Businessweek Archives

Cell Phones: More, Better, Cheaper


Personal Business: HOME TECH

CELL PHONES: MORE, BETTER, CHEAPER

Picture this: You're running around Manhattan on Saturday trying to cram in all your errands. Only problem is, you've got your cousins shuffling in from Buffalo, and you don't know what time they're arriving. And you're trying to book dinner reservations at a hot new restaurant in SoHo, but the phone is always busy. To top it off, every pay phone you try is broken. What to do?

The obvious answer would be to carry a wireless phone--and maybe a pager for good measure. But how, you ask, am I going to impress the out-of-towners with an expensive night out if I have to shell out all that money paying for static-filled cellular phone calls?

INTERLOPERS. Not to worry. For 12 years, only two operators were licensed to provide wireless service in each city. But now, a whole slew of contenders, ranging from giant AT&T Wireless Services to upstarts such as NextWave Telecom and Omnipoint, are flooding the market. The competition is pushing prices down fast: Today, you can subscribe to a wireless service for as little as $10 a month, plus calling charges.

You no longer have to settle for plain-vanilla analog cellular, either. That's the original wireless technology that transmits calls via sound waves: The signal is subject to static, calls are frequently dropped, and it's easy for interlopers to eavesdrop. The new kids on the block are offering personal communications service (PCS), which translates calls into digital signals so that static and interference can be programmed out and security codes programmed in. PCS also offers paging and other data services.

The downside: PCS cannot roam. The technology was developed to use while running around town, not around the country. You can, however, get the best of both cellular and PCS with digital cellular. This technology combines the high-transmission quality and data-friendly features of PCS with the wide geographic coverage of analog cellular, though at a much higher price.

TANGLE. Indeed, the wireless market is becoming as full of choices as the personal-computer market--and can be just as confusing. Be prepared to choose between a dizzying array of price plans, technologies, and service contracts.

You're not even stuck with basic black anymore. Wireless phones come in all kinds of cheery colors, from canary yellow to red, white, and blue. But be careful which model you choose--you can easily spend from $100 to $1,000 on a device, only to discover that you are limited to one type of wireless service. This is starting to change, however: L.M. Ericsson has just announced the first commercially available "triple mode" wireless phone that will carry all three services. But there are drawbacks: Its PD 328 and PD 398 are slightly bulkier than other types of wireless phones and will cost around $200 initially. SBC Communications in Tulsa and AT&T Wireless in Atlanta plan to offer the phones this summer.

To unravel this ball of confusion, figure out why and where you want to use a cellular phone. If you spend most of your time in one city and want a phone to help you keep track of the kids or to call ahead when you're running late, think PCS. This new service operates in a higher-frequency range of the radio spectrum than cellular, allowing operators to use smaller transmitters that keep their costs low. The first PCS systems started up last fall: By yearend, most major cities should have three or four competing networks in place.

Because PCS is digital, it is more than a voice service. You can use it to send and receive E-mail, faxes, and other text messages--eliminating the need for a separate pager. The phones are about five inches long and weigh around eight ounces--slightly larger than a standard cellular phone--but the life of the rechargeable battery is about twice that of analog cellular, providing four hours of talk time. PCS works well both indoors and outdoors, but the digital conversion can make voices sound tinny and hollow.

The best reason to sign up for PCS, though, is the price. Omnipoint's service in New York, one of the first in the country, costs as little as $9.95 a month, with calling charges starting at 25 cents per minute. Given that basic local phone service from Nynex is about $16 a month, it's not that much of a reach to think about switching to all wireless, all the time. In the long term, that's just what some PCS operators envision--that consumers will subscribe to the service for all their local calls.

ON THE ROAD. But if you like to travel, forget PCS. Right now, coverage is too spotty to be able to take your phone out of town, while analog cellular has nationwide coverage, so your phone should work almost anywhere. Voices also tend to sound more natural with analog. The price may not be as high as you think, either: Bell Atlantic-Nynex, for example, is charging $24.99 a month for a package that includes 30 minutes of free air time. The phones can be had for as little as $20, but if you want to shell out $1000, you can get something as tiny as Motorola's 3 1/2-inch StarTAC. But there are no data services with analog, and security is a concern, even with new encryption systems.

If you travel a lot and conduct sensitive business talks while on the road you might want to opt for digital cellular. Both the service and the phones are pricey, and the phones are bulky--weighing about nine ounces. But again, you don't need a separate pager. Digital cellular is not available everywhere, but most digital phones are dual-mode, meaning they automatically switch to analog when you leave the digital network's reach. Plus, the sound quality is more robust than PCS.

Eventually, all these distinctions will blur as PCS and digital cellular networks are built in other parts of the country. After all, "customers just don't care what kind of wireless technology they are getting as long as they get voice fidelity at a reasonable rate," says Sam Ginn, CEO of Airtouch Communications, a wireless company that offers all three services. AT&T, Sprint Spectrum, PCS PrimeCo, and SBC are all building nationwide PCS networks that will be integrated with their cellular systems. These operators also have ambitious plans for combining wireless offerings with long-distance and local service on one bill. So if you think you would like to stick with just one company for all your telecom needs, you should look for a provider that offers the greatest breadth of services.

Or just wait five years. By then, you might be able to buy a small satellite phone that can be used anywhere in the world. Just the thing to take with you when you visit that distant cousin in Poland.Catherine ArnstReturn to top


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus