A New Spectrum : Sprint Unit Offers a Digital Wireless Telephone Device
With a phone call from Vice President Al Gore to the mayor of Baltimore, an affiliate of long-distance giant Sprint Corp. on Wednesday introduced an all-digital wireless communications technology that promises to reduce mobile phone prices and eventually change the way many Americans communicate.
American Personal Communications of Washington said its new service, dubbed “Sprint Spectrum,” would offer up to 5 million residents of the Washington-Baltimore area the ability to make and receive voice calls, paging messages and voice mail on a single device. It’s the first of the new generation of personal communication services, which APC and a number of other carriers won the right to offer via a recent series of multibillion-dollar auctions of radio spectrum.
In addition to making phone calls, the APC device--a portable phone handset about the size and weight of a deck of cards--will also be able to retrieve and store various kinds of information such as stock quotes, traffic reports and sports scores. The handsets will cost between $99 and $199 each.
“We are extremely proud to be the standard-bearer for a marvelous new service,” said Wayne N. Schelle, who founded APC six years ago after a stint in the cellular industry. “Customers will receive far more value in their PCS service than with any existing system.”
Gore said he had good voice quality during his call to Baltimore Mayor Kurt Schmoke over APC’s system, which got a two-year head start on other PCS providers from a federal decision to grant the company a preference for pioneering the technology.
Still, although priced between $15 and $150 a month (10% to 40% cheaper than existing cellular phones, officials said), personal communication services such as APC’s face an uphill battle for market share.
Cellular providers are beginning to offer comparable technology. And APC’s customers initially will be able to place and receive calls only in a 2,100-square-mile area around Baltimore and Washington. Unlike cellular customers, they will not be able to make calls outside of their service area.
For the longer term, APC--which has already spent more than $100 million to build its system and an equal amount to acquire its PCS licenses--will have to spend millions more expanding its system to a total of 3,000 square miles by early next year while fending off half a dozen competing PCS technologies. For instance, long-distance giant AT&T; Corp. has chosen a PCS transmission standard that is incompatible with APC’s.
APC and its competitors plan to move quickly into additional markets, blanketing virtually the entire country in two to three years. Pacific Bell Mobile Services, a subsidiary of Pacific Telesis, intends to offer PCS services in Southern California next year.
“We think PCS is going to have a very difficult challenge ahead,” said Jane Zweig, a vice president at the suburban Washington wireless consulting firm Herschel Shosteck Associates. “The cost of building out those networks is enormous.”
As for the promise of PCS technology bringing consumers closer to the day when they will rely on a single handset for all their communications, Zweig said: “I think there is a large proportion of people who really do want to keep their professional and business lives separate” and are not interested in always being in touch.
But in Washington, with its sensitivity to secreting information from the opposition camp, PCS may have special appeal.
Its digital technology means that voices are transmitted over the airwaves in a stream of numerical characters that can be scrambled or encrypted to thwart easy eavesdropping. By contrast, cellular phones can be readily tapped, and are vulnerable to thieves who use scanner-like devices to appropriate cellular transmission codes from the airwaves.
A lot is riding on the acceptance of PCS. In the past 1 1/2 years, dozens of communications companies, including AT&T; and Pacific Telesis, have pledged to pay $8 billion in auctions held by the federal government to allocate licenses for PCS service.
Companies have bet such high sums in part because the Personal Communications Industry Assn. has predicted that PCS will attract 15 million subscribers and generate $8.5 billion in revenue by 2000. That contrasts with about 28 million current cellular phone subscribers who generated $16 billion in revenue for the year ended June, 1995.
In addition to its 49% stake in APC, Sprint, the nation’s third-largest long-distance carrier, hopes to become a nationwide provider of PCS services along with its partners, cable giants Tele-Communications Inc., Comcast Corp. and Cox Cable Communications Inc. The quartet is paying the government $2.2 billion for 30 PCS licenses it won earlier this year.
