If you want to see competition at work, look at the next-generation cellular telephone. New technology and companies are shaking up the traditional market and lowering prices. AT&T has just shocked the industry by announcing it will make a wireless telephone that's almost as cheap and just as clear as the traditional wired telephone in your house today.
AT&T's new phone isn't out yet. But its service - called personal communications service or PCS - already is. For the past month, I've been testing it. The results are impressive.
Even if the long-distance giant doesn't use PCS to replace the phones in America's homes, the technology is certainly going to make its way into America's cars and purses. PCS phones are clearer, cheaper, and offer far more features than traditional cellular telephones. Once you've tried one, you'll never want to go back.
The biggest advantage of PCS phones is their digital nature. Instead of sending and receiving wavelike analog signals as traditional cellular phones do, PCS handsets use the ones-and-zeroes language that computers understand. This allows them to use the airwaves much more efficiently. It also means far more features.
For example, when going into an important meeting, you can turn off the phone completely and have the PCS system take any messages. When you switch the phone back on, it alerts you to how many messages are waiting, just like an answering machine. By calling a number, the user can retrieve those messages.
The phone also works like a pager. You can set it to vibrate instead of ring. And callers can punch in a number rather than leave a voice message. Another big plus with most systems: caller ID as a standard feature. This turns out to be immensely useful.
PCS users, like traditional cellular users, have to pay for calls they receive as well as those they make. That's fine if the call is from your boss or your child. But if it's a pesky telemarketer, having to pay makes it all the more annoying. With caller ID, PCS users can choose not to answer numbers they don't recognize.
Some services, such as Sprint's new PCS, go a step further. They don't charge for the first minute of an incoming call. So even if its a telemarketer on the other end, you don't pay anything as long as you get rid of him in 60 seconds.
The cost of PCS service is very competitive. With a monthly volume discount plan, my 317 minutes of local calls would have cost just over $90. But AT&T is running special promotions, which include 30 free minutes of AT&T long-distance service at home. AT&T charges an extra 60 cents a minute when users are roaming outside their home territory. Some companies have eliminated roaming charges; Sprint charges a flat 50 cents a minute for all roaming calls (which includes the long-distance rate). The batteries for PCS phones also last longer - up to two to three times in standby mode, AT&T claims - than those in traditional cellular telephones.
The biggest problem with PCS right now is its lack of reach. AT&T has the most widespread network with service in more than 60 markets. Its phones also operate over analog cellular frequencies, so the phone will work even where digital service isn't available yet.
So if you travel widely and want PCS service immediately, AT&T is the logical choice. But keep an eye on the offerings from Sprint, MCI, regional Bell, and other competitors. Sprint, for example, is building an all-digital PCS service slated to reach 65 US markets by the end of June. In 1998, MCI will begin offering all-digital PCS service from a wholesaler called NextWave.
PCS is new enough that cellular phone users don't have to throw away their phones just yet. But someday in the not too distant future, they'll want to go digital.
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