PCS Needs Pre-Auction Scrutiny
Cellular telecom companies may be about to bid on something they won't be able to use
PCS, the hottest buzzword cruising the infobahn, may be in need of a little redefinition. Instead of "Personal Communications Services," a more appropriate definition, at least for the foreseeable future, may in fact be "Plain Cellular Services."
In a few weeks, the FCC will auction off radio frequencies for PCS. According to conventional wisdom, by the gavel's final slap, the government will be $10 billion dollars richer, and the winners will be poised to offer consumers cutting-edge, mobile communication services cheaper and more reliable than today's notoriously erratic cellular service.
But the question is, will the PCS auctions pave the way for a quantum leap in wireless services, or are they actually an opportunity for carriers to expand their existing cellular service to new markets?
According to one telecom analyst, the answer may be the latter. The reason: the technology for combining cellular and PCS technology does not yet exist.
Both PCS and cellular technology work over radio frequencies. Cellular operates in the 800 MHz frequency, while PCS is designed to operate in the broader 2 GHz range. Cellular calls are passed from one "cell site" to another often kilometers apart, which is why conversation often fades in and out, depending on one's proximity to a cell tower. PCS is premised on dense clusters of smaller, cheaper cells to enhance the quality, reliability and capacity of voice and data traffic.
All of the carriers allied to bid on PCS licenses are not about to eat the millions of dollars they've invested in their collective cellular infrastructure, and will bid on PCS licenses only in those markets where they have no cellular presence. But if they use PCS technology to fill in the gaps, don't expect seamless, national, anytime, anywhere PCS anytime soon.
"The risk for many of these companies is how difficult it will be to integrate PCS with existing cellular," said David Goodtree, senior analyst with Forrester Research. "No one knows how to do that."
Steve Fleischer, general manager for Bell Atlantic Mobile Systems corporate communications, said Goodtree raises a valid question. "He's absolutely right -- the challenge will be to make the systems work together and we have been doing testing for quite some time to make sure that happens," said Fleischer.
But in the meantime, he said, Bell Atlantic continues to upgrade its cellular network service with digital technology, micro cells and lighter phones. Indeed, he said, there is nothing promised by PCS that isn't already possible over cellular. "With the systems we are developing, we believe there is no real technological difference between PCS and cellular," he said.
But Bell Atlantic clearly believes there is a marketing difference between the two. In select areas, it is already offering a service known as "PCS Now."
Fleischer said the service is a reduced pricing plan designed to make consumers aware that PCS is happening by bringing wireless service to the masses. The plan entails a single-number, cellular phone with discounted rates for calls within a given community.
"Bell Atlantic is abusing the name PCS -- they've taken their existing capability and labeled it PCS because it's the new infohypeway word," said Goodtree. "It's not PCS and has nothing to do with PCS -- all it is call-forwarding."
But what will the national network Bell Atlantic and three of its siblings are proposing look like? If PCS will be used to plug the gaps in cellular coverage, will true PCS be available only in those areas, or throughout the network? And when will any of this start to happen?
"I can't tell you how exactly the system will develop, many, many ways have been developed in theory how to deploy it," Fleischer said, adding that PCS networks should begin to appear by 1996. "All I do know is that whatever we deploy will make the most sense for the customers."
Goodtree said this lack of focus was inevitable because cellular carriers jumped on the PCS bandwagon with little thought for how they would actually make PCS possible. The formation and collapse and reformation of alliances on an almost daily basis prior to the Oct. 28 filing deadline only underscores their haphazard nature, he said.
"These are fast and dirty deals with big round numbers and no technological game plan to implement them," said Goodtree. "They were born of a deadline and not of good business, financial or technological strategy."
As a result, he said, there will be PCS networks, but no national ones, and the carriers have admitted as much. However, he added, consumers will benefit economically, if not technologically.
"There will be more competition and players doing some national services," he said. "But it won't be the promised revolution in services."