Cellular Radio – King of the Road

Let’s say it at the outset: Cellular radio is the most important technological innovation benefiting salespeople since the invention of the automobile.

Why? Because it gives you the opportunity to stay linked – throughout the day – to your clients, prospects, sales managers, marketing support people and family even if you’re trapped behind the wheel of that sample-laden car in snail-pace traffic.

Lay your technological fears to rest. Cellular radio is not another high tech toy for the guy who wields an oversize slide rule from a leather scabbard at his belt. It’s a bonafide, practical sales tool, easy to use, relatively cheap and getting cheaper. It’s already marketed in about 40 big cities like New York, Chicago, Los Angeles, Washington, Atlanta and Miami. It should be available in a total of 90 cities by the end of 1985.

Time Savings = Increased Productivity

Why be interested? Because the cellular phone can help you conserve and effectively utilize the salesperson’s most precious commodity: time. Better use of time equates to higher productivity and more sales.

Here’s an example of what the typical salesperson can do with a cellular car phone.

John Technophobe, who sells mainframe computers, has three calls to make between 9 a.m. and 2 p.m. He hops in his car at 8 a.m. and heads right into a traffic jam on the interstate. Not a public phone in sight, but it’s no problem. John calls Prospect Number One on his cellular phone and tells the secretary he might be late.

When John arrives for his first presentation, he picks up the phone again and dials a brief code on the touch tone pad. Now, while he’s inside selling, any calls that might come to his car phone are automatically routed to his sales office where his secretary, Minnie Memory, takes a message.

An hour later John returns to the car and dials the office. Sure enough, he’s had messages. Prospect Number Two is ill today and has cancelled the appointment. John has just saved an hour of driving time. While he’s scribbling down messages and deciding what to do with his extra hour, he hears a click on the line. It’s another call coming in.

“Excuse me, please,” he tells Minnie and presses another button that puts her call on hold.
“John Technophobe,” he answers.
“Hi, this is prospect number three. I’ve just had an urgent meeting come up that conflicts with our appointment. Any chance we can reschedule?”
“How about if I come an hour early? Just had an opening.”
“Sounds good. Say, I remembered a question I wanted to ask your boss, Henry Gigasale. Is he there?”
“I’m on the road, Prospect Number Three. But let me try to get Gigasale for you.”

John puts him on hold and returns to Ms. Memory.

“Get Gigasale on the line fast, Minnie. This prospect is hot.”

While Ms. Memory is ringing Gigasale in the office, Technophobe presses another button on the cellular phone and sets up a conference call.

“Gigasale here.”

“Henry, it’s John.” Technophobe turns the key in the car ignition and pulls out onto Main Street. “I’ve got Prospect Number Three on the line with a question for you.”

“Hi, Mr. Gigasale. I wanted to ask you about the port capacity on that mainframe, but first I have to know where you found such a sharp salesman. This guy Technophobe seems to be everywhere at once.”

On-The-Road Computing Coming

And so he is, thanks to his cellular telephone and the typical custom calling features just illustrated – call forwarding, call waiting, and three-way calling.

Sound impressive? There’ll be more in a short while. Soon, if John rushes out forgetting that key proposal, he’ll be able to access the computer company with his cellular phone, retrieve the proposal on-line and print it out on a portable computer terminal that hooks to his phone via a device called a modem. All from the front seat of his car.

John could use the same equipment to access the latest business news on a public database like Dow Jones News Retrieval, check the financial health of a sales prospect, or pull the latest pricing and feature information on a new product line out of his company’s computer for use in a presentation.

Merging Radio and Telephone

How is all this possible? What is cellular radio? Why is it called “cellular” radio? The concept is simple: Cellular radio is the union of radio and telephone technology. The service is offered by special subsidiaries of telephone companies, as well as by partnerships independent of the phone company.*

To understand how cellular radio works, picture a big transparent honeycomb superimposed on a map of your city. Each of the roughly hexagonal units in the honeycomb is a “cell.”

And each cell is equipped with an antenna waiting to pick up cellular telephone conversation and route it over the local telephone network to your boss downtown, your wife in the suburbs, or over a long distance connection to the prospect you’re visiting in Pago Pago next week.

In your cellularly-equipped car, right where the four-speed gearshift used to rattle, sits what looks like a fancy princess phone in a cradle. The phone has a few extra buttons on it which we’ve already alluded to. These help provide calling options.

