Search

Southern New England Telecommunications Inc (SNET) is planning to acquire cellular telephone service territory rights from Bell Atlantic Corp and Nynex Corp at a cost of about $450 million. Bell Atlantic and Nynex are selling the rights to these territories as part of their Jun 1994 merger agreement with federal regulators that requires the companies to give up cellular services in areas where both companies offer service. SNET officials say that the acquisition of Bell Atlantic's territory in Rhode Island will add about 2.3 million subscribers to its cellular service area, giving that company 5.5 million potential subscribers. The acquisition is expected to give SNET a good position to compete with future competitors, which will include the merged Nynex and Bell Atlantic companies. SNET is also planning to test a service that will transmit videos over its telephone network in Connecticut.

Ameritech Corp executives are talking with their counterparts at Bell Atlantic Corp and Nynex Corp about joining the planned merger of their cellular operations. Ameritech's 1.1 million cellular customers will generate approximately $700 million in revenue in 1994. Ameritech is probably the best suitor among cellular telephone companies to join the Bell Atlantic and Nynex merger because Ameritech's customer base would provide a strong market presence in the Midwest, while the other companies have an established customer base in the Northeast. The merger would also give the companies access to a larger pool of investment capital to purchase new licenses for personal communications services and to aggressively compete against the merger of AT&T with McCaw Cellular Communications Inc. However, Ameritech insiders are not sure if the company will benefit from the three-way merger.

U S West Inc and AirTouch Communications, the Pacific Telesis Group spinoff, will combine their cellular operations into a national service. The new company, the industry's second such union in one month, will have 1.7 million customers and annual revenues of $1.26 billion. It will be the nation's fourth-largest cellular company, and its combined value will be about $13.5 billion. A similar agreement was reached in Jun 1994 between Bell Atlantic Corp and Nynex Corp. That merger will have revenues of $1.2 billion and 1.8 million customers. Some observers are anxious about these mergers, fearing that the wireless industry will be dominated by giants.

Nextel Communications Inc, a wireless communications supplier acquires OneComm Corp, also a wireless communications supplier in a tax-free exchange of stock valued at $650 million. The transaction will increase Nextel's market presence to 47 of the 50 largest US markets. Nextel has established other relationships with wireless carriers, but it has been slow to begin service in its markets. The creation of a national wireless network is not expected to be finished until 1998. The company offers wireless services in Sacramento, Los Angeles and San Francisco. The company plans to receive additional investment capital from MCI, Motorola Inc and Comcast Corp. Industry analysts report that the company's strategy to expand wireless service throughout North America is the most ambitious undertaking of any communication company.

The FCC is asking a federal appeals court for permission to reconsider its recent awards of three valuable cellular radio licenses. The licenses, which were awarded to Cox Enterprises, Omnipoint Corp and American Personal Communications, cover wide metropolitan areas and are free of charge. These services will be used for a new generation of digital cellular technology for transmitting voice and data; the awards are given in recognition of technological innovation. In the FCC's request, the commission says it has a fuller understanding of market and competitive factors that make it unwise to give away such licenses while other firms must pay substantial fees. The three companies question whether the FCC has the authority to charge for the licenses, which are valued at over $500 million each, but all three firms support some sort of payment.

AT&T and the US Justice Dept are developing a mutually-agreeable consent decree which will enable AT&T to acquire McCaw Cellular Communications in a $12.6 billion deal. The final agreement may be available by the end of Jul 1994, if AT&T and antitrust officials can agree on how AT&T will preserve competition in the cellular and telecommunications services marketplace. AT&T must maintain complete separation between McCaw and its equipment manufacturer, AT&T Network Systems. AT&T claims that McCaw will continue to purchase network supplies from LM Ericsson, an AT&T competitor. However, US District Judge Harold Greene is also requiring AT&T to restrict its Network Systems from sharing competitive data with McCaw. AT&T is also negotiating with Greene over whether it can acquire McCaw's cellular operations in Houston and Los Angeles, which are jointly owned with several regional Bell companies. Bell South and other regional Bells have opposed AT&T ownership of these systems and have also filed overlapping motions requesting Greene to lift restrictions preventing them from offering long distance service.

