Glendale firm calls for opening of local mobile-phone field.

A state regulatory judge is considering a proposal by a Glendale cellular telephone company to open up the mobile-phone market in Southern California to greater competition on the promise that rates could drop about 20 percent.

The judge plans to publish an advisory opinion in February, which will guide state regulators in making a final decision next year on further deregulating Southern California's cellular market, where mobile-phone users spend an estimated $500 million a year. Complicating the issue, however, are a host of technical and regulatory changes needed to further innovate the radio-telephone technology, introduced into the Southland only seven years ago.

Standing to benefit are Cellular Service Inc. -- the Glendale company that is pressing the case for more competition -- and other cellular-telephone retail outfits waiting in the wings. Ultimately, thousands of Los Angeles businesses could get better and cheaper cellular service from the approximately 275,000 cellular phones operating in Southern California.

Cellular Service Inc. has asked for permission to offer new options -- like call forwarding between office, car phone and home -- and offer basic rates at a discount. In return, it would be granted a key electronic access to L.A.'s physical telecommunications network. That is run in monopoly fashion by the local wholesalers, PacTel Cellular and L.A. Cellular Telephone Co., which operate under exclusive license by the Federal Communications Commission.

CSI is one of about 15 active retailers of cellular services locally, and it claims 25,000 customers in the L.A. cellular zone, which stretches from Ventura County south to San Clemente and east nearly to Las Vegas.

Founded in 1984, CSI reported revenues of $38 million in 1990, paid by customers who rent phone numbers and can receive limited services, like billing.

Retailers currently are barred from selling certain other services by regulatory and technical barriers.

Spearheading the deregulation drive, CSI officials say they want to pry open the wholesale market to bring cellular phones closer to the masses. And they admit they want to get a big piece of the action as well.

CSI officials have estimated about 35 percent more customers would order mobile-phone service if it were substantially cheaper.

"There's a whole class of users that would get cellular service if the prices were about 20 percent lower," claimed CSI Vice President David Nelson. He also represents retailers as president of the 14-member California Cellular Resellers Association, based in San Francisco.

One small local retailer, Matrix Cellular Resources of La Crescenta, might consider this new niche, possibly in league with CSI, said Matrix General Manager Steven Cogswell.

Other Southland resellers potentially interested, said Nelson, include the much larger Pleasanton, Calif.-based GTE Mobilnet and San Francisco-based Comtech Mobile Telephone Co.

Nelson has told regulators at the state Public Utilities Commission that CSI could offer monthly basic service for $35, peak-hour air time at 38 cents a minute, and non-peak time at 23 cents. Currently, PacTel Cellular and L.A. Cellular charge $45 for basic service, 45 cents a minute for peak and 27 cents for non-peak.

Nevertheless, breaking the "duopoly" of those wholesalers would not necessarily bring better, cheaper service, said officials of those companies.

"Our belief is that CSI's proposal is flawed," said PacTel spokeswoman Amy Damianakes. Irvine-based PacTel has stated, in documents submitted to the PUC, that "costs to all consumers will likely be higher." Giving CSI electronic access "does not add capacity, but merely increases the load on the network" which "could potentially degrade the quality of service."

Attorney David M. Wilson, who represents Cerritos-based L.A. Cellular, has called the proposal "technically problematic" and a threat to quality of service, too.

PUC Administrative Law Judge Michael J. Galvin last week estimated he will rule by early February. His opinion, which also concerns four unrelated cellular-service issues, would then go to PUC commissioners. Those regulators, who hold public meetings at PUC headquarters in San Francisco, have the final say. They have not scheduled a vote yet.

Commissioners must decide whether CSI's idea is truly pro-competitive, technically feasible and not destabilizing for the industry, according to their legal mandate.

"There are a number of technical problems which have to be worked out before this can come into being," said Ravi Kumra, a consumer advocate on staff at the PUC and project manager for a broad, three-year investigation into reforming the cellular market in California.

Kumra's department, called the Division of Ratepayer Advocates, has endorsed CSI's proposal in principle. But it has specifically asked for guidelines to be established to judge this and similar proposals, "rather than get all tangled up in one proposal that may or may not be good," in Kumra's words.

Kumra and others stressed the complexity of the issues. Currently, retailers like CSI lease phone numbers and sell air time in competition with the wholesalers, which were permitted to field retail arms as well. All charge roughly $45 a month for basic service, plus a few frills and discount options.

The big change, under CSI's proposal, would allow retailers to tap into the wholesalers' physical network of radio towers, relay stations and computers. By installing a telecommunications switch at some point, calls could be routed to the new competitors. They could then take over certain technical functions, such as running the computer database where phone numbers reside -- a juicy asset.

Nelson said retailers like himself currently rent phone numbers from the wholesalers for about $32 a month, and they re-rent them to consumers. Nelson would like to skip the wholesaler and buy them directly from Pacific Bell, which sells numbers for a one-time fee of $3.50.