Courtship, Competition In Tough Cellular World
Denver company goes to Northwest to battle with the big boys
KIRKLAND, WASH. — ONECOMM Corporation has the temerity to literally walk (or is it stalk?) in the footsteps of a communications giant. The wireless company upstart has set up shop in the same offices on the shores of Lake Washington where McCaw Cellular Corporation grew to become America's largest provider of wireless phone services.
McCaw has since moved to bigger quarters and merged with AT&T Corporation. But from this ``historic'' outpost in Kirkland, Wash., last week OneComm of Denver launched a service that will compete with cellular carriers in the corridor from Portland, Ore., to Seattle. In theory, regulations have created a system with just two cellular carriers in each market. But capitalizing on a technological loophole, OneComm offers another choice by adapting mobile radio to provide a similar service.
OneComm's lunchroom occupies the former office of Craig McCaw, chairman of McCaw Cellular, notes OneComm president Justin Jaschke, who sees therein a fitting irony since ``we do plan to eat their lunch.'' But there is no telling who will eat whose lunch in this fast-changing business.
Consumers, who should see prices fall and choices proliferate, may be the biggest victors in the wireless fray. Communications firms, meanwhile, are scrambling to build alliances.
In a December auction, cellular, wired-phone, and cable-television giants are expected to pay more than $10 billion for federal licenses to provide so-called personal communications services (PCS), yet another mobile-phone technology that also opens the door to more than two carriers per cellular market.
``There's nobody that has pockets deep enough to go it alone,'' says Herschel Shosteck, a communications consultant in Silver Spring, Md. Oct. 28 is the cutoff for creating partnerships to bid for PCS licenses. Several alliances are anticipated by then. ``This is the social event of the decade,'' Mr. Shosteck jokes. He predicts three to five corporate weddings.
The Baby Bells, who have cellular licenses in the regions where they provide local telephone service, want to match the size of AT&T's McCaw unit. So far, Nynex Corp. and Bell Atlantic Corp. have agreed to merge their cellular divisions. US West Inc. is pairing with AirTouch (formerly the wireless branch of Pacific Telesis Group). Another possible linkup could involve BellSouth Corp., Ameritech, and GTE Corp.
Cable and long-distance phone companies want a piece of the action, too. Their motives are different from the Baby Bells', says Ira Brodsky, president of DataComm Research in Wilmette, Ill. These firms are hoping to steal local-phone business from the Bell firms.
Cable TV providers can use their wires to connect wireless transmission sites with the long-distance network, thus bypassing the Baby Bells, who are currently the local gatekeepers to long-distance services. (With regulatory changes, cable could even compete directly as a traditional telephone wire company, going head-to-head with the Baby Bells.) Sprint Corp. is said to be negotiating with several cable giants.
MCI Communications Corp., unlike long-distance rivals Sprint and AT&T, has no cellular operations now. MCI is reportedly talking with several Baby Bells. But will Bell companies trust a firm that plans to bypass the local loop in many markets by expanding its wired network?
If all this isn't complex enough, OneComm wants to link up with other regional mobile radio providers, Nextel Corp. of Rutherford, N.J., and Dial Page of Greenville, S.C., to provide mobile radio/cellular service nationwide.
Analysts see these three firms as niche players with a secret weapon: They offer a remedy for what OneComm's Jaschke calls the ``sagging-belt index.'' That refers to workers who now carry more than one wireless device. OneComm's ``Unicator'' handset serves as a phone, pager, radio, and can be used to transmit computer data.
One challenge: Much of this group's infrastructure remains to be built over the next four years, so users of these services cannot get phone calls everywhere in the United States. Moreover, MCI recently dropped out as a pledged investor in Nextel.
Despite the limitation, this service will still appeal to local businesses such as landscaping, real estate, and construction, which value mobility and a mix of radio (for talking to many people at once), paging, and traditional phone service, says Dale Hatfield, a communications consultant with Hatfield Associates in Denver.
All this competition represents an ``opportunity to lose fortunes,'' as much as make them, Mr. Brodsky says. To provide PCS, he explains, the players must pay for licenses, build networks, and relocate some current users of the radio spectrum to other frequencies.
For consumers, the payoff should be a continued decline in still-steep wireless fees. Brodsky tells of one Hawaiian island where wireless service is already priced low enough that some users are tempted to switch from traditional wired telephone service entirely.