A recent dispute over a cellular-phone license in South Korea illustrates the challenge President Kim Young Sam faces as he tries to separate business and politics. In late 1993, it was announced that a cellular-phone license would be awarded to a bidder chosen by the Federation of Korean Industries. The administration placed Sunkyong Group's Chey Jung Hyon in charge of the federation, believing that his position as chairman of one of the largest conglomerates in South Korea would enable him to select bidders wisely. However, Pres Kim's administration did not see the impending power plays as Sunkyong pulled out of the bidding and steel industry giant Pohang Iron & Steel Co (Posco) moved in. The only company that stayed in the race was Kolon Group, a textile company run by Lee Dong Chan. News leaks forced Pres Kim to set up a compromise in which the two conglomerates, Posco and Kolon, would be given dominant shareholdings in the Shinsegi Mobile Telecom Co consortium, which would offer GTE a 20% share, AirTouch 10% and Southwestern Bell Corp 7%.

Bell Atlantic Corp's decision to merge its cellular services network with Nynex Corp will create the second-largest cellular company in the US with 1.8 million cellular telephone subscribers and $1.12 billion in annual revenue. The merger must gain the approval of the Justice Department and the FCC before it begins business. The new company will have access about $13 billion in combined assets, which can be used as the investment capital it needs to bid for new licenses. The US government plans to auction off licenses for wireless personal communication services in 1994. The new company's merged system covers a population of 55 million and company executives hope to extend its reach to 120 million by Dec 1995. Industry analysts predict the merger will hasten other mergers among cellular carriers so they can benefit from the economies of scale that mergers can produce.

Bell Atlantic and Nynex plan to merge their separate cellular phone service operations into a single entity, thus creating a cellular giant to rival industry leader McCaw Cellular Communications. Officials for the regional Bell operating companies refused to disclose the terms of the deal, but inside sources report that Bell Atlantic is to control 62.35% of the merged company, while Nynex will hold 37.65%. The deal is still subject to review by the Department of Justice, but if it succeeds the merged company would have a subscriber base of approximately 1.8 million and projected revenues of $1.2 billion. The merged company would also become a strong contender in the two Bells Northeast and mid-Atlantic markets, markets that have historically been among the most profitable for cellular carriers in the US. The proposed deal highlights a consolidation trend among local, long-distance and wireless carriers.

The nation's regional Bell operating companies were recently granted the right to resell long-distance services to cellular customers, but now they are finding that the right comes with some regulatory restrictions. In June 1994, the Justice Dept granted a petition filed by the Baby Bells requesting that they be allowed to resell long-distance services in connection with their cellular operations. In granting the petition, the Justice Dept also mandated that the seven regional Bell companies not give any more that 45% of their long-distance business to any single long-distance carrier. The Baby Bells' cellular divisions must also ensure that all long-distance carriers be given an equal chance to attract the Bells' cellular customers. The Justice Dept has yet to address another concern of the Baby Bells that relates to restrictions placed on their ability to offer calling services beyond a limited geographic area.

Motorola Inc and Mexico's Grupo Protexa have formed a joint venture to offer cellular telephone services that will link the northeast part of Mexico with the central states of Chihuahua and Durango. Motorola currently holds a license in the central states, and Grupo Protexa holds a license in the northeast. The deal will enable Motorola to have a stake in the four cellular regions that cover northern Mexico. The joint venture will involve an initial investment of $1.5 billion and an eventual investment totalling $6 billion. The details regarding how the cost will be divided have not yet been clarified. The companies' ultimate intention is to develop various communication services in Mexico, including long-distance services. Because of northern Mexico's high per capita income, it has the potential to develop into a lucrative cellular market.

The FCC is setting up a new scheme for licensing of cellular communications in response to the growing influence of advanced wireless communications devices. The new scheme approves three 10MHz and 30MHz licenses in each community, with two of the 30MHz services in each of 51 large civic zones defined by map vendor Rand McNally. The remaining 30MHz licenses will be sold in 493 smaller areas also defined by Rand. Under the regulations, the FCC will grant each cellular firm a 10MHz slice of the spectrum in each zone, with an additional 5MHz available in the year 2000 for each firm that achieves 25% coverage of the personal communications business in that area. Additionally, the FCC will group all of the licenses together in each area, facilitating the creation of contiguous 40MHz services for each participant. The scheme was proposed in May 1994 by telecommunications equipment manufacturer Motorola Inc.

