Mobile phone service could be a gold mine for firms
There's a veritable Phone Rush going on here - for a nearly $2 billion-a-year cache of gold. That's what a new type of mobile phone service is expected to eventually be worth to companies that win the right to offer it.
While the Gold Rush of '49 was a pioneer struggle across the Great Plains, this rush required only a struggle up six flights of stairs earlier this month. That was the route that enterpreneurs took in a federal office building here to stake their claim in a promising new venture: ''cellular'' mobile telephones.
Cellular telephones will likely revolutionize the mobile communications business - and permits from the Federal Communication Commission (FCC) to establish these systems are being sought as if they were fist-sized gold nuggets.
''One company's already dropped off its applications - 14 boxes full of paper ,'' sighs an FCC employee.
Currently, mobile telephone service is provided by one transmitter in each major US urban area. Few channels are available - for the most part limiting portable phones to the limousine-and-Mercedes-convertible crowd.
In cellular systems, cities will be divided into many small ''cells'' or districts, each with its own low-powered transmitter. The cells will be linked together by computerized, electronic ''operators,'' which automatically pick up callers as they move from one cell to the next. This system will make more channels available, and many more people will be able to use the service.
Analysts say the demand for mobile phone service may be terrific. A Bell System official estimates there are 4,000 people on the waiting list for mobile phones in Chicago alone. Lawyers, consultants, developers, and others who spend hours of their workday out of the office may find reliable, relatively inexpensive cellular service attractive. One industry observer estimates the eventual market for cellular phone service will be at least $2 billion a year.
''There are a lot of people out there with a lot of money who are interested, '' says Lou Gionfriddo, marketing manager for Metropolitan Radio Telephone Service, a Washington, D.C., firm that has applied for several cellular construction permits.
Where people are mining for gold, someone is sure to come along and sell them shovels. An industry observer estimates that there are now 24 consulting firms that will help small companies write applications for cellular permits, and twice that many law firms eager to handle the fine print. The industry already has its own publication - Cellular Radio News.
''This is not a get-rich-quick (industry),'' says Stuart Crump, Cellular Radio News editor. ''It will require hard work, long hours, and a large investment. However, those who succeed will be assured of a good solid payoff.''
Cellular technology has been polished and ready to go for a decade. But after years of regulatory wrangling, the FCC last December finally settled on a procedure for issuing precious construction permits for the systems.
Two permits will be issued for each major metropolitan area - one to a telephone company that serves the city, and one to a nonphone firm. Applications for the 30 largest US cities were accepted last June, and a wild scene it was: lawyers, consultants, and company presidents piled up outside an FCC office, some finishing their writing there in the hall. One hundred and ninety-four requests were filed. The most popular city was Tampa: 12 firms applied for the nonphone spot.
Applications for cities 30 through 60 were submitted the week of Nov. 8. Analysts estimate twice as many people will be apply for these less extensive projects.
So far, only one construction permit has actually been issued. On Oct. 21, the FCC gave the American Telephone & Telegraph Company the go-ahead to set up a cellular system in Chicago. The FCC said at least one license in each of the top 30 markets should be granted by the year's end.
The Justice Department and many small cellular companies object to the FCC's procedures. They say telephone companies will get a head start in each market, while the nonphone firms fight among themselves for the remaining license.
A suit against the FCC, brought by the Justice Department and several cellular firms, is now pending in the District of Columbia Court of Appeals. If the suit is upheld, the phone companies could conceivably lose their privileged status and be thrown into competition with everyone else.