The following is 11/12/96 Reuters article:
INTERVIEW - PrimeCo sees fight with Sprint
Reuters Story - November 12, 1996 18:49
FINANCIAL TEL ENT US ELC RET CORA FON ATI T BEL NYN USW V%REUTER P%RTR
By Nick Louth
NEW YORK, Nov 12 (Reuter) - PrimeCo, the mobile telephone
venture owned by AirTouch Communications Inc and three
regional Bells, expects a tougher fight with Sprint Corp in the
wireless market than with AT&T Corp .
PrimeCo on Tuesday launched Personal Communications
Services (PCS) in 16 cities, offering tiny phones with more
features, longer battery life and clearer sound than cellular.
"With AT&T we believe we have a clearly discernible quality
advantage, with Sprint..we felt it was important to be to
market first," chief executive Ben Scott told Reuters.
PrimeCo and Sprint both use the same technology, called
code division multiple access (CDMA), so it would be much
harder to claim a quality advantage, Scott said.
"They (Sprint) have a good brand for long distance, it
remains to be seen whether we can have a better brand for
wireless services," Scott said.
AT&T, Sprint and Primeco -- owned by Bell Atlantic Corp, NYNEX Corp, US West Inc as well as AirTouch -- are the only three firms which spent enough on Federal PCS licenses in 1995 to build national networks.
While every PCS operator starting up will make easy comparisons with analog cellular, the real fights will begin in a year or two when there are two or three PCS operators and two digital cellular operators in every market, analysts said.
The better the brand, the less any competitor will have to
resort to cutting prices, according to business models. Winning
the marketing war will be at least as important as the
technical wizardry that allows the phones to work.
By mid 1997, Scott expects PrimeCo will be spending about
as much on advertising as AT&T Corp does. ATT doesnt
break out its ad spending, but is thought by analysts to spend
at least $100 million a year.
"As an alliance our spending will be very competitive with
those levels (of AT&T)," he said.
PrimeCo has already spent $1 billion building its PCS
network, on top of $1.1 billion for licenses. When the network
is complete the total bill may reach $3.6 billion.
Nevertheless, Scott said PrimeCo is on target to reach a
breakeven on earnings before interest, taxes, depreciation and
amortization in 1999.
AT&T Corp in October launched Digital PCS, which does
not use PCS license frequencies but a digital version of
cellular services. However it does offer features similar to
PCS, including call waiting, voicemail and long battery life.
AT&T will start offerings its real PCS service next year.
Arcane arguments continue to rage in the industry about
which of the myriad technical standards is best, but all agree
that PCS in all its forms is far better than analog cellular,
which is what the vast majority of U.S. users still have.
American Personal Communications, an affiliate of Sprint,
was the first to offer PCS in the country, starting last
November with a service in Washington and Baltimore.
However this service uses time division multiple access
(TDMA), a technology which is currently incompatible with the
CDMA network Sprint plans to build elsewhere across the country
with its cable TV partners.
-- New York Newsroom 212 859 1610 |