Telecommunications consortium CellCom Israel Ltd is going to offer one of the lowest-priced cellular telephone services in the world. The consortium includes Israel's Discount Investment Corp, Brazil's Safra Group and Atlanta-based BellSouth Corp. CellCom has been granted permission by the Israeli Ministry of Communications to offer Israel's second cellular-phone network. Beginning in fall 1994, a cellular call within Israel on the new network will cost only about 2.5 cents per minute. Cellular calling rates in the US run between 40 and 60 cents a minute. CellCom plans not to charge monthly subscription fees for the first two years, and then will charge just $5 per month for the following three years. Customers will not be required to pay any one-time connection fees, which generally cost between $50 and $250.

The Chilean government is imposing restrictions on Compania de Telefonos de Chile (CTC), threatening the virtual monopoly the firm has held on the country's cellular phone market. The new regulations will force CTC to comply with market dynamics, as well as to adopt more competitive rates that will likely slash customers' monthly bills. Investors are wary of CTC; although the company still appears to be priced attractively, some insiders are concerned that it may be ill-prepared for competition. Baring Securities recently downgraded CTC's stock to a 'hold,' and cut the 1994 earnings estimate from $5.50 to $4.87 per ADR. In 1993, CTC earned $4.67 per ADR, achieving net profits of $236 million. Operating profit margins during the same period were an astonishing 36%.

The FCC is considering a Motorola Inc proposal for issuing low frequency airwave licenses to wireless communications services providers. The new plan suggests having three 30MHz licenses and three 10MHz licenses, instead of the two 30MHz and one 20MHz license in low frequencies and four 10MHz licenses in higher frequencies initially set aside. The Motorola proposal still allows new companies to compete effectively with established cellular telephone service providers in each FCC region. Some of the licenses under consideration would be subtracted from spectrum allocated to mobile satellite services. The FCC would have to discover additional satellite spectrum if it approves the plan. Motorola says the new plan would reduce pocket phone costs by 25% because the devices would not need extra technology to overcome the frequency gap inherent in the earlier plan.

Grupo Iusacell SA, a cellular firm in Mexico, is planning an initial public offering which analysts predict will generate considerable attention from investors. The $227-million offering adds to the competition facing the dominant Telefonos de Mexico SA, which currently holds a monopoly on long-distance services. Demand for telephone services is high in Mexico, where there are only eight lines per 100 people in residential areas. Iusacell has cellular concessions that can reach approximately 70% of the population. The company plans to sell 85.7 million shares at a price of $26.50 per American Depository Share. This places Iusacell's value at approximately $42.83 per person covered by its concession. The company also plans to begin offering local telephone service via a highly advanced wireless system.

An increasing amount of cellular-phone users have cut back or given up on using their cellular phones due to high service rates. Surveys indicate that 60% of companies that use cellular phones report that high rates are a large source of dissatisfaction. Consumers are especially upset over the high fees charged for incoming calls and for calls made outside their home regions. Approximately 30% of cellular consumers cancel or switch services every year. Although the cellular industry has grown rapidly, the lowest average cellular rates across the US have only fallen 9% in eight years. A major reason for the high rates is a lack of competition. The FCC hopes competition will increase when it auctions off licenses for personal communications services in fall 1994. Cellular service providers argue that their rates are not very high and that discounts are available for high-volume users.

GTE Corp is planning to introduce a nationwide, pocket-phone service, called Telego, by the end of 1994. The offering would mark GTE as the first major cellular carrier to actively attack the future 'personal communications services,' (PCS) whose introduction has been delayed until around early 1995 by government regulators. That delay is enabling GTE and other cellular firms to gain a possible competitive advantage over PCSs. The Telego service would broaden the market for pocket telephones beyond business users, since GTE's pricing for the offering would make it much more affordable. While Telego uses the company's existing cellular phone network, it will be unique in that consumers' pocket phones will also serve as cordless phones; the service will not have the range of regular cellular users, however. Telego will be offered at $25 a month and will include a per-minute charge.

