Two more cell firms to enter L.A. market.

Competition to heat up even more over next 2 years

The number of cellular telephone service providers in Los Angeles County will jump 66 percent in the next two years as two new operators enter this lucrative and increasingly competitive market.

When Cox California PCS Inc. and Pacific Bell Mobile Services come on line sometime next year or in 1997, they will again alter the local market that has already changed significantly in the last 18 months.

And the changes may not be over for some time, as it's possible that even more operators will enter the greater Los Angeles market over the next five years.

Last month, Pacific Bell Mobile, a unit of Pacific Telesis Group in San Francisco, won a Federal Communications Commission license for $493.5 million to operate a wireless communications systems in Southern California. Last year, Cox California, a unit of Atlanta-based Cox Enterprises Inc., was also awarded a license, at a cost of $251.8 million, to operate a wireless system in Southern California.

Licenses auctioned off

For licensing purposes, the Southern California region includes the area from Santa Barbara south to San Diego and east to Las Vegas.

Pacific Bell Mobile won the license as part of an FCC auction that started in December for licenses all over the country and several United States territories. A total of six companies bid on the Southern California license.

Cox did not participate in the auction but was granted a license under the FCC's "pioneers preferred" program, which awards licenses for technological advances in the telecommunications industry.

As early as this coming summer, the FCC could conduct another auction for cellular phone licenses for smaller markets, including Los Angeles County, said agency spokeswoman Stacey Reuben Mesa.

Last week, Mesa said it was too early say if any companies will bid on additional cellular phone licenses in the Los Angeles County market.

"What all this means, of course, is that this is becoming a very competitive market. Prices are going to come down even further and service is going to get better," said Bruce Crair, vice president and general manager, for Cox California in Irvine.

Two providers already exist

In Los Angeles County the two primary cellular phone providers are AirTouch Cellular and L.A. Cellular. AirTouch, which was formerly PacTel Cellular, started operations in the county in 1984 and had the market to itself until 1987 when L.A. Cellular appeared.

In 1993, Nextel Communications, a New Jersey-based company, moved into the market but did not turn its system on until last year. Since Nextel arrived, consumer prices have dropped. Cellular phones, which a few years ago cost $500, now are available for $100, and the basic charges have dropped significantly to about $45 for a hook-up, a $40 a month service fee and 40 cents a minute for air time.

Industry sources would not speculate how low prices could drop when the two new players arrive.

But with just 10 percent of the general population in Los Angeles County equipped with cellular phones, the new players are eager to tap into such a large market, said officials from Cox and Pacific Bell.

"I think it's safe to say that the competition is going to benefit consumers the most," said Lou Saviano, a spokesman for Pacific Bell. "But this is a huge market and there's plenty of business out there."

Big bucks involved

The Southern California market represents a major investment for both companies. In addition to the cost of the FCC license, constructing a wireless system, which is made up of hundreds of small transmission stations, will cost the two companies at least $200 million each, according to estimates by representatives for Cox and Pacific Bell.

The companies are also under a time limit by the FCC to get their systems built or they will lose their licenses, which have already been paid in full.

Under the FCC regulations, the companies must have their systems available to one-third of the population in the license area in five years or lose their licenses. In 10 years, the companies must have their systems available to two-thirds of the population in the license area.

The representatives from Cox and Pacific Bell both said they will offer state of the art cellular phone service. But neither of the representatives would divulge specific information about when their respective systems would be turned on in Los Angeles County.

The representatives both also said it was too early yet to discuss service rates in the local market for their systems.