Hidden back in the trunk are the guts of the system: the transceiver (transmitter/receiver) and power supply. These devices transport your conversations in what’s called “full duplex mode,” which means you and your sales prospect can talk at the same time just as you would over a standard telephone in your office. None of this “over and out” or “ten-four” stuff.

“Yeah, I’ve seen guys in limos using this for years,” you say. Wrong again. Cellular technology is a brand new baby with a lot of advantages over the oldtime mobile phone. One of the biggest has to do with those cells.

As you’re driving along talking, you pass from cell to cell without realizing it. Your conversation is “handed off” from the antenna in Cell A to the antenna in Cell B, and so on. Unlike what happened with the old mobile phones, the radio signal carrying your voice doesn’t fade, crackle or vanish. The conversation remains, excuse the expression, clear as a bell.

System capacity is far higher for cellular radio technology able to handle tens of thousands of users in the typical metropolitan area rather than the few hundred exclusive souls who used to chat over the old radio phones.

The higher volume of business for cellular service providers is one of the reasons cellular radio is a fraction of the cost of “limophones.” I’ll provide more detail on cost in a moment, but just to give you a clue, some providers are now offering a rental cellular phone and usage time for $99 per month. Installation is free.

Finally, there’s no waiting list. You can become a cellular radio user right away.

Features and Service Options

You want features and service options? Start with the buttons on the phone. With some you can speed dial, that is, push just one button instead of dialing the usual seven, and get right through to your calling destination.

In many areas, you can also buy the custom calling packages identical to those available with a home or business phone – call waiting, call forwarding, and conference calling. A tightwad sales manager can have your cellular phone programmed so that it transmits only to selected clients.

Service is not necessarily limited to the city where you become a customer. Many providers have signed intercity “roaming agreements” that let you use your cellular phone in a city served by a different provider. Roaming agreements may even extend beyond the sphere of your regional telephone company.

For example, a Chicago customer served by Ameritech Mobile Communications may use his phone in New York City which is NYNEX Mobile Communications turf. All he has to do is notify Ameritech in advance of his travel plans. NYNEX bills Ameritech for the Chicagoean’s cellular phone use in New York, and the amount appears in his monthly usage bill from Ameritech.

Market Shake-out = Buyer Bargains

Now to cost. Here there’s good news about both components: 1) the phone equipment and 2) cellular service, which consists of a monthly fee plus access charges based on usage during business (peak) and nonbusiness (off-peak) hours, and custom calling features. Costs have dropped considerably since cellular radio was first introduced in Chicago in 1983, and they could go lower.

Take the equipment first – the phone, transceiver and power supply. When cellular radio was being prepared for the market in the early 1980’s, industry enthusiasm was high. Manufacturers thought cellular radio in 1984 would offer the same golden payback as television in 1948. Nearly every electronics manufacturer turned to making cellular radio equipment.

Some of the better-known makers are AT&T, Motorola and OKI of Japan, the latter sold under the logos of regional phone company cellular radio subsidiaries. Tandy and Nokia of Finland plan to enter the market this year with their own phone carrying the Radio Shack mark. All the phones are about the same in quality and features, with the exception of some Motorola phones which you can move from the car and take into a business meeting, restaurant – wherever.

The point is, there’s a tremendous glut of cellular phones on the market. And they’ve dropped in price from $2,500-$3,000, to as low as $1,400 off the shelf, including installation and a maintenance package. Some analysts see the price falling as low as $600 by 1986. But don’t hold your breath. The same pundits concede that the fixed costs in the system – the transceiver and power supply – could prevent prices from dipping much farther.

Some analysts suspect that retailers are deliberately eating losses on cellular hardware in order to buy market shares and name identification. Whatever the case, you the buyer are the beneficiary of manufacturer’s overestimation of the market size. Inventory is high and that means that bargains abound. So get in there and haggle.

Service Costs Falling

Cellular radio service has dropped in cost, too. Again, the reason has to do with the service providers’ overshooting the market, though most claim they knew all along what would happen in the wake of cellular radio’s birth.

Take the example of Chicago. Ameritech Mobile Communications brought in 5,000 customers between mid-October, 1983 (when the service was introduced), and year’s end. But that was just pent-up demand: fairly easy sales to large business customers who knew about the product and were eager to buy. For the first half of 1984, Ameritech Mobile sold service to only 3,800 new customers. Fall sales were a market “bubble.”