AT&T has filed a petition with an Illinois state regulatory commission that may lead to the right of the long-distance company to compete directly with regional Bell holding companies for local telephone services. AT&T has far-reaching plans to provide cellular services across the US, but it is restricted from local phone markets by the consent agreement that broke up the Bell telephone company in 1984. AT&T is requesting clearance for a market test in which one or more outside companies could provide local services by interconnecting with facilities of Illinois Bell, a subsidiary of Ameritech Corp. While it does not address the issue directly, if the petition is cleared it could lead to local communications competition among numerous companies, including cable providers. Ameritech claims it has already submitted a petition similar to that of AT&T, but it also requested clearance to provide long-distance services, a market closed to Baby Bells.

AT&T is facing several objections from the US Justice Department in its attempt to buy cellular giant McCaw Cellular Communications Inc for $12.6 billion. The Justice Department says all the antitrust and anti-competition issues will take several months to negotiate, but managers close to the deal expect it to close according to schedule. One of the issues is a conflict of interest that may help AT&T squeeze out rivals in cellular services markets, which AT&T will acquire through McCaw. AT&T is already the leading supplier of cellular communications equipment to McCaw and most other cellular providers. Because it supplies their equipment, AT&T has gained access to secrets concerning these companies' proprietary systems, and could use them unfairly. AT&T must also resolve antitrust issues raised by BellSouth Corp, which claims the regional Bell holding companies are unfairly restricted in providing local cellular services.

US District Judge Harold Greene announces that the terms of the proposed merger between McCaw Cellular Communications Corp and AT&T must be changed to comply with federal antitrust laws. In buying McCaw, AT&T will also acquire several cellular properties, including those in Los Angeles and San Diego, owned jointly by McCaw and some regional Bell holding companies. According to the 1982 consent decree that broke up the Bell phone company, AT&T may not acquire any stock or assets of regional Bell holding companies. AT&T has argued that the decree covers assets divested in the final Bell breakup in 1984. Greene, who has overseen the decree since its inception, says AT&T may still complete the deal if it can persuade him the acquisition of the cellular properties are in the public interest and the current telecommunications climate is different than in 1982.

AirTouch Communications CEO Sam Ginn announces that the cellular service company severed ties with its former parent Pacific Telesis Group on Apr 1, 1994. Ginn believes the new company is in a good position to take advantage of the still nascent cellular telecommunications market. AirTouch has cash reserves of approximately $1 billion and is the fifth largest cellular carrier in the US. The company also holds cellular licences for areas covering 34.9 million people (POPs) in the US, including the highly desirable Los Angeles, CA region. On a global basis, the company has 81.2 million POPs, and is expected to announce new licences in South Korea. AirTouch is also hoping to expand into the personal communications services (PCS) field when the Federal Communications Commission begins auctioning PCS licenses in 1995. PCS is a new technology used to transmit wireless communications.

The Japanese are downplaying the importance of a recent agreement in the cellular telecommunications industry that US officials claim indicates how future trade conflicts will be handled. As part of the agreement, Japan will help Motorola Inc gain equal access to Japanese cellular markets through specific steps mandated by the US, indicative of a new 'results-oriented' trade policy. The US is also stressing the importance of personal involvement by US ambassador Walter Mondale and high-ranking Japanese officials such as Prime Minister Morihiro Hosokawa and legislator Ichiro Ozawa. Japanese officials claim the cellular agreement was largely a matter of changing government regulations, while conflicts in the auto industry and others will be more difficult to settle because they involve only private industry.

The Japanese government continues to negotiate with American companies in cellular communications and other industries to avoid US government trade sanctions. Japanese officials claim IDO Corp will open 159 cellular service stations in the important Nagoya-Tokyo corridor by the end of 1995 for use by Motorola Inc. Motorola's access to service channels is still under debate; Motorola is demanding 16,100 service channels by the end of 1995, which compares to the 2,700 channels it had at the end of 1993. Motorola could gain an estimated $300 million if granted equal market access in Japan. IDO will also freeze development of Nippon Telegraph and Telephone cellular services in the region. Because of the financial burden of the concessions, IDO will not follow through on plans to convert cellular services from analog to digital signals, a project that was expected to involve AT&T.

MCI Communications Corp's plans to buy 17% of Nextel Communications and access to its digital cellular communications technology heighten the competition for the nation's cellular services. MCI had been looking for a cellular partner since its chief rival, AT&T, announced it would buy cellular giant McCaw Cellular Corp in a $17.6 billion deal. The seven Baby Bells, long-distance provider Sprint Corp and GTE Corp are also maneuvering for wireless services that will fight off companies invading their territory. The eventual winner in this market will likely be determined by marketing prowess, rather than differences among the three major technologies: traditional cellular services, personal communications services and Nextel's digital cellular network. Nextel's technology remains in the primitive stages, and the government will not begin auctioning licenses for personal communications services frequencies until 1995.

