the Economic Development Bank of Puerto Rico, and Jamie Morgan Stubbe, administrator of the Economic Development Administration, said they see the advent of advanced telecommunications as key to the commonwealth’s future-especially given the recent loss of federal tax incentives for pharmaceutical manufacturing, a mainstay of the Puerto Rican economy.
At the same time, Puerto Rico Telephone Co.-whose privatization status is still a question-is a lumbering behemoth whose poor service is widely acknowledged. Call quality and reliability using Qualcomm Personal Electronics’ QCP-1900 handsets that will be deployed here seemed to a casual user at least as good, in most instances, as that offered by PRTC. The retail price of the handsets hadn’t been decided as of mid-November, Rivera said.
Qualcomm Personal Electronics’ new manufacturing facility in Southern California is turning out 200,000 handsets a month now, according to Jeffrey K. Belk, director of marketing for subscriber products. “A year ago, we couldn’t make 1,000 a month,” he said.
Centennial now has 500 Qualcomm handsets operating in a friendly user trial, and 10,000 that were to be shipped to it Nov. 16., with standing orders for 5,000 a month thereafter, Graf said. “You can quit throwing rocks at Qualcomm,” he added.
Dual-mode handsets will be supplied upon customer request, “but with proper roaming agreements, we won’t need dual-mode,” Graf said.
Asked how soon he thought it would take for Centennial to break even, Graf replied, “as a public company, we don’t think it’s a good idea to forecast that, but I can say it won’t take a long time.”
