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Digital development.

Phone Companies Push Each Other's Buttons in a Flurry of Cellular Tech One-Upmanship

A BIT OF ARKANSAS telecommunications history was made several weeks ago when Shy Anderson, general manager of Alltel Mobile of Arkansas, dialed up John Pursell, systems manager for Alltel Mobile.

It marked the first time a digital cellular telephone call was placed in Arkansas and prompted Anderson to observe, "This is nice."

Okay, so the event wasn't nearly as momentous as the first phone call ever, when Alexander Graham Bell uttered, "Mr. Watson, come here, I want you."

But digital equipment is the big move in a national cellular market that sees 7,600 customers added daily, according to industry estimates.

Little Rock is in the national forefront of the digital trend, which encompasses millions of dollars of capital investment. The new technology provides more efficient service for carriers, who can handle three calls per channel instead of one.

The selling point for customers is better sound clarity and a system that prevents eavesdroppers with police scanners from tuning in and listening to conventional analog cellular calls.

The city's two cellular carriers, Alltel Mobile and Cellular One, both are testing newly installed digital equipment.

Bragging rights were at stake over which company would place the first digital call in Little Rock. Alltel made first dibs with its call and a subsequent June 3 announcement.

In a June 23 press release, Cellular One claimed to have the first "cellular digital transmission" in Alltel's corporate home town.

"Well, if it wasn't the first, it was the first AT&T digital cellular phone call," says Leon Pugh, area manager for Cellular One.

That's true enough because Alltel is working with digital equipment from Motorola Inc.

It should come as no surprise that Cellular One is using AT&T Co. hardware because AT&T is in the process of buying a one-third interest in Cellular One's parent company, McCaw Cellular Communications Inc. of Kirkland, Wash.

That $2.5 billion deal is undergoing regulatory scrutiny because it would put AT&T back into the business of handling local telephone calls -- albeit cellular ones.

Big Cellular Player

McCaw, the nation's largest cellular phone company, is making an initial capital investment of $3 million-$3.5 million in digital equipment in Little Rock. The project is part of an overall $10.75 million investment for Arkansas and Oklahoma.

Cellular One already has set up digital cellular service in New York and Florida, which are larger markets where communication congestion can pose problems for conventional systems.

The company is in the test mode for its digital service in Little Rock. Cellular One officials will make internal calls and run test data for four months.

The ability to transfer data via cellular digital system will be another link in the info-explosion networking with fax machines, computers and phones.

"It will not be unimaginable to have one device capable of operating in all of those arenas," says Alltel's Clyde Smith. "This backdrop is driving the technologists to have a network that will support that."

As the mobile community continues to grow, it's not hard to envision a lap-top computer downloading information through a cellular phone.

The new digital phones will cost about 10-15 percent more than current analog models, which average $650-$750 for pocket phones or $350 for car phones.

The increased use of digital equipment won't make analog models obsolete, but the new digital phones will have the capability to switch in and out automatically between analog and digital systems.

"Our strategy, if you will, is to allow the core of our |Little Rock~ system to have commercial digital capability in 1994," Cellular One's Pugh says.

Cone of Silence

In contrast, Alltel officials are not as forthcoming on details of their digital program.

They consider the dollar figure for capital investment to be an unlisted number, except to describe it as part of a multimillion-dollar upgrade systemwide.

The company also isn't talking about the number of select customers participating in the testing or how long the test period will last.

"That's indeterminate, but we want to give our customers and engineers time to evaluate the types of service available," says Smith, vice president of technology and planning for Alltel Mobile.

Although a public company, Alltel is secretive about the profitability of its mobile operations. The only mention of this business segment's profit picture in Alltel's most recent annual report is: "The cellular operation's contribution to the company's earnings growth is increasing significantly."

The significance of that contribution remains unclear because Alltel does not disclose the net income of its individual business segments.

The growing popularity of cellular phones has helped position Alltel Mobile as the 15th largest carrier in the nation, according to RCR Publications Inc. From March 1992-March 1993, the company had an 81 percent increase in the number of cellular customers, growing from 102,012 to 184,982.

Like Alltel, McCaw has spurred growth through acquisition. Corporate officials say the company reported a whopping $1.3 billion in revenue during 1992.

However, the profitability of McCaw is another matter because the company ended the year with an equally whopping net loss that topped $364 million. Its aggressive purchase of cellular phone market share has racked up debt, but the additions have led to a customer base that exceeds 1.6 million subscribers.

Augmented by satellites, the day is coming when personal communications service will be become a reality. One person will be reached through one phone anywhere in the world.
COPYRIGHT 1993 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:cellular radio services in Little Rock, Arkansas
Author:Waldon, George
Publication:Arkansas Business
Article Type:Industry Overview
Date:Jul 5, 1993
Previous Article:The price of goodwill.
Next Article:Arkansas' corporate giants: 113 firms among Fortune, Forbes elite.

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