MCI Communications Corp will spend $1.3 billion for a 17% share of Nextel Communications Inc and access to its digital cellular communication technology. MCI will develop a nationwide cellular network to be marketed under the MCI brand name that will offer customers two-way voice mail, paging, traditional phone and other services in a single phone number. MCI has been seeking a cellular partner with widespread connections since the announcement of a takeover of cellular communications giant McCaw Cellular Communications by MCI's chief rival, AT&T. Many of the Baby Bells are also maneuvering for the national cellular market. The new cellular network will be built on the radio licenses Nextel has for 45 metropolitan areas and over 180 million people, licenses that are currently being used for primitive two-way radio applications such as taxi dispatching.

Pohang Iron & Steel Co (Posco) has been awarded the leading position and a 15% share of the consortium that will develop South Korea's national cellular telephone system, a system which is expected to carry a subscriber base of $6 billion by 2000. The Federation of Korean Industries awarded the steel firm, also known as Posco, the chief share despite a strong challenge from textile giant Kolon Group. The consortium will choose two foreign companies to contribute to the network's development, based on Posco recommendations. Posco has submitted PacTel as its foreign choice, but the Kolon Group, which holds a 14% consortium share, has threatened to pull out of the consortium if its chief technological partner, Southwestern Bell, is not given a stake in the network's development. GTE Corp, Nynex Corp and Qualcomm Corp have also submitted bids to the consortium.

European companies introduce products that enable notebook and laptop computers to communicate over Europe's GSM (Global System for Mobile Communications) cellular-phone network. Such communications-equipment companies as Oy Nokia of Finland and Siemens AG and Dr. Neuhaus Mikroelektronik GMBH of Germany present their new products at the 1994 CeBIT conference in Hanover, Germany. Compaq and IBM are among those portable-computer makers participating at the trade show. GSM, with 1.2 million subscribers in Europe, is the world's largest all-digital cellular-phone system. The network is being implemented across Western and Eastern Europe as well as the Middle East, making it possible for the same phones to be used in every country. Phone companies are upgrading the network to handle data as well as voice.

US trade officials threaten to levy sanctions on Japanese imports if the nation does not open up its market for cellular phone equipment. Despite their dramatic protestations, trade officials suggest that if Japan agreed to a quantitative way to track changes in government and business practices, they may not insist on particular sales goals. The dispute centers on Motorola Inc's access to the densely populated market south of Tokyo, but US Trade Rep Mickey Kantor is unlikely to retaliate against Japanese cellular-gear vendors, largely because most of their goods are produced in the United States. The United States is using the Motorola case as a symbol of the difficulty in penetrating the Japanese market. By mid-Mar 1994, US trade officials will draft a preliminary list of sanctioned goods.

The 1992 South Korean presidential candidate Kim Young Sam slammed the chaebols, or powerful, mostly family-owned conglomerates that dominate the economy of the peninsula nation. Despite his election, the chaebols are likely to control a $50 billion, 12-year effort to upgrade telecommunications services. The chaebols have helped fuel South Korea's economic growth, but now most economists believe that the chaebols are too big and inefficient to compete effectively in the world market. However, a weak economy has forced Kim to back off his plans to restrain the chaebols. He has now asked the Federation of Korean Industries, a chaebol group, to select the consortium that will build Korea's second cellular-phone system. Korea Mobile Telecom Co operates the nation's first cellular system, which serves 400,000 customers.

The competition in Italy's cellular mobile phone industry is fierce, and Ing. C. Olivetti & Co. has the most at stake. The cellular market in Italy is worth $1 billion, and the value is expected to quintuple by the year 2000. Italy announced the end of the monopoly by the state phone company, SIP SpA, in Dec 1993, and the government said a second license for the Italian part of the pan-European digital GSM system would be awarded to a private bidder by the end of Apr 1994. Omnitel, a consortium led by Olivetti, competes against Unitel, a group including Fiat and Fininvest, as well as Vodafone, of the United Kingdom, Group PLC and others. Olivetti's diversification into telecommunications is critical to the company's survival.

