Search

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.

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.

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.

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.

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.

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.

Scientists from the Environmental Protection Agency, the Food and Drug Administration, the National Cancer Institute and the Federal Communications Commission tell Capitol Hill legislators that portable cellular telephones probably do not cause brain cancer. The scientists say that there is a slight possibility that the phones accelerate the growth of existing cancers. However, the scientists say that more research is needed on the possible physiological effects of radio-frequency electromagnetic waves. Concern over the public health issue was touched off in Jan 1993 when a Florida man appeared on national television to discuss his lawsuit, in which he claims that his wife's use of a portable phone contributed to her fatal brain cancer.

Entrepreneurs are doing well in the business of renting cellular telephones, demonstrating that small operators can survive in a business dominated by large companies. The rental business has grown fast during the past five years and is now worth an estimated $500 million. Consumers see various advantages in renting their telephones: they do not have to pay for a year of air time, as is sometimes required by sellers; they can use the latest technology; and they do not need to key in 'roaming codes' if they are making calls outside an area where a phone is registered. Some operators are discovering markets that had previously been overlooked. In the future, pocket telephones could threaten cellular phone rental companies, but at least one industry analyst, Herschel Shosteck, believes pocket phone technology might stimulate the rental industry.

Improvements in cellular telephone communications include the ability to have one telephone number per customer, regardless of the number of locations and telephones, programmable call screening and messaging, and internal modems for communications with portable computers. Bell Atlantic Corp is offering single telephone numbers as a test in the Washington/Baltimore area. Microcom Inc, Mitsubishi Corp and IBM have introduced cellular phones with built-in modems. Cellular telephone transmissions quality is being improved by migrating from analog to digital communications. Southwestern Bell Corp, McCaw Cellular Communications Inc and Rogers Cantel Mobile Communications each are adding digital signals to their cellular systems. Quality will also be improved by using microcells to augment the metropolitan cells, allowing call transmission even in buildings or mountainous areas. Pacific Telesis is implementing this technology along the California coast. Motorola Inc is planning global cellular communications by 1997 using 77 communications satellites.

Eight cellular carriers are expanding their networks to increase computer data communications. McCaw Cellular Communications Inc, Pacific Telesis Group, U S West Inc and Ameritech Corp are planning to modify their existing networks to handle significantly more data traffic by using packet switching technology. Packet switching is an attractive alternative to dedicated voice channels because it is less expensive, can be encrypted for security and utilizes voice calls. Companies involved in expanding data traffic capabilities foresee a near future when consumer electronic devices can exchange data on the same lines as telephone calls.

The Motorola MicroTac Lite portable cellular telephone, which weighs less than half a pound equipped with its battery, is too expensive for most people, costing $1,500 to $2,500. It is an interesting product, however, because it is the first of the very-small-telephone type. Prices for such telephones will no doubt come down when other companies introduce similar devices. Some Japanese companies, including Fujitsu, are said to be working on products that are scheduled to be introduced in 1992. Motorola's phone is 5.25 inches long and only 2.50 inches wide. It proved to be sturdy product during a month of testing by the reviewer. The MicroTac Lite's small size means that its battery holds a charge for only about 45 minutes of calls. Recharging takes about an hour using a recharger that comes with the phone. The Motorola MicroTac Lite is a convenience, but it is expensive.

L.M. Ericsson Telefon A.B., a telecommunications equipment supplier in more than 80 countries, continues to grow and outpace competitors despite recent financial strains. Founded in 1876, the Swedish company is currently led by 52-year-old CEO Lars Ramqvist. Ramqvist is credited with turning around Ericsson in the mid-1980s and pulling the company out of a disastrous venture into computers. Ericsson holds 60 percent of the western European cellular telephone market and 40 percent of the world market. Ramqvist is funneling research dollars into digital cellular systems; Ericcson now has a 40 percent share of orders for the new Global System for Mobile Communications (GSM) for the European Economic Community. The company is developing public telecommunications equipment for the US market, digital cellular systems for the US and Japan, and pocket telephones. In the midst of this success, profits remain tight. Pretax profit for the first half of FY 1991 fell 26 percent to 1.78 billion Swedish kronor from 2.4 billion, revenue was flat and orders plunged.

The fact that a political coup occurred on the eve of the signing of a major cellular telephone system contract between U S West Communications Inc and the Soviet Union shows the importance of understanding a country's power structure when conducting international business. The U S West contract to install and operate three international gateway switches in Moscow, St. Petersburg and Kiev is going forward despite the Aug 1991 coup because U S West how to negotiate as the Soviets do. Negotiating involves working with top and middle managers, several ministries and officials in the republics to build trust. The involvement of top U S West officers and a core group of negotiators was key to demonstrating the company's commitment to Soviet projects. The three switches, which enable the Soviet Union to add 23,000 international circuits, are an $18 million investment over two years to U S West, but the company will receive 16 percent of revenues from calls funneled through the new switches for a 15-year period.