What followed was a dramatic 56 percent drop in the cost of service, and the launch of a range of new calling options to spice up cellular radio service. Monthly retail services charges fell overnight from $50 to $22. Access (usage) charges dipped from 40 cents a minute to 38 cents a minute for peak hours, and from 24 cents a minute to 22 cents a minute for off-peak.

With its next opening, in Milwaukee, Ameritech offered customers new service options ranging from basic, at $15/month to off-peak (for after hours callers) at $5/month, to express at $10/month with no usage charge for you fast talkers who make and complete calls in under 30 seconds.

Buy Now, Wait, Or…

The question arises, “If costs are coming down, shouldn’t I wait? Won’t the equipment I buy now be out of date by the time it’s paid for?”

Good point. The problem of outmoded equipment has certainly plagued many a business buyer of microcomputer systems. So instead of buying, you might want to try leasing, or renting your equipment.

Bell Atlantic Mobile Systems and its competitor, Cellular One, offer attractive rental programs in their Baltimore and Washington, D.C. Markets. For a $200 deposit and $99/month, Bell Atlantic Mobile will rent you a cellular phone and toss in 60 minutes per month of free peak hour usage. You get free installation, a three-year parts and labor warranty, and a one-year protection against loss or theft. If you decide to transfer the phone after 12 months of use, Bell Atlantic Mobile will install it in the new car free.

The rental period is 36 months. After that time the phone is yours to keep – there’s no added payout as is common with many leading programs. Bell Atlantic Mobile keeps the $200 deposit and applies it to the price. Cellular One’s program is similar.

Overall cost, exclusive of usage charges above the 60 minutes per month, is about $3,500 over 36 months. That’s $1,000 more than it would cost to buy the phone equipment outright. Why pay the difference? Because of the freedom you’re given – if at any time during the rental program you change your mind, you can return the phone and get your $200 deposit back.

Are these guys buying market share or what?

Test Drive Cellular Radio

Still need convincing? Then test drive cellular radio next time you’re in Chicago or Los Angeles. Ameritech Mobile Communications has installed cellular phones in many taxicabs in Chicago. Cost to you: 85 cents per minute – not too bad, provided you don’t mind watching two meters (mileage and phone) ticking.

In Los Angeles, rent a car from Hertz at L.A. International Airport installed cellular phones from PacTel Mobile Access in about 50 of their cars. Let them put you in the driver’s seat and keep you out of the phone booth at the same time.

King of the Road

Lest you readers in a remote village in Alaska get too excited about cellular radio and start plaguing Moosehead Phone Company about the coming availability of cellular radio in your town, realize that cellular technology will be a big city phenomenon for some years to come.

Service providers learned a hard lesson when they opened systems in the so-called “secondary” markets, places like Indianapolis and Buffalo. After spending millions of dollars to install the cells and antennas, the phone companies and their competitors found there were only a handful of customers. Losses were staggering and many a marketing and planner’s heads rolled. The companies won’t make that mistake again.

However, if you live and sell in a major metro area, chances are strong that cellular radio is there already or coming soon. To find out, call representatives of the following regional companies:

* Ameritech Mobile (Illinois, Indiana, Michigan, Ohio, Wisconsin) (312)490-7646
* Bell South Mobility (Florida, Georgia, Kentucky, Louisiana) (404)956-2400
* Bell Atlantic Mobile (Delaware, District of Columbia, New Jersey, New York, Pennsylvania, Virginia) (800)255-2355
* New Vector (Arizona, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming) (800)626-6611
* NYNEX (New York, New England) (212)370-7400
* Pactel Mobile Access (California) (800)622-0735
* Southwestern Bell Mobile Systems (Arizona, California, Florida, Missouri, Oklahoma, Texas) (800)527-5029
Don’t forget the competing companies in each city where cellular service is offered. They offer some good deals, too.

Equipped with a cellular phone, you can chuckle as you pass your competitor, pulled off the road fumbling for change as he tries to place a call in a pay phone booth where the door won’t close and the directory is ripped to shreds. Passing him, in more ways than one, you’ll be King of the Road.

*Cellular service is sold, either directly or through agents, by subsidiaries of the regional Bell holding companies or by nonphone company firms. It is not sold by local phone companies.