Geoffrey Longfellow, chair and founder of RadioMail Corp, connects users of wireless and wired networks. RadioMail serves as a receptor and distributor of electronic-mail (E-mail) messages. The company packages the necessary hardware and software that microcomputers require to send and receive E-mail, while the company performs the actual routing of messages to and from any combination of wireless carriers, corporate networks, on-line services and Internet. Goodfellow, who established the market niche for RadioMail, is now working to stay ahead of competitors by quickly getting involved in all aspects of wireless communications technology, such as digital-cellular and satellite-transmission systems.

The Bell regional holding companies derive over 90% of their profits from their wired telephone services, and those companies are threatened by the growing popularity of wireless technology. The Baby Bells, spin-off companies from the 1982 divestiture of AT&T, will have their services rendered obsolete by wireless technology. Robert Barada, vice president of corporate strategy for Pacific Telesis Group, says wireless technology is becoming more cost-effective than wired services. Many Baby Bell companies are beginning to offer cellular-phone services, and they are investing in foreign cellular markets. These companies are establishing their own wireless data services and partnering with cable-television companies. Baby Bells are retrofitting their networks in order to deliver the same services as their personal communications service (PCS) competitors.

People in many developing countries have access to wireless cellular telephone systems before wiring for conventional phone service is available. Wireless telecommunication systems are more extensive and available, and they are more economical, since there is no need to lay cable to every office and household. In Thailand, the unstable coalition governments could not agree on infrastructure projects, so the supply of conventional telephone lines remained flat, but the demand continued to grow because of the country's rapid economic growth. Thailand's waiting list for phone lines totaled 1.5 million in 1993, and the installation delay was up to three years. The government gave long-term private concessions to Thai companies Advanced Info Services Plc and Total Access Communications Co in 1989, and in 1994, cellular phones make up 20% of the phone service in Thailand.

Few studies have been conducted on the biological effects of cellular-frequency radio waves, and some people speculate that the frequency is capable of causing serious harm, such as brain cancer. In response to consumer concern over the possible health risks, the cellular-phone industry is investing as much as $25 million in a three-to-five-year research project. In the meantime, consumers are filing lawsuits against makers of cellular devices for product liability. Motorola Inc and NEC Corp are among the companies facing lawsuits filed by users who attribute their brain cancer to the cellular devices. The cellular industry claimed that there were numerous studies proving the safety of the devices when the allegations were first posed, but those studies were actually based on the effects of radio waves outside the cellular frequency or on exposure levels different from those of cellular users.

Cellular telephones come in three varieties: permanent in-car models, transportable models and small, low-powered pocket-sized models. Phones used in cars get their power from a car's battery and alternator, and they use a battery pack as a backup. People who need to make calls often from a variety of remote locales can benefit most from a small pocket phone. Buyers of cellular phones should evaluate the kinds of telephone needs they have as well as where they live and work. Transmission coverage is not good in some areas, making it necessary for users to have a powerful transportable phone. Talk-time, the amount of time the battery can support the phone's use before needing to be recharged, is something for shoppers to consider. Modern cellular phones are small and offer a variety of features. Some phones now operate on digital networks. Carriers and cost are other important considerations.

Motorola Inc struggles to win 'comparable' access to Japan's cellular telephone market. The company seeks help from the US federal government to determine whether Japan violated its agreement to share its cellular telephone market with foreign companies. The US is expected to decide by Feb 15, 1994. Motorola claims that Japan is denying it of the comparable-market access it expects to have through an agreement reached in 1989. Trade pacts between the US and Japan tend to dissolve years later, and the current negotiations between the companies over Japan's procurement of telecommunications equipment may be a repeat of the process that formerly led to a trade 'framework.' Motorola has installed cellular 'base stations' and phone handsets throughout Japan, with the help of its partner DDI Corp, and that enables the company to present its case from a strong position.

Eo Inc, a company of AT and T, plans a new investment strategy and will market its small data communicators as 'smart cellular phones.' Less than 10,000 of the company's hand-held devices have sold, prompting Eo to devise a new strategy. The company's plan may involve new equity partners, but the majority holder will continue to be AT and T. Eo and other manufacturers, including AT and T and Apple, are finding the market resistant to hand-held data communications. Compaq is delaying the development of its device due to the quality of pen-based software used in the devices to convert handwriting to the digital form. Eo's director of customer marketing says customers are more interested in communications than a tablet-device type of product. The company's redesigned line will feature a flip-open model with a built-in phone, and the device will be priced between $1,000 and $1,500.

