Session Thirteen:
Wireless Services

Lecture Notes

Wireless Services

Wireless handheld telephones are popular and becoming ubiquitous. Pricing for the services is getting to the point where, for certain users, cellular telephone service is actually less expensive than using a land line. Further growth in the market is anticipated, and all of the major carries are attempting to make a strategic investment in cellular, both for its own sake and as an alternative means of accessing the “last mile.”   Terrestrial wireless services include cellular, personal communication services (pcs), paging, government (e.g. police)  and business radio (nextel).

Cellular telephony was developed by the Bell Labs just prior to Divestiture. At Divestiture in 1984, there were two cellular licenses available for each market service area. As part of the terms of the breakup, the Regional Bell Operating Companies kept one cellular component, and the other was given away via a lottery process.  It was predicted that at the turn of the century, there would be about 1 million cellular users. AT&T gave up the business at divestiture. A dozen years later, faced with huge customer demand and rapid proliferation of inexpensive, reliable devices, AT&T bought McCaw
Cellular to reposition itself in the cellular market. The McCaw merger also gave AT&T access to a substantial number of licenses for the more than 400 market service areas in the U.S.

With the tremendous growth of wireless services, the FCC in 1994 allocated new spectrum for Personal Communication Services (PCS) using digital techniques.  The providers of the PCS services obtained the spectrum via an auction process.  PCS services encompass a wide variety of applications for communication at any time to any where. Equipments include portable (handheld) and mobile (vehicle).

AT&T is not alone in its desire to develop the wireless market. Sprint had already achieved a high degree of market success with its Sprint PCS offering. This year, 1999, MCI Worldcom also began to invest heavily in cellular technologies.

AT&T had expected to use its obsolescent microwave relay towers, placed in line of sight every 35 miles across the U.S., as a platform for cells. Other entrants would have to duplicate the investment in order to enter the market, match the service provision, and try to make a profit. For MCI Worldcom, the acquisition of wireless technology, via the Sprint purchase is contemplated (2000)

Another wireless alternative is satellite wireless transmission. But satellite is expensive and fraught with its own problems. Satellite communications have a couple of engineering constraints.

First, satellite transmission  must be in line of sight with the transmitter. As the earth spins on its axis and the satellite “flies” overhead at a different speed, the signal must be transferred to the next satellite in line to continue the coverage, much as the cellular call is transferred when you drive around the Beltway. This “handoff” is a problem.

The problem can be resolved by flying the bird higher, creating a larger footprint over the earth, that is, increasing the coverage range. If the satellite is placed on an   orbit 22,000 miles above the earth, it moves at the rotation speed at the earth and appears to be "geostationary."

But when you increase the altitude of the satellite, you increase the requirement for signal strength. Since signals attenuate, or degrade, with distance, increasing the altitude increases the size and power requirements for the transmitter. That is why middle earth orbit and low earth orbit satellites are proposed for global cellular solutions—the power and signal requirements are less.

Another deleterious effect is the delay in the signal which for geostationary orbits is about 250 milliseconds.

Finally, there are market issues involved with developing satellite based technologies. Iridium has become the prime example of how not to market a new technology. Iridium, a consortium led by Motorola, developed a handheld device that could be used anywhere in the world, without regard for the robustness—or lack of it—for the local phone system. Iridium launched a constellation of satellites to transmit signals, and waited expectantly for
customers to jump on the new technology.

Reveling in the fact that they had succeeded in placing the birds in orbit, conquered the handoff problem, and produced a strong enough signal, the company simply failed to determine whether there would be any customers for this service. It turned out there were not. The customer base was undersubscribed by almost 70 per cent of the breakeven point and the company filed for Chapter 11 bankruptcy protection.  The system is now turned off.  Just because you build it, does not’t mean they will come.

Wireless services enjoy a great deal of popularity and, although we all have our stories to tell about drivers talking on the phone, they appear to be headed for greater proliferation and use. As the technologies mature, more services will undoubtedly be added which will increase the value of the investments all these companies are making. In most market service areas, the local RBOC remains the primary provider of cellular service and an out
of region RBOC doing business as Cellular One is usually next.  Sprint PCS, AT&T Cellular and others also compete and are investing heavily in digital technologies.   Eventually, all analog technologies will be replaced by digital.

Satellite technologies continue to improve, but costs remain substantially higher than terrestrial technologies. The cost of launch, while coming down due to commercialization of launches and reuse programs like the SpaceShuttle, are nonetheless substantially higher than other technologies aimed at individual end users.

Where satellite has been spectacularly successful is in deploying such technologies at GPS. The development of these handheld instruments has virtually revolutionized navigation. The successful implementation of INMARSAT, International Marine Satellites, by an international consortium of governments, provides virtually global tracking of ships at sea. (INMARSAT B coverage does not extend over the poles.) But the success of this venture is based
primarily upon its being conducted by governments. Whether it could have succeeded as a private venture is open to question.

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