Published Sunday, November 30, 1997, in the Miami Herald
Talk of the town: Wireless phones
More choices, better deals make S. Florida hot market
By DAVID POPPE
Herald Business Writer
Who says talk isn't cheap?
If you're planning to chat on a wireless phone, you're in luck this holiday season. Rates are plummeting and scores of companies are offering high-tech phones with handy new features.
Just a year ago, a new wireless customer would be hard-pressed to find daytime calling rates below 35 cents a minute. Today, every major player offers calling packages with daytime rates as low as 10 cents a minute. And the new companies offering personal communications services, or PCS-- the latest innovation in wireless technology -- are hawking digital phones that come with Caller ID, voicemail and paging as part of the basic service.
These advances, a boon for consumers, occurred because the two cellular companies that controlled the fast-growing South Florida wireless market for a decade, BellSouth Mobility and AT&T Wireless, were joined in the past 12 months by three new players: PrimeCo Personal Communications, Sprint PCS and Nextel Communications.
Why the crowd? Because South Florida is one of the hottest areas in the nation for wireless phones, which are carried by about three of every 10 people -- more than 1.2 million -- from Jupiter to Key West. As the five companies fight it out, the deals keep getting better.
''If there's winners and losers, the winners obviously are consumers,'' says Allen T. Hunt Jr., general manager of PrimeCo in South Florida.
The competition heated up this summer after Sprint PCS launched service and began offering extremely low rates for wireless calling.
In fact, one offer of up to 1,500 minutes of monthly calling time for $75 -- a rate as low as 5 cents a minute -- met with heavy response. Sprint found that its new $150 million local telephone network was overloaded less than two months after launch.
Sprint made an emergency $10 million upgrade and will spend $70 million next year to triple the capacity of its calling network.
Also over the summer, Nextel Communications launched service. Nextel sells a combination of cellular and two-way radio service to businesses. While Nextel doesn't market to average consumers, it has been a successful niche player.
In particular, Nextel has been a hit in the construction industry, where crews on job sites use the two-way radios as private telephone networks. That, too, has chipped away at the hegemony of BellSouth and AT&T.
But consumers should be aware that South Florida's wireless carriers are not interchangeable. There are significant differences in services.
Among the most important:
Coverage: The two incumbent cellular operators have been around for about 15 years and have mature national telephone networks. The new PCS companies can't yet offer the ability to use the wireless phone throughout the nation.
''Definitely, coverage is our big advantage,'' says Pat Collier, spokeswoman for BellSouth Mobility. ''When people want to make the call, they can make it where and when they want.''
Juan Carlos Barreto, owner of wireless service reseller Genesis Communication Systems in South Miami, says he believes that AT&T Wireless has the best national network and is the best service for a person who travels widely with a wireless phone. AT&T Wireless also
offers national roaming rates -- or charges to make calls outside the local calling territory -- that are excellent, Barreto says.
For a customer who travels a lot within South Florida, Barreto likes BellSouth Mobility service. ''Its local coverage is very good,'' he says. In particular, he says, BellSouth has good coverage in the Keys, where some phones don't work well.
Nextel, PrimeCo and Sprint PCS say they are rapidly building their national wireless networks. By the end of next year, PrimeCo and Sprint PCS expect to offer statewide calling at local rates, with no roaming charges.
For now, users who travel a lot appear to be sticking with cellular service. Stuart Danoff, owner of a Miami ship brokerage bearing his name, has more than a dozen AT&T Wireless phones for his employees. He says he likes many PCS phone features, but is wary of new telephone networks.
'It has certainly got some nice features on it, but I don't like to be a pioneer where my business is concerned,'' he says. ''I'd rather be the second guy on the scene.''
Cost: How rapidly has pricing changed? A year ago, a wireless customer could expect to pay $15 a month for the privilege of service plus at least 30 cents a minute for calling time. Now Sprint PCS is offering 180 minutes of monthly calling for $30. That's a rate of 16.7 cents a
minute with no monthly fee. The other carriers are nearly as cheap.
Barreto says that for customers who spend a lot of time on their wireless phones, PCS may be the best choice because the rates are so low. Also, PCS phones have longer battery life than cellular phones, making them valuable to frequent callers.
Sprint PCS says that a year ago, a cellular customer using 1,000 minutes of monthly calling could expect to pay between $180 and $216 a month. Today, the same customer would pay a maximum of $116 a month on a Sprint plan.
Casual users who spend 175 minutes on a wireless phone used to pay $60 a month. Now, Sprint PCS offers that for $30 a month.
''That's what competition has done for the consumer,'' says Daniel J. Olmetti, area vice president for Sprint PCS.
But the lowest rate isn't necessarily the best deal. Customers should pay close attention to rate packages.
The PCS companies make customers buy their phones -- which can cost $200 or more -- but then charge lower rates for calling time. The cellular companies often give away phones as part of long-term contracts that typically include higher calling rates.
Barreto says he regularly reads competing ads in The Herald offering the same wireless phones at different prices. The reason: The phones come packaged with different calling plans.
A consumer might see the same phone advertised for $1 and for $100 and presume the second offer is worse. ''But the $100 phone may be a much better deal,'' Barreto says.
Features: There are some significant differences between PCS service and cellular. The first: PCS is 100 percent digital, which means conversations are less vulnerable to eavesdropping and it's harder for thieves to clone phone numbers. Most cellular service is still analog-based. Analog service is less secure and more prone to static or other interference than digital service.
PCS phones also come with built-in features such as paging, Caller ID and voicemail, which lets many mobile workers stop carrying pagers. They usually have much longer battery life than cell phones, so they can be used more.
Cellular has its own advantages. Barreto says he hears fewer complaints from cellular customers about dropped calls and constant busy signals than from PCS customers. And digital cellular phones offer many of the same features as PCS phones, including enhanced
security.
Finally, cellular phones are usually given away or sold at heavy discounts, which can make buying them less costly than PCS service. And cellular phones are interchangeable between services, meaning a consumer who tires of AT&T Wireless can switch to BellSouth and vice
versa. But PCS phones contain proprietary chips that render them usable on only one network. So a PCS customer not only pays more for the phone but can't switch service, without buying a new one.
Deals may get better
For customers who don't buy this holiday season, there's good news. Prices should keep falling, services should keep improving and the deals won't stop in 1998.
As rates fall, the Boston research firm Yankee Group believes that half of the national population could own a wireless phone by 2005, up from about 20 percent this year. In South Florida, the penetration rate is expected to climb much higher, truly making wireless talk a way of life.
For years, notes Luis M. Cruz, marketing director for PrimeCo in South Florida, cellular telephone service has been sold as a utilitarian device for business people or a safety enhancer. An ad might depict a woman standing next to a broken-down car on the highway.
''You instructed people to keep the phone in the glove box,'' Cruz says. ''We're telling people that they can use the phone.''
Already, several national surveys show that users of lower-priced PCS phones spend triple the time on their phones than cellular customers.
''Nobody is questioning the utility of wireless,'' Cruz says. ''We don't do commercials with people using the phone in an airport anymore. We don't have to.'' |