AT&T encounters a possible setback in its plan to acquire McCaw Cellular Communications Inc. The Justice Department says AT&T should obtain a waiver from District Judge Harold H. Greene, who oversees the consent decree that broke up the Bell telephone system. The Justice Department's opinion is non-binding. The agency is responding to a petition filed by BellSouth Corp, which wants a court review of AT&T's plan. An AT&T spokesman says no such waiver is required, and even if it is, AT&T anticipates no difficulty in getting one. The spokesman points out that the consent decree prohibited AT&T from buying assets owned when the breakup took place, but cellular franchises in which Bell companies share interests with McCaw are properties that were not owned at the time of the divestiture.

Pacific Telesis Group (PacTel) intends to spin off its cellular operations and publicly offer a small stake. The plan, which is expected to raise $1.2 billion, gains approval by the California Public Utilities Commission but with conditions that prevent PacTel from selling any party a stake of more than 2.24 percent in the spin-off. Consumer groups intend to contest the state's approval, which took 10 months of deliberation. After the approval, composite trading on the New York Stock Exchange ended with PacTel shares up $4.875, or nine percent, to a 52-week high of $59.125. Analysts interpret the surge as traders' anticipation of PacTel selling the cellular business to AT and T, which has shown interest. If the public offering of a 12 percent stake for $1.2 billion occurs in Dec 1993, the value of the cellular unit would be $10 billion.

Pacific Telesis Group will try for the fourth time to get permission from the California state Public Utilities Commission (PUC) to spin off its cellular phone business and sell 12 percent of the new firm for $1.2 billion in a public offering. PacTel has gone before the PUC as a courtesy, for the company doubts that the commission has the legal authority to block the spinoff. However, state officials and consumer advocates, contending that conventional telephone customer services have subsidized PacTel's entry into the cellular market, want the company to refund upwards of $1 billion to California customers. PacTel contends that only $7.9 million of customer's money went into its cellular operations; still, it has offered to refund less than $100 million.

Bell Atlantic Corp plans to pay $1.04 billion for a 42 percent stake in Grupo Iusacell SA, a Mexican cellular firm. Some say Bell Atlantic is paying too much for a firm with only 135,000 customers, profits of less than $40 million annually and $450 million in debt. Investors dumped Bell Atlantic stock Oct 11, 1993, the day the investment was announced, driving it down $2 to $59.375, while Moody's Investors Service Inc plans to review $2.4 billion in Bell Atlantic debt for possible downgrade. Bell Atlantic figures that cellular has huge potential in Mexico, a country with notoriously unreliable wired service, and Bell Atlantic wants a foothold when Telefonos de Mexico SA loses its long-distance monopoly in 1996. However, Bell Atlantic is not sure if Iusacell will be allowed to enter the long-distance market. Still, the Baby Bell figures that Iusacell's potential is enormous.

Telular Inc develops a device that allows telephone users access to wireless networks without the assistance of local telephone monopolies. The system electronically simulates a dial tone to connect the wired phone to the Telular box rather than the phone network. The call is subsequently sent to the cellular system via a radio transceiver from Motorola Inc, which purchased an 18 percent stake in the small Libertyville, IL-based company. Emergency wireless backup service for hospitals and offices are among the present uses of the technology, and once the cost of cellular services declines, Telular is expected to grow as a provider of wireless services such as cellular, particularly in rural areas lacking costly phone lines. Qualcomm Inc's code-division multiplexing technology and Steinbrecher Corp's cellular connectivity systems are among other technologies emerging to promote wireless telecommunication.

Specialized mobile radio companies convert to digital systems to provide the same services as cellular technology, and the enhanced uses of radio frequency technology pose competition for the $9 billion cellular industry. Mobile radio firms intend to offer paging and voice as well as dispatch services on the same handset, which will appeal to the mobile work force. Federal deregulation has enabled mobile radio companies, which have traditionally provided dispatch services to taxi cabs, truckers and plumbers, to convert their systems from outdated analog technology to static-free digital. Dispatch carriers are growing via acquisition of small mobile radio companies, and some are going public. Public investors and large companies have contributed to Nextel Communications Inc's accumulation of more than a billion dollars, and Nextel stock is worth 400 percent more than it was in Sep 1992.

