Clearing a path: Wireless PBX cordless/mobile applications offer inroads to rural customers, but coverage and roaming issues must be settled to tap a burgeoning market

After more than two years on the drawing boards and in the news with spectrum auctions and grand predictions for the next generation of wireless, PCS providers have finally begun to deliver their services to the public in force this year.

But customers eager to try the clearer signal and greater security promised by 1.9 GHz PCS providers are quickly discovering a drawback: Outside major population centers, most PCS phones are useless. PCS providers haven't been around long enough to expand into less-populated rural areas. And dual-mode phones that allow PCS subscribers to roam to 800 MHz cellular outside PCS coverage areas aren't being widely deployed.

While the strategy of building a strong base in major markets at the expense of short-term rural coverage is sensible, carriers face an interesting challenge: moving service into rural areas as quickly as possible in the wake of weak interest from capital markets. If PCS providers wait until revenue from services alone can support rural expansion, such expansion will be a long time coming.

So it falls on the shoulders of carriers to be creative in getting their phones into the hands of customers who are not necessarily in primary markets. One feasible strategy for expanding into less-populated areas is developing private systems for large businesses, including farms and other agribusiness concerns, as well as manufacturing and service businesses that are located in rural areas.

Minneapolis-based PCS carrier WirelessNorth is in the very early stages of rolling out its services in the Fargo, N.D., area (see map). Even as it was preparing to open its Fargo retail store in late October, WirelessNorth already was in talks with two companies in the Fargo area about developing private network applications.

WirelessNorth executives are reluctant to discuss the projects, but Dan Richards, sales and marketing director for WirelessNorth, says the first step in the process is getting the companies signed up for WirelessNorth's basic service. "We've first got to get them into [PCS] phones so they can see the quality and features," Richards says.

Instead of supplying wireless phones for relatively few key employees, WirelessNorth plans to equip employees with PCS phones that work off a wireless PBX system. The handsets would operate on the public wireless network when taken outside the private network. To make it work, WirelessNorth is counting on dual-mode phones that will take advantage of all available wireless networks for roaming.

But WirelessNorth is learning on the fly about putting such a system together. While it sounds simple enough, getting the complex digital PCS handsets to work across networks at peak efficiency is no cakewalk, according to Rick Rappe, the company's president and chief executive officer.

A number of issues have clouded WirelessNorth's plans. Its code division multiple access signal covers much more territory than was anticipated, Rappe says. It reaches 47 miles outside Fargo with a signal strong enough to prevent a phone from roaming to another network but not strong enough to carry a conversation. But if the signal from the transmitter atop the Fargo Radisson Hotel were weaker, that would create building penetration problems in Fargo.

Roaming is another complex issue. Rappe and Richards point out