Digital Stirs Into the Cellular Stew : Technology: New mobile systems will handle more calls and claim to have better sound. But phones are incompatible.
Choosing a cellular phone, never an easy task, is becoming more complicated as phone companies roll out an advanced technology said to provide clearer sound.
But doubts as to whether the sound is really much better--and incompatible phones that could chain consumers to the company they choose--are two new pitfalls facing mobile-calling customers, who already must wrestle with confusing advertising and bewildering price structures.
The newest wrinkle in portable phones is “digital,” which means sound is converted into electronic bits, the language of computers. Theoretically, digital is better than traditional analog service, which converts sound into waves, because it is more precise.
First in Los Angeles to offer the new digital calling service is L.A. Cellular, the market leader. Starting out small, it introduced digital calling this month in a star-studded slice of Los Angeles County: Beverly Hills, Century City, West Hollywood and part of West Los Angeles.
Hoping to persuade people to ditch their analog phones and buy ones designed for digital calls, L.A. Cellular is dangling a package of rebates and discounts for digital customers. Not to be outdone, rival cellular companies have announced plans to offer their own digital phone service soon.
Cellular phone companies are strongly motivated to adopt the new technology: A digital network can handle up to 10 times the calls of a traditional cellular network, expanding the number of potential customers. The companies plan to convert their networks to digital, but the process is expected to stretch into the next decade, so traditional cellular technology will be around for some time.
Cellular companies boast that digital calling offers static-free sound and greater privacy. Digital calls go through easily because the new networks are uncongested, and neighbors with baby monitors won’t be able to eavesdrop.
Digital phones are not immune to interference, though. And experts say digital phones don’t reproduce voices as well as analog phones do.
When it comes to traditional cellular, the real advantage is price: Analog phones cost half as much as digital phones. But analog has its failings. An antiquated system can’t keep up with the heavy volume of calls in places such as West Los Angeles. At times, calls don’t go through.
Participants in field tests give digital slightly higher marks. L.A. Cellular asked participants in a recent trial to rate the services on a scale from 1 to 10. They gave analog an 8 and digital a 9.
In cities where digital cellular is up and running, the vote appears even closer. Herschel Shostek, a cellular analyst in Silver Spring, Md., collected these comments in a recent survey of digital cellular dealers in Chicago: “sound tinny and hollow,” “digital is great,” “sound quality awful.”
The mixed reviews suggest that digital cellular has some bugs to work out, he said.
For Los Angeles consumers, the choice isn’t simply between old and new. L.A. Cellular and its two rivals--Pactel Cellular and newcomer Nextel--are developing incompatible digital networks. L.A. Cellular and Nextel are using the same kind of digital technology--known as time division multiple access, or TDMA--but transmit over different radio frequencies. Pactel is using different digital technology, known as code division multiple access, or CDMA. Phones purchased for use on one digital network won’t work on competing networks--although a caller on one network can reach someone on another.
People who buy digital phones may thus find themselves tethered to one cellular company; the cost of a digital phone--$500 or more--is a strong incentive against switching. One escape hatch for consumers unhappy with digital cellular: Digital phones for use on the L.A. Cellular and Pactel networks are “dual mode,” which means they can also function on either of the traditional analog networks.
Nextel’s cellular service is aimed at the 50% of cellular users whose calls are mostly work-related. The upstart company is patching together a cellular network by acquiring radio frequencies assigned to dispatch services and taxi companies. In January, Nextel will begin marketing to Los Angeles businesses an elaborate bundle: digital cellular calling, wireless electronic mail, two-way paging.
Pactel’s digital network won’t come on line until January, 1995.
L.A. Cellular plans to expand its digital network, but it hasn’t announced a timetable. This means that digital cellular service is available in an area smaller than 60 square miles, bordered by La Brea Avenue on the east, Interstate 405 on the west, Mulholland Drive on the north and Interstate 10 on the south--a fraction of the 24,000 square miles the company claims as its service area. Outside the digital zone, the “dual mode” digital phones switch over to analog.
How digital cellular will affect phone rates is hard to predict. L.A. Cellular President Michael Heil predicts that over time rates will fall, but there is little evidence of that so far.
Basic rates for traditional cellular haven’t budged since 1984 from the standard $45 a month and 45 cents a minute for outgoing calls. Under regulatory pressure to lower rates this spring, L.A. Cellular and Pactel Cellular offered discount calling plans for those who take the service for a year or longer. Almost half of Southern California cellular customers are on discount plans.
Critics, including Nextel, have complained that the calling plans are actually ploys to lock in customers before competing digital services come on line. People who discontinue service on either L.A. Cellular or Pactel before the year is up forfeit their discounts and pay penalties of up to $150.
The California Public Utilities Commission is looking into the allegations.
L.A. Cellular’s current digital rates are the same as its analog rates. Rather than entice new customers with low rates, L.A. Cellular is offering monthly rebates that effectively defray the cost of a new phone. Similar pricing strategies have been used in other markets, including Chicago.
Michael Shames, executive director of the San Diego-based Utility Consumers Action Network, worries that incompatible digital networks will stifle rate competition. He said digital customers aren’t likely to buy new phones simply to switch cellular carriers. Cellular firms have little incentive to lower rates for these consumers, he said.
It’s unlikely that traditional analog rates will fall as digital grows; L.A. Cellular’s Heil predicts that more than half its network will be digital in five years. Lower analog rates would attract new customers to the older technology, the opposite of what cellular companies want.