AT and T plans to expand the reach of its recently acquired subsidiary, McCaw Cellular Communications. Although McCaw is the largest cellular communications company, its presence is still lacking in major urban areas such as Boston, Philadelphia, Atlanta, Chicago and Washington. One possible way that AT and T may try to extend the reach of McCaw is by acquiring local cellular players such as Vanguard Cellular Systems. McCaw, under AT and T's direction, may also pursue more radio transmission licenses for developing technologies such as personal communication services (PCS). PCS will supposedly become a low-cost alternative to wireless digital phone communications and pocket phones.

Wall Street investment bankers say that more cable TV operators and telephone companies are likely to merge or form alliances in the wake of AT and T's announcement that it plans to acquire McCaw Cellular Communications Inc for $12.6 billion. Merger activity is up 64 percent over 1992 levels, fueled in part by the AT and T/McCaw deal, U S West Inc's decision to take a $2.5 billion share in Time Warner Inc's entertainment operations and British Telecommunications Plc's announcement that it would pay $4.3 billion for a one-fifth stake in MCI Communications. Likely deals include alliances between the seven Bell regional operating companies and cable TV operators. Speculation is rampant over what MCI will do with its British Telecom war chest. The long-distance service provider might form cellular pacts with some of the Baby Bells, or it might ally itself with a major cable TV operator.

AT and T and McCaw Cellular Communications Inc face determined, well-financed competitors as well as technological hurdles that could thwart their bid to dominate the world of wireless communications. The seven Baby Bells are already seasoned competitors in the cellular field, where each local market is divvied up among two service providers. If McCaw leaves the Cellular One wireless consortium started by Southwestern Bell for AT and T's brand, Cellular One might sign a lucrative agreement with AT and T rivals Sprint Corp or MCI Communications Inc. Six of the seven Baby Bells and GTE have formed MobiLink, a rival cellular consortium that covers much more of the US and Canadian population than does McCaw. AT and T/McCaw also face fierce competition in the wireless data-transmission market, including RAM Mobile Data Inc and the Ardis network.

AT and T agrees to acquire McCaw Cellular Communications Co, the nation's biggest cellular phone company, for $12.6 billion in stock. The regional Bell companies fear that the consolidation of AT and T's 90 million long-distance customers with McCaw's 2 million customers will allow their former parent company to challenge them as a provider of local phone service. The acquisition is second in US corporate history only to the $30.6 billion buyout of RJR Nabisco Inc in 1989. The news pushed up cellular stocks. McCaw stock rose $5 to $56.25 while Lin Broadcasting's Class B stock advanced $12.75 to $115 on the assumption that AT and T will buy up the 47 percent of LIN shares not owned by McCaw. AT and T agreed in Nov 1993 to acquire 33 percent of McCaw; since then, though, McCaw's stock has skyrocketed 93 percent. Apparently, AT and T decided it was better to pay relatively little for McCaw now than a lot later on.

Spectrum Information Technologies Inc's stock fell 49 percent on May 20, 1993, closing at $6 a share. Spectrum's stock had been doing spectacularly well since May 11, when Spectrum announced a licensing agreement with AT and T. Spectrum's stock had increased from $4 a share a week ago to $13.125 on the morning of May 20, but on that day, a report on CNBC cable television cast doubt on the value of the AT and T deal. AT and T reportedly had envisioned a vast and growing market chip for modem chips incorporating Spectrum designs. A market for almost a billion chips was foreseen. According to Spectrum Pres Peter Caserta, the AT and T agreement would generate hundreds of millions of dollars of revenue. A spokesman for AT and T now disputes such projections, saying the agreement is worth a few million dollars.

Cellular telephones are gaining popularity among vacationers in the outdoors. The devices have been credited with getting aid to injured hikers, helping rescue snowbound mountain climbers and even saving lives. The phones are popular with campers, bicyclists, boaters and hikers. The Cellular Telecommunications Industry Assn, which was recently rocked by allegations that cellular phone use can cause cancer, is eagerly promoting the safety advantages of cellular phones. Some outdoors aficionados dislike the intrusion of cellular phones. Rangers and others caution that cellular phones can give an outdoors-person a false sense of security.