Bringing Cellular Home- New competition for local carriers

As if local carriers aren’t already losing enough customers to telephony over broadband Internet, their losses to cellular operators may also be ready to ramp up. And this time, they won’t just be losing college students and others so mobile, their friends don’t know their home phone numbers. They’ll be losing mainstream subscribers: residential customers with multiple phones throughout their homes. With a new service Sprint is trialing in five cities, all of those phones could become extensions of a single cellular connection.

By: Robert Poe
America’s Network Enews

http://www.americasnetwork.com/americasnetwork/article/articleDetail.jsp?id=134650

The service works through a Telular fixed wireless terminal that plugs into a phone jack, receiving cellular calls and routing them through the in-home wiring that used to carry their landline service. Sprint sells the $250 terminal to its customers for under $100. The service requires its own cellular number, which thanks to local number portability, can be the same as the customer’s previous wireline number.

A big benefit for customers is that it lets them take advantage of their cellular plan’s features. In particular, Sprint cellular service provides free nationwide long-distance — a potentially significant saving for heavy coast-to-coast callers. And adding the additional line to an existing wireless plan costs $20, less than many basic local service offerings.

There are a few technical issues to cope with. Like voice over cable or DSL, the service depends on local electrical power rather than having its own supply like the PSTN. Although the Telular device has battery backup, it won’t outlast a prolonged outage. In addition, 911 emergency location capability relies on GPS positioning, rather than mapping the phone number to the address as with landline phones. And there are always potential problems with wireless network coverage, although the stronger power supply and antenna of the wireless terminal make that less of an issue than with cellular handsets, according to Bill Elliott, Sprint’s director of marketing for voice services.

Sprint is currently rolling the new service out in Charlotte, North Carolina; Indianapolis, Indiana; Minneapolis, Minnesota; Richmond, Virginia; and San Antonio, Texas. Although he won’t talk numbers, Elliott says interest has been "what we anticipated it to be." A Telular release says Sprint is marketing 2,000 of the terminals in the five cities.

The service should pay off for Sprint in several ways, according to Elliott. First is the $20 a month it’ll get from each new line added to an existing cellular account. Customers may also upgrade their calling plans to accommodate the higher usage. And the more services customers buy from the same provider, the less likely they are to leave.

It also obviously will hurt both local and long-distance carriers that are losing the customers Sprint is gaining. If it catches on, the new service will only accelerate the wireline replacement trend already in progress. IDC, for one, predicts that wireless service will replace 18 million landlines by 2007.

But there may be a hidden benefit to that trend, at least for many ILECs, because most of the biggest of them also own wireless service providers. That means, notes independent telecom analyst Jeff Kagan, that while they may lose landline customers to cellular competition on their home turf, they may take them from landline providers elsewhere. If more follow Sprint’s lead, fixed wireless could be the weapon that escalates such competition into all-out warfare. That could particularly benefit the fiercest competitors and their customers.

Of course, if they don’t watch out, big operators selling fixed wireless could end up taking customers from their own local-service divisions. But that could bring a hidden benefit as well: The erosion of local wireline customers would suddenly become part of a broader strategy they’re pursuing, rather than a looming disaster they’re trying to avoid.