Calling Up New Telecommunications Services : Different Tab for Wireless Phone Users

Hoping to expand the use of cellular phones among everyday consumers, McCaw Cellular is experimenting with a new way for subscribers to have someone else pick up the tab for the calls.

Dubbed “calling party pays,” the feature allows cellular subscribers--who pay up to 45 cents per minute for incoming calls--to require that their callers be billed instead. Outgoing calls would still be billed to the subscriber.

The new system, patterned after cellular billing systems in Europe and Asia, is being tested in southwestern Idaho but could be expanded if well received.

Analysts said the new billing system would be especially attractive to existing or potential cellular subscribers who don’t use their phones for business or who can’t write off the costs of incoming calls as a business expense.

It also could be attractive to an increasing number of new cellular subscribers, particularly in crime-plagued urban areas, who are purchasing wireless phones strictly as emergency communication devices and do not give out the numbers for fear of having to pay for the calls.

“This type of billing is in the interest of the cellular companies because it will increase use of the phones,” said Herschel Shosteck, a Bethesda, Md., cellular market analyst.

Executives at Kirkland, Wash.-based McCaw, the nation’s largest cellular company, acknowledged that the new billing program offers them a chance to expand their market among consumers who believe that a wireless phone is still an expensive luxury. Although prices of cellular phone equipment have fallen as much as 90% since the service was initiated a decade ago, usage fees remain at nearly their introductory levels.

“One of the barriers to our growth has been the affordability of the service,” said Duane Wollmuth, manager of McCaw’s operations in Boise. He said cellular operators have been reluctant to lower air time prices because of the high cost of building its networks.

The new feature requires subscribers to choose whether they will pay for all their incoming calls or whether they will require the callers to pay. In the Idaho test, subscribers will be assigned phone number prefixes based on that choice. Callers to subscribers charging back the fees will receive a prerecorded message notifying them of the future billing.

Ultimately, McCaw executives said, cellular subscribers will be able to pre-program the numbers of incoming calls for which they are willing to pay; all others will be the responsibility of the callers. McCaw executives said “calling party pays” has been tried before in the United States but has proven difficult to administer by the local phone company whose billing cooperation is required.

For example, if an incoming “calling party pays” call is made from a location served by a single switchboard, such as an office, dormitory or prison, the local phone company cannot accurately assign billing responsibility for the call and cannot collect the money. As a result, the cellular operator loses the revenue.

McCaw executives said they are experimenting with the service now in Idaho because they feel secure that the billing plan developed with US West, the phone company serving the state, can overcome the earlier problems.