ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, October 27, 1996 TAG: 9610250107
SECTION: BUSINESS PAGE: 1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
IT was the special deal in a newspaper ad that caught Janet York's eye.
York, who sells advertising for Roanoker magazine, had been watching for a good buy on cellular phone service. She thought it would be useful in her work and would provide some security for her family.
What York saw was a promotion by Communications Depot Inc., a downtown Roanoke retailer. It promised two months free service, free weekend calling until the end of the year, and a free phone, all for signing a one-year contract. York decided to join the ranks of nearly 40 million Americans who are cellular phone subscribers.
Special promotions are one thing to look for when buying cellular phone service, said Deborah Edwards, Communication Depot's owner. Cellular service providers and retailers, like herself, run some sort of promotion every month, she said.
The hype that sold York on the service is probably mild in comparison to what Western Virginians are likely to see in the next two years as new companies line up to compete for customers like her.
But when buying a cell phone there are other considerations besides promotions.
Edwards and others familiar with the cellular-phone business said consumers should ask themselves two basic questions before they go shopping for a cellular phone: Where will the phone be used? And how will it be used?
The answer to the first question will help a consumer decide what type of phone to buy - a car phone, bag phone or portable - as well as which provider of cellular service offers the best coverage in those places where the phone's user usually travels.
How the second question is answered will help the consumer decide which calling plan offers the best value. A person buying a phone for security, for instance, may want to pick one of the cheaper basic plans, but someone using it for business may want a plan that offers more minutes of talking time at a lower per-minute rate.
The federal government grants licenses to two cellular phone companies in each market. In the Roanoke Valley and much of Western and Central Virginia, those companies are Atlanta-based GTE Mobilnet and United States Cellular Corp. of Chicago.
Beginning a year from now, though, consumers will find the number of wireless phone providers growing. By late 1997, the first of the new personal communications services or PCS providers will enter the market with a phone product based on digital wireless technology.
GTE and U.S. Cellular view PCS providers as potential competitors but also believe they may benefit from entry of the new service because of the additional interest they will help create in wireless communications. It's a case of a rising tide "raising all the boats," said John Rodman, Roanoke-area manager for GTE.
For the consumer the increased competition should mean lower prices, although though it's not clear yet how much lower, Rodman said.
GTE Mobilnet acquired Contel Cellular's operation in Roanoke in 1991 but didn't change the company's name until last year when GTE acquired the remaining 10 percent of Contel's stock.
Rodman said GTE recently has made improvements to its network in the Roanoke Valley by adding antennas, including one downtown on top of the nine-story Professional Arts Building on Franklin Road. The additional antennas mean customers will have better connections, particularly with lower-powered hand-held, portable phones.
U.S. Cellular also has added several new antennas around the Roanoke Valley this year, said Hank Cline, the company's new area general manager. U.S. Cellular came to the Roanoke Valley last year after buying Cellular One's local operation.
Cline respects his competition. GTE is "a good company," he said. Depending on where a customer travels, GTE may be a better choice for a service provider than his own company, Cline admitted.
A consumer, he said, should look for a company that "can provide a quality service in the general area in which they spend the majority of their time."
Both GTE and U.S. Cellular operate their own stores and also have retailers who act as authorized agents for their services. Edwards at Communications Depot on Kirk Avenue, for example, is an agent for U.S. Cellular. Circuit City at Crossroads Mall is one of GTE's agents.
Citing competitive reasons, neither GTE nor U.S. Cellular would say how many customers each has in the Roanoke Valley. Cline guessed that no more than 8 percent of the area's total population has cellular service.
At the end of June, the nation's cellular companies had 38.2 million subscribers, representing 14.5 percent of the U.S. population, according to the Cellular Telecommunications Industry Association.
* * *
Cellular technology traces its roots to the FM two-way radio communications developed for military use during World War II.
Shortly after the war, AT&T created a mobile radio system to connect to the wired public phone system. To make better use of the radio airwaves, AT&T engineers conceived a cellular system in which low-powered transmitters would be scattered around a city and calls would be "handed off" from transmitter to transmitter as customers moved around in their vehicles.
Cellular technology, however, wasn't ready for consumers until the early 1970s and it was 1983 before the Federal Communications Commission granted the first commercial cellular license to AT&T in Chicago.
It took more than nine years - until November 1992 - for the cellular industry to grow to 10 million customers. By contrast, in the most recent 12-month period, ended June 30, another 10 million new customers subscribed to cellular services, the CTIA said.
Cellular industry revenues during that period were $21.5 billion, a 31 percent increase over the previous 12-month period. The average monthly bill for a cellular customer is $48.84.
Cline and Rodman said that the average bill for cellular users in the Roanoke Valley is about the national average.
The most popular service plan with U.S. Cellular's customers, said Cline, is one called the "Smart Talker," which includes 75 minutes of air-time for $39.95 a month. GTE's most popular plan is "Lifestyle," which provides 15 minutes of talk time for $24.95 a month, said Rodman.
For people who want phones only for emergency or extremely limited use within a specific area, both companies offer plans with monthly access rates less than $20. In those plans, the calling is billed strictly by the minute with no minutes included in the monthly fee, and once a customer leaves his service area the per-minute rates rise sharply.
The popularity of plans at the lower end of the price scale reflects the growing use of cellular phones by people interested in the security they believe the phones can provide on the road and elsewhere. Consumer Reports recently polled its readers and found that emergency use and keeping in touch with family and friends were the two most common reasons for buying cellular phones. Business uses - being in touch with the office or clients - ranked third.
