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Rallying Call: 10 Cents a Minute!

Cellular phone providers try to cut through customer confusion with simpler offers and lower prices

By Staff writer of The Christian Science Monitor / March 16, 1998



ST. LOUIS

So many ads, so many deals for wireless telephones.

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"$16.99 a month ... You could spend more going to the movies." "Free nights and weekends until the year 2000!" "Give them a lasting gift. A cellular phone!"

But finding the best deal is almost impossible as new competitors enter the fray, established carriers turn up the hype, and prices trend lower. Instead, analysts and consumer advocates focus on one figure:

Ten cents a minute.

That's what some wireless telephone services already charge customers who use the most air time. Soon, it could become a benchmark for the industry.

"Ten cents per minute is a good deal for air time," says Geoff Mordock, research associate for Telecommunications Research and Action Center, a nonprofit group in Washington.

"There's been price confusion; what customers are asking for is a level of simplicity," adds Chris Landes, an industry analyst based in Nazareth, Pa. "If Sprint can offer 10 cents a minute on some wireless packages, that is huge, considering the average rates are 30 [or, in some markets] 45 cents a minute."

Several carriers offer similar deals in the most competitive markets. Analysts expect more such offers, even for moderate wireless-phone users, as the competition heats up.

That heat rises as traditional cellular carriers face challenges from newer, all-digital offerings called personal communications service (PCS).

"We've only begun to see the decline in price," says Herschel Shosteck, of Herschel Shosteck Associates Ltd., a market-researcher in Wheaton, Md. "The cellular carriers are going to try to hold the market up. But as they witness the erosion to PCS service providers, they will lower their prices."

Eventually, he adds, prices will get so low some people will stop using traditional wire-line phones altogether (the ones found in most offices and homes today). Instead, they'll rely on a wireless phone they can carry everywhere.

"It's a trend we are starting to see happen" already, says Ashley Pindell, a spokeswoman for Sprint PCS. The company last month signed up its millionth customer. Sprint PCS, Nextel Communications, and AT&T are the big three of PCS.

Not everyone needs 24-hour phone access. So companies target different phone plans to different types of users. For example, some market low-cost monthly packages to drivers who want phones only for emergency use.

Another company looks for what it calls the "credit-challenged" customer. Topp Telecom of Miami offers a prepaid cellular phone, which works much like a prepaid calling card. Users buy the phone for $99 and get 60 minutes of air time. At least every two months, they purchase cards good for 30, 60, or 200 minutes of talk.

The cost is 50 cents to $1 a minute, higher than other deals. The advantage is no monthly bill, and you never lose those prepaid minutes, unlike most plans that offer no credit for unused minutes.

"You see advertisements for 10 cents a minute and all those other wonderful deals," says Robert Dandrea of Topp. But "there are a lot of hidden costs."

The Ways of Wireless

Traditional cellular. The fading standard, some of the cheapest monthly rates but fewer features than digital.

Digital cellular. The new trend. More features than traditional - Caller ID, voice-mail, even e-mail. Competitive pricing, but until it gets established, often covers a limited distance.

PCS. Digital benefits, usually costs less but with less geographical reach.