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Cellular Radio Ushers in Revolutionary Changes for Servicing Business User Needs.

Cellular Radio Ushers in Revolutionary Changes for Servicing Business User Needs

The revolution has begun. The personal communications revolution will change the way you communicate as radically as did the introduction of the telephone over 100 years ago.

Dick Tracy would feel right at home in the personal communications revolution. He has been carrying his own personal communications device (PCD) on his wrist for about 40 years.

The wristwatch telephone is not quite here yet; but at least one company has already perfected a completely self-contained portable cellular telephone that weights just 28 ounces and will fit--with a slight bulge--inside a man's jacket pocket or a women's purse. An even smaller lighter model should be on the market within two years.

Do not confuse the cellular telephone with the so-called "cordless' telephones that you can buy for $100 at Sears or Radio Shack. If you have one of these devices, you know that your cordless phone is nothing more than an extension phone without wires. It will operate effectively up to about 750 feet from the "base station' in your house. Then its signal fades out.

Imagine how much more satisfying it would be if you could take that "cordless' phone with you anywhere you wanted to--to the park, to the ballgame, to the bank, in a taxi cab, even to the bathroom.

No Longer a Dream

The truly portable telephone is no longer just a dream that will come true "someday.' Ameritech Mobile Communications put the first commercial cellular telephone system on the air in the US on October 13 in Chicago. Users are being added to that service at the rate of about 100 per day. The only thing that is preventing faster growth is the lack of available user equipment and service shops to install the mobile cellular phones in cars. At last count, 26 companies were selling cellular car phones in the Chicago area, and more companies are being added each week.

Washington, D.C., and Baltimore are slated to be turned on to full commercial cellular service soon. The five non-wireline companies that filed for cellular service in those two cities announced on September 30 that they had reached a mutual agreement in which they would form a partnership to offer cellular in the Washington-Baltimore area. That service is expected to be on the air by early 1984.

Meanwhile, the BOC subsidiary serving the southeastern states, BellSouth Mobility, has also announced that it intends to put its Miami system on the air in early 1984-perhaps before this article is published. Other systems that will be turned on early next year include those that will be operated by MCI in Pittsburgh, by Indianapolis Telephone Company (a partnership among Graphic Scanning, Westel and Midwest Mobile Phone) in Indianapolis, and by Milwaukee Telephone Company (a partnership between Graphic Scanning and Westel) in Milwaukee.

Other systems that are expected to be turned on during 1984 are those that will operate in Minneapolis, New Orleans, Seattle, Philadelphia, Atlanta, Phoenix, New York, Los Angeles, Denver, Boston, Dallas, St. Louis, Cleveland, Kansas City, Buffalo, Phoenix, Detroit and Cincinnati. New cities are being added to this list every month.

New Telecom Era

The point to remember is that the cellular radio is already here in some areas and is almost here in many major cities. It brings with it the beginning of a new era of telecommunications--the personal communications revolution.

I am frequently asked, "What do you mean, "personal communications'? What is a "personal communications device'?' (PCD).

I begin by explaining that the wireline telephone that sits on your desk today is one of the most useful tools in your office. With it, you can make sales, keep appointments, organize your work and do a multitude of other tasks that would be almost impossible for you if you had to rely on telegrams or personal visits.

An Important Tool

In other words, your wireline telephone is a tool that is as important to you as the hammer is to a carpenter or a typewriter is to a secretary.

As useful as the telephone is, however, it suffers from one major problem. If I call you at your office and you are out to lunch, I will not be able to speak to you. If I call you at home and you are away, I won't be able to talk to you.

In an effort to remain in touch while traveling, many executives today have installed telephones in their cars. Unfortunately, today's mobile telephone service is oversubscribed in most major cities. In most cities, if you call the phone company or a radio common carrier (RCC) and ask for a mobile telephone, you will be put on a five to 10-year waiting list. If you do manage to obtain a car phone, you will find that it is almost unusable during much of the day because the channels are overcrowded.

To combat this overcrowded condition, the FCC has approved the new cellular technology, which has been developed by AT&T, Motorola and a number of other companies. (The FCC has also recently liberalized the rules that allow Specialized Mobile Radio [SMR] systems to be interconnected to the wireline network, thus easing the burden on the common carrier mobile phone systems. We will not discuss SMR in this article, although it does offer another method of helping meet the demand for mobile telephone service.)

A conventional mobile phone system places a single, high-powered transmitter on a high tower or building in the middle of the city. The same frequency cannot be reused any closer than about 75 to 100 miles away.