Both Roanoke-area companies offer more expensive calling plans aimed at the business user. At the top of the scale, GTE's Premium plan costs $234.95 a month and provides 3,000 minutes of talk time. U.S. Cellular's Unlimited plan offers unlimited talk time for $249.95 a month. Beyond those plans, each provider also offers special corporate-rate plans.
Security, increased productivity and staying in touch are some of the benefits that cellular providers say their phones will provide. Advertising saleswoman Janet York said her cellular phone has been a great convenience and time-saver in her work. Among other things, she said it allows her to call her office to check for messages without having to leave her car and it also offers her peace of mind.
* * *
New PCS services will increase the choices of consumers looking for mobile communications over the next few years. But Brian Woerner, a wireless communications expert at Virginia Tech, said he wouldn't advise anyone to postpone buying a cellular phone because they're waiting for the new PCS services. People, he said, should base their buying decisions on the service that's offered rather than future technology.
Some may think that because PCS uses digital technology, the quality of the sound of PCS over cellular will be comparable to switching from a record to a compact disc, Woerner said. The reality is the digital technology doesn't sound significantly better than the technology now used by cellular providers, he said.
Rather, PCS providers, because they use digital technology, may be able to offer special features such as electronic mail and enhanced data transmission. Cellular services, however, may update their technology in order to match some of those features.
Digital transmissions are coded and more secure from eavesdropping and fraud, proponents claim. And because portable PCS phones are smaller and operate at a lower power than cellular instruments, they will have a longer battery life.
Cellular providers, which share a common technological standard, warn that PCS uses three different standards, meaning that a PCS phone that operates in one part of the country may not operate somewhere else. PCS companies are trying to overcome that problem, though, by making sure enough companies using a particular technology are scattered around the country.
A consortium of smaller rural phone companies, led by CFW Communications Inc. of Waynesboro and including R&B Communications Inc. of Daleville, may be the first PCS provider to begin operations in the Roanoke Valley. Bud Zirkle, chief operating officer for CFW, said the plans are to begin selling PCS services in next year's third quarter.
The cost of the service should be very competitive compared with the cost of cellular, Zirkle said. A decision on what brand name the service may be offered under hasn't been made yet, he said.
The CFW-led consortium bought the rights to offer PCS services in Western Virginia from PCS Primeco, a joint-venture of large regional phone companies, including Bell Atlantic Corp. PCS Primeco bought a PCS license for much of Virginia in a federal auction.
In all, the FCC eventually will sell six separate licenses allowing companies to offer PCS services in the Roanoke area. In addition to the rights now held by the CFW-led group, two other licenses have already been granted - one to AT&T Wireless of Seattle and another to NextWave Telecom Inc. of San Diego.
As an indication of how lucrative PCS providers expect their business to become, both PCS Primeco and AT&T wireless paid more than $33 million each for their licenses which encompass much of the state, and NextWave paid $19 million for a license that covers a smaller area of Western Virginia north and south of Roanoke.
An AT&T spokesman said the company wasn't saying when it would begin offering services in any particular area but said construction of AT&T's network would probably occur throughout 1998. NextWave said it will build its network in 1997 and 1998. NextWave will not sell PCS services under its own name but will sell time on its network as a wholesale supplier to other carriers such as MCI, a company spokeswoman said.
CFW's Zirkle said he expects the other three licenses for the Roanoke area - each of which covers a narrower radio frequency band than the three licenses already granted - will be consolidated or used to offer specialized services, such as data-only networks for businesses.
CELLULAR BUYING TIPS
* Look for promotions. Cellular providers and their authorized agents run promotions every month, some offering free phones and discounts in service charges. Shop around. Retailers will sometimes offer better promotions than cellular service providers.
* Pick the service-rate plan that best suits your needs. If you will use it only for emergencies, start off with the lowest-priced plan. If you find you are talking more minutes than the plan provides, there should be no problem in switching to another plan before the contract is up.
* Always ask if the activation fee can be waived. That fee - the charge for turning on your service - can cost around $30 but often is waived as part of a sales promotion.
* Look for special features such as call waiting, three-way conference calling and voice mail that may be included in various rate plans. The features may also be purchased separately.
* Consumers also need to consider the cellular provider's home-calling service area.
Traveling outside a provider's "home" calling area is known as "roaming" and brings with it considerably higher per-minute charges for calls. Picking the provider whose home area best coincides with your travel patterns will save you money.
Providers sometimes offer discounted roaming in certain areas for an additional fee.
* Where a phone is used most also will help determine what kind of equipment you need.
If you use the phone mostly in rural areas, you would probably be better off with either a higher-powered mobile phone installed in your car or a "bag" phone. Bag phones come in a carrying case and have the same power as a mobile phone, but can be powered off a car's cigarette lighter or by a rechargeable battery.
If you use the phone mostly in the city and want the convenience of carrying it with you, one of the lower-powered, hand-held portable phones might be the best choice. For portables, ask how long a battery will last in a phone that's turned on waiting for a call and how long the battery will last when you talk on the phone.
LENGTH: Long : 232 lines ILLUSTRATION: PHOTO: Don Petersen. 1. John Rodman, Roanoke-area manager, saysby CNBGTE is improving its network in the Roanoke Valley. A new tower is
going up in Salem. 2. Jank Cline, U.S. Cellular's area general
manager, advises consumers pick a company that can provide a quality
service in the area where they spend most of their time. color.
Graphic: Chart by Robert Lunsford. Service plans and rates. color. KEYWORDS: MGR