Cellular Phones No Longer Only for the Fast Lane
The garage at Cellular Communication Corp.’s tiny Irvine office backs up to the noisy, traffic-choked San Diego Freeway. But Michael Nasco, founder and president of the cellular telephone company, doesn’t mind. What others might consider noise, Nasco considers the perfect “background environment” for testing his latest cellular product: an emergency roadside call box.
If the call box blocks out the traffic noise, and not the caller’s voice, Nasco figures that his device will pass at least one critical test of its potential effectiveness on America’s roadsides. Such fine-tuning is important because the competition for space on the country’s freeways and parkways promises to be fierce as the cellular industry begins its push for new group of customers and uses.
Two years after the first cellular service was introduced as an automobile-mounted device for busy executives, freeway-bound salesmen and affluent gadget lovers, the cellular telephone is gradually finding a life beyond the fast lane.
Within the last few months, a handful of manufacturers and retailers have introduced products, such as the freeway call box and the portable pay phone, to exploit cellular technology’s principal strength--wireless voice and data communication.
Although pursuit of these “second generation” applications is just starting, industry analysts and insiders alike are already excited about the potential.
“Ultimately, there’s no limit on where cellular telephones might go or who might use them,” said Bradford Peery, a telecommunications analyst with Hicks Peery Inc., a San Francisco-area investment firm. The new applications for cellular phones may give an important boost to an industry whose growth has fallen below expectations and whose profitability has proven elusive.
Unlike traditional telephone service which uses wires that must either be buried or strung between poles, cellular service is actually a sophisticated refinement of the old “wireless” radio technology.
Cellular service is carried by antennas and transmission stations that beam messages over radio frequencies to receptors in each telephone. If a community has cellular service--as most of the big cities in America do--a cellular user should be able to gain access to it whether traveling in a car or picnicking at the beach.
And it is just this flexibility that is inspiring the new wave of applications.
Last month, National Pay Telephone Corp. in Los Angeles, a manufacturer of credit card telephones, introduced its first group of portable cellular credit card phones at Chicago’s McCormick Place, in the world’s largest convention center.
Over the next several months, the company expects to place similar banks of phones in Chicago area buses and limousines and at several Los Angeles area locations. Potential locations for the phones include airports, bus stations, convention centers and sports arenas, said company President Ross Scheer.
“Anywhere a large number of people congregate, you need telephones,” Scheer said. “The beauty of cellular is that, when the people move away, the phones can go, too.”
Earlier this month, Tandy Corp., the nation’s largest retailer of consumer electronics through its Radio Shack stores, introduced a hand-held portable cellular telephone that analysts say is the first one appealing to the non-business customer. Unlike previous portable models, the 11-pound Radio Shack phone does not come packaged in a bulky, heavy briefcase but rather resembles a medium-size transistor radio. The Radio Shack model is selling for just $1,199, among the lowest on the market.
Robert Miller, vice president-merchandising at Tandy, said that, although the product is aimed at the average consumer, he expects it to appeal to the cellular industry’s mainstay customer, the business person.
Lower Maintenance Costs
“It’s great for real estate agents who are showing homes without telephone service or for contractors out in the field,” Miller said. “And it’s ideal for the doctor, who can use it in his car and then take it with him in his golf cart.”
The cellular emergency call box for freeways and remote park sites has attracted considerable attention from government agencies and cellular device makers. The New York City Police Department is scheduled to award a $700,000 contract within the next month to replace 200 expressway call boxes with their cellular counterparts, the first major project of its kind in the nation. Maintenance costs for the cellular units are expected to be substantially lower than those for the existing call boxes, which are about 40 years old.
Similar projects are expected to begin in California next year, in large part because of a state law that takes effect Jan. 1. The law allows counties to receive $1 for each car registered within their boundaries and to use the funds to install roadside emergency call boxes that would automatically dial 911 or another public service number when activated.
The law has excited cellular phone manufacturers who claim that their wireless products are ideally suited for areas that are not currently wired for telephone service, such as the freeways in Orange and Ventura counties.
“Why spend the time digging up all that dirt to lay telephone lines when you can plop a cellular phone down?” asked Ronald Bishop, Cellular Communication’s director of engineering.
Herb Thordarson, a communications engineer for Ventura County, said that county is currently evaluating a single cellular emergency phone on the Canejo Grade and expects to start installing the first of 360 roadside call boxes in 1986.
Fierce Competition
In Orange County, considered “ideal” for cellular service by Stan Oftelie, executive director of the county’s transportation commission, a decision on the call boxes isn’t expected until mid-1986.
The competition for the roadside contracts, said Cellular Communication’s Nasco, is expected to be fierce in large part because the new business promises to spark some additional profit potential in the earnings-starved cellular industry.
As an auto-bound device, cellular telephones have attracted about 250,000 subscribers nationwide who spend about $350 million annually for their mobile telephone service. Although the number of subscribers is expected to reach at least 1.5 million by 1990--with service revenues increasing proportionately--even that substantial growth rate is still far below the initial and overly optimistic projections of 5 million users by the end of the decade.
And, with the exception of the Los Angeles region whose 40,000 cellular users make it the nation’s largest system, profits in the industry have largely proved elusive.
However, Telocator, a cellular and communications industry trade association, believes that companies providing cellular service, such as the PacTel Mobile Access unit of Pacific Telesis, will be the prime beneficiaries rather than manufacturers of cellular phones. New trends actually may not lead to the sale of very many additional units, Telocator argues, but should increase the number of calls made on cellular phones.
Nevertheless, the participants are hopeful. “There’s money to be made,” said Scheer of National Pay Telephone.
