The catalyst is the cellular digital phone called PCS (personalcommunications system). Unlike analog cellular systems, PCS uses a digital signal that can transmit e-mail, short messages and caller ID, while offering greater protection from eavesdroppers and cloners. Introduced in Florida in late 1996, it was available in most of the state's major markets by June 1997.
Analysts predict that by the end of 1998 there will be as many as six wireless competitors in most Florida markets, one for each frequency on the wireless spectrum. Contenders are likely to include two cellular providers, such as giants AT&T Wireless, Cellular One or BellSouth Mobility, and up to four PCS competitors, such as Sprint PCS, Omnipoint, PrimeCo, Powertelor Nextel, a digital telephone and paging service whose phones also function as two-way radios. "The presence of the PCSs has placed great pressure on even the stodgiest providers and presented great competition," enthuses Enrique lopez, president of AKlGroup, an information technology consulting firm based in Coral Gables. "It is transforming the industry."
The result is lower prices and a better array of customer options. According to the Cellular Telecommunications Industry Association, a Washington, D.C.-based trade group, cellular phone prices - which had remained at about 60 cents a minute for the past 10 years - dropped by an average of 25% in markets with PCS competition. Prices will continue to decline for the next five years until they are ultimately competitive with long-distance rates at about 20 cents a minute, predicts Tom Ross, a telecommunications consultant with the Strategis Group in Washington, D.C. Florida's strong economy and its growth will continue to make it one of the highest-penetrated states in the nation for wireless service, with Miami continuing to be one of the most competitive markets, Ross says.
lower prices have already translated into sales to a broader audience. Although 1996 saw a slowdown in the growth in cellular phone subscribers, the number of people pocketing a wireless phone in the U.S. in 1997 rose from 44 million to 57 million, according to the cellular telephone trade group. That's the fastest growth of any industry in contemporary history, notes Ross. He predicts that in four more years, the number of those owning wireless telephones will double.
"Competition is good," says Emilio Echave, Southeast Region president for AT&T Wireless in North Palm Beach. The aggressive marketing campaigns by the PCS competitors "have brought a lot of awareness of wireless into this state and made the pie bigger."
One of the more aggressive entrants has been Sprint PCS - a consortium of Sprint, TCI, and cable companies Cox and Comcast - with calling reach from Jupiter to Key West. By the end of 1998, the consortium plans to expand its reach into Orlando, Tampa, Jacksonville and Tallahassee and triple the number of employees in Florida from 200 to 600.
With so many operators in a city, analysts expect the price per minute to drop; calling plans are likely to offer one-price for calls anywhere in the country with no roaming charges and an increase in data access through wireless.
Industry veterans predict a shakeout. "We question whether six wireless providers in all of these markets are going to be able to make it," says Jim Bacon, BellSouth Mobility's vice president for north Florida. "Consumers are going to have to ask a lot of questions." For its part, BellSouth has launched its own digital service with its expansion into Tampa this year.
All the growth also means there will be increasing demand for placing cellular phone towers throughout Florida to provide seamless communication. "That's what's holding up our continuing growth," admits Echave of AT&T. "It's probably a bigger issue for us than anything else."
Wireless doesn't just mean telephone communications in Florida; it will soon also mean wireless video. BellSouth has purchased the rights to provide digital wireless television to 4 million potential customers beginning in New Orleans and Atlanta in 1998, and the company plans to expand into Jacksonville, Orlando, Daytona Beach, Fort Myers, Lakeland and Bradenton.
Down to Earth
Meanwhile, the number of phone lines in Florida continues to increase at a rate of one million a year. "Which is exactly why we have more competitors here than anywhere else," says BellSouth Florida President Jim lacher. "It's recognition Florida's not just a place to retire, it's a place to do business."
It's also recognition that the telephone is the essential business tool of the '90s. It is the link to vital data communications, Internet access, security systems, telemetry devices and faxing.
The result is an unprecedented demand for quality as well as growth opportunities as more homes and businesses add phone lines for computer needs. The number of companies asking state regulators to be certified as local phone companies more than doubled in 1997 from 55 to 118. But by the end of September, only 22 companies had been able to compete against the 12 incumbent companies, and most of the companies were competing only for business clients. Together, they served less than 1% of the state's phone customers. Another 31 companies were certified by state regulators to provide long-distance service in Florida, bringing the total to 528 as of Oct. 31.
The biggest long-distance hopeful, however, BellSouth, was thwarted in its attempts to be allowed to enter the long-distance market because it could not prove to regulators it had sufficiently opened its local markets to competitors.