tele.com article. Too Much of a Good Thing for Wireless?
Growth in subscribers stretches network
capabilities
By Meg McGinity. Meg McGinity is senior
editor/wireless for tele.com. She can be reached at
mmcginit@cmp.com
Wireless business is good. But is it too good? Maybe--at least
for the time being. It's certainly worth posing the question to
AT&T Wireless Services Inc. (Kirkland, Wash.). The carrier's
popular Digital OneRate, which gives subscribers 600 minutes
of local and long-distance service for $90 a month, has lured
more than one million subscribers to its service since debuting
last year. From AT&T's standpoint, that's good business.
Yet some analysts and customers may not be so sure. They
admit the strategy has resulted in a subscriber boon for
AT&T. But many have publicly complained that the tempting
offer--and others like it in the wireless market--have
overextended these networks, resulting in some spotty
wireless service, especially in the overcrowded New York
City market. That isn't necessarily good business, they say.
The wireless service issue was brought to center stage recently
when AT&T Wireless experienced a 22-hour service outage
in upper Manhattan that carried through almost all of Mother's
Day. AT&T was quick to point out that the outage was not
related to capacity. Rather, it stemmed from a combination of
hardware and software problems that are still being
investigated, according to Ericsson Inc. (Research Triangle
Park, N.C.), the carrier's equipment provider.
Others say that regardless of the reason, the outage
underscores concerns that many wireless networks, including
that of AT&T Wireless, are being oversold. "Their network is
becoming quickly oversubscribed," says Bob Egan, senior
analyst at Gartner Group Inc. (Stamford, Conn.). "People are
getting concerned about the fast busy signals and dropped
calls."
Customers get a fast busy if the network itself is not
provisioned, meaning a call has made a radio frequency (RF)
connection but can't connect to a landline. Cells that receive
the incoming calls can also be congested, resulting in dropped
or lost calls, says Paul Sergeant, senior manager product
marketing in the code-division multiple access (CDMA)
business group at Nortel Networks Corp.
It's little wonder that networks are becoming saturated at their
busiest points, typically metropolitan areas such as New York
and Boston. Subscribers and usage are soaring. The Cellular
Telecommunications Industry Association (CTIA,
Washington, D.C.) reports almost 70 million wireless
subscribers in the United States alone by the end of last year,
up from 45 million in 1996. Couple that with a 65 percent
jump in the average minutes of usage last year, to 160, and
that's a recipe for an overburdened network, warns Jane
Zweig, executive vice president at Herschel Shosteck
Associates Ltd. (Wheaton, Md.).
The surge presents carriers with a simple dilemma: When does
too much of a good thing become a bad thing? "This [rising
subscribers] is a nice problem to have, as long as you don't
lose a ton of traffic," says Andrew Cole, principal wireless
analyst at Renaissance Worldwide Inc. (Lincoln, Mass.).
Carriers are aware of the danger. AT&T spokesman Ken
Woo says his company has doubled its capital budget to $2
billion this year in order to fix any capacity problems, but that
the solution doesn't rest entirely with AT&T. Equipment
shortages in the New York market have hindered AT&T's
ability to ease congestion problems, Woo says.
"We are making significant progress meeting capacity
challenges," says Rod Miller, global accounts vice president of
business operations at Ericsson. AT&T and Ericsson are
working together to increase switching capacity and the
number of radios in the network, which should help relieve any
capacity problems by the end of the month.
Of course, AT&T isn't the only wireless carrier having growing
pains. Bell Atlantic Mobile (BAM, Bedminster, N.J.)
reportedly has had its share of growth-related problems in
Boston. "A capacity demand has been placed on us," says
Dick Lynch, chief technical officer at BAM. "Our Boston
market remains our biggest challenge, but it is not a crisis. It's
a day-to-day challenge to stay incrementally ahead."
The company is trying to do just that by spending $700 million
this year alone on the network. It has already used up the
capacity on its first CDMA carrier in Boston and is now on its
second. Lynch says BAM has seen total usage increase on the
national network by double-digit percentages in a month's
time.
Providers are well aware that wireless technology can ease the
strain. Digital, for example, is a more efficient use of spectrum,
says Tom Sawanobori, director of integrated network planning
at AirTouch Communications Inc. (San Francisco). This is
why operators are pushing customers over from analog.
More important may be constant upgrades. At least that's the
position at Sprint PCS (Kansas City, Mo.). "We are adding
carriers and cell splits on a daily basis. There is not a capacity
crunch today that is significant, but there is significant work
going on to stay ahead of customer requirements," says Keith
Paglusch, senior vice president of operations. That's good
business.
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