A cellular system, on the other hand, divides a city into a half dozen or more "cells.' Each cell contains a low-powered transmitter that covers that cell only.

If you have a cellular phone in your car and you attempt to place a telephone call, the phone will make contact with the cell nearest to you. As you drive through the city, your signal will begin to fade in that cell and to grow stronger in another cell. A central computer (the Mobile Telephone Switching Office, or MTSO) monitors your signal strength at both locations. At a point determined by the computer, your signal will be "handed off' from one cell site to the next. This handoff occurs so quickly-- within a fraction of a second--that you are completely unaware that it is happening. Your conversation can continue uninterrupted.

This MTSO is also the location in the cellular system through which your phone call is routed into the conventional landline telephone network. This interconnection to the wireline network allows you to place a normal telephone call anywhere in the world from your car just as easily as if that phone in your car were instead located on the desk in your office or on the wall in your home.

Similar to TV

Because the cell-site transmitters are low powered and cover only their own cell, the same frequencies can be reused in another cell two or three cells away without interference. (This is the same principle that is used today in the television industry. Channels 4, 5, 7 and 9 are used in New York. Channels 3, 6 and 10 are used in Philadelphia. Washington is too close to Philadelphia but it is far enough away from New York so that channels 4, 5, 7 and 9 can be used--or "reused'--in Washington without interfering with their simultaneous use in New York.)

Later on, as the number of subscribers on the system increases, the cell channels will become crowded. When that problem arises, the cells can be "subdivided' into a series of smaller cells, thus increasing the number of available channels.

Thus, the four principles of cellular radio are: (1) use of multiple cell sites with lower-powered transmitters at each cell site controlled from a central location (the MTSO); (2) handoff of the telephone signal from one cell to another as the caller moves throughout the city; (3) reuse of frequencies several times throughout the city; and (4) growth of the system by subdividing cells into smaller units.

Cellular is for Real

The first commercial cellular phones that have gone into operation in Chicago have been car phones. (An experimental system has been operated successfully in Chicago by Bell Labs and Illinois Bell for three and a half years, serving 2,000 customers. That system is being gradually phased out now that the commercial service is in operation.)

Motorola is one company that has developed a self-contained portable phone that will work on the cellular systems. Several other companies have also announced their intention to develop a portable unit. However, because using the portable puts a large drain on its batteries, the portable has less transmitting power than is available to the mobile unit. Thus the portable has a limited range.

Portable Use to Grow

The result is that the portable may not be usable everywhere in a city during the early phases of cellular implementation. The portable's usefulness will increase as the cells are subdivided into smaller units.

Eventually the lighter, more convenient portable cellular phone that can be carried everywhere should they replace the bulkier car phones, which are permanently mounted inside the car and thus can only be used when one is in his car.

The cellular revolution will offer a new money-making opportunity to a variety of business currently involved in the telecommunications industry.

There are a number of ways that you can join the cellular revolution and profit from it.

Are you a telephone company? Depending on your size, you may or may not be interested in offering cellular radio to your customers. Even if you do not presently think that cellular is in your future service offerings, remember that the "wireline set-aside' expires in April 1984. If you do not file an application by that date, you may be forever frozen out of this potentially lucrative new market.

As a telco, you might consider an approach such as the following: Prepare a filing for your territory. It does not have to be complex. The applications filed by Bell's Advanced Mobile Phone Service even in the first round for the top 30 cities were quite small, yet they were sufficient to win a license for AMPS in most of the major markets.

Wirelines are expected not to have to face comparative hearings. Hence your application need not be fancy. You don't have to put a lot of money into it.

Time for Building

Even though you file on March 1--the date on which the FCC will begin accepting applications for markets number 91 and smaller--the Commission probably won't get around to awarding you your license for at least six months or even a year. Then you will have three more years in which to build your system.

If at the end of that time you still are not convinced that there is an opportunity for you in cellular radio, you can gracefully withdraw with relatively minor losses.

However, by the time those three or four years have passed, you may also discover that the cellular market has begun to grow and bloom at a far greater place than you had originally expected. You will have preserved your option to enter the cellular market--all because you had the foresight to submit a simple filing in 1984.

Radio common carriers (RCCs) have a slightly more difficult choice confronting them, especially if the Commission decides to use a lottery to select the cellular licensee in a given area. RCCs may find it in their interest to file in number of areas-- both where they offer conventional mobile phone and paging services and in areas where they do not--and then combine their applications with those of other RCCs for a percentage of the action.

