nomdenet@venera.isi.edu (12/02/89)
In the Thursday, November-16th, Wall Street Journal was an article
on the possible appearance in the U.S. of the Personal Cellular
Network now seeing some use in Great Britain, and discussed here in
Telecom.
Millicom, a communication company that is among the
cellular-telephony pioneers, and which has a stake in cellular
telephony in Great Britain, in early November asked the FCC to set
aside frequencies for PCN service. Wednesday, November 15th, the FCC
invited public comment -- in effect deeming the petition worthy of
further study. One FCC staff engineer is quoted as saying "We think
there may be some merit to it." The political fighting could be long
and intense, but "a lot of people" at the FCC think the Millicom
proposal "is the reasonable thing to do."
Millicom's chairman, J. Shelby Bryan, says PCN can reduce prices
and improve cellular service, especially in crowded, urban markets
where service and reception often are poor. He also says that PCN
frequencies are higher and so can accommodate more customers, that PCN
phones would be smaller ("belt-buckle size"), or would have
longer-lasting batteries, and would also offer many new services.
Skeptics say there are many problems: Even if PCN were allowed,
existing cellular-phone companies would be entrenched by then. These
companies won't be standing still, either; they could upgrade existing
services or apply for PCN licenses themselves. There also isn't much
spectrum available, though the FCC seems to lean toward sharing or
releasing government-reserved ("warehoused") regions; in an apparently
unrelated move, Congressman John Dingell has introduced a bill
mandating this.
Much of the WSJ article discussed the effect of possible
competition from PCN on cellular-telephone companies' stocks --
potentially very bad. Investors quake at the thought of going from
the present "blessed duopolies" to a market shared by 3-5 providers,
even though such increased competition may be years off. Almost no
cellular companies are profitable yet; their stocks are valued on the
basis of what they might earn in the future. In June of this year
Britain's government announced plans to license two or three PCN
operators to compete with existing cellular firms, and the value of
one provider's shares fell 32%.
"The current wisdom on Wall Street" is that cellular users will
rise to 5% (from 1.25% now) of the population in five years, and that
prices won't fall too far if duopolies continue; now, the average
subscriber pays $110 per month.
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[Moderator's Note: The above is one of the items which was submitted
earlier this week intact from the WSJ, and I extend my thanks to our
reader for taking the time to summarize the article and send it back
in to the Digest summarized. PT]