Ideally, the RCC will end up operating a cellular system in one or two markets and sharing in the management and profits of systems in several other markets.

The alternative for those RCCs who decide not to get into cellular is that they may well be pushed entirely out of the mobile phone business--and perhaps the paging business as well--when truly portable wireless telephones come into widespread use.

You don't, however, have to be a traditional telephone company or RCC to be attracted to the cellular radio industry.

Do you install mobile radios or stereo tape players in cars today? Why not expand your operation to include the sale and installation of cellular phones? Installing a car phone is a relatively simple operation if you have the necessary garage facilities and equipment.

If you repair mobile radios, you could learn to repair and maintain cellular radios. You can also make a profit by reselling service offered by the cellular carrier in your area.

Do you operate a telephone answering service (TAS)? You may find that you can generate extra profits by selling cellular telephone service.

Your TAS could profit in several ways. You have an existing base of customers who know and trust you. Because your customers are the kind of people who are constantly on the move (after all, that's why they employed your service, didn't they?), they are ideal customers for cellular service. You could sell and install cellular phones for them.

If you aren't prepared to do the installation yourself, you could farm that work out to a local garage or service station or perhaps a car-stereo sales-and-service business.

You can also make a profit by reselling service offered by the cellular carrier in your area.

A Golden Opportunity

Answering services have a golden opportunity to provide a much-needed service to individuals who own cellular car phones. Cellular phone calls will be quite expensive to users--upwards of 40 cents a minute during peak periods, plus long distance charges. As a result, the average cellular owner may wish to have all of his incoming calls screened before they reach him in the car. You could offer a pre-screening service through your TAS--the sort of thing you are used to doing today.

You would answer all your customer's incoming calls. If you determine that a call is important enough to require an immediate response, you could call your customer in his car, tell him who is on the line and ask him if he wants to take the call. If he says yes, you could then bridge the call over to his mobile line.

Thus, even if you yourself do not offer cellular service, the coming of cellular service offers the TAX owner additional opportunities to sell his existing service to new customers.

Other business opportunities are available in cellular. The traditional retail store could sell a line of cellular phones, just as they sell regular telephones today. Companies such as Sears and Radio Shack are expected to be in this business. Does your store compete with Sears and/or Radio Shack today? Compete with them tomorrow. Offer a personalized sales and service that the big companies can't touch.

Cellular resale may be a profitable business even for people who have never been in the telecommunications business before. Resale, in its simplest form, is buying in bulk at wholesale and selling to consumers in smaller chunks at retail.

A Business Asset

You don't even have to be in the cellular business itself to profit from cellular radio. All you have to do is have your own cellular phone installed in your car--and use it in your business. If you are the telecommunications manager for your company, you should pay serious attention to the coming of cellular radio service in your area. There is hardly any upper management level employee in your company who couldn't profit from having a phone installed in his or her car. Industries such as trucking firms and construction businesses should consider adding cellular phones to their fleet of vehicles.

I you are a user rather than a provider of mobile radio service, the cellular phone offers you a more sophisticated mobile service than is available to you today. The cellular phone call is as convenient and clear as that of a conventional landline phone call. The convenience of having a phone always at your fingertips can be an attractive idea to the executive or company president who might otherwise think that carrying a standard two-way portable radio or beeping paper is "beneath' him.

Costs Will Tumble

In its early years of operation, cellular service will not be cheap. Expect to pay upwards of $150 to $200 per month for basic service (dial tone) and message units to use your cellular phone. This price will put the cellular phone out of the reach of the average consumer, at least for a few years. As with every new technology, the price of cellular service should begin to tumble dramatically as the systems come into more general use and manufacturers gear up to meet the demands of competition.

At least 24 companies have already announced their intention to supply a variety of types of cellular equipment for this new market.

At the time Alexander Graham Bell demonstrated his early model telephones, few people appreciated just how important his device was. Many viewed it as a "toy.' A member of the British Parliament, upon seeing the telephone for the first time, is reputed to have commented, "This may be well and good for our American cousins, but we shall have no need of it here because we have an adequate supply of messenger boys.'

If you have not begun to pay serious attention to the revolution in personal communications that is just beginning with the introduction of the cellular radio, you may be overlooking one of the most exciting developments that has appeared in our industry since the invention of the telephone.
COPYRIGHT 1984 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1984 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Crump, S.Jr.
Publication:Communications News
Date:Feb 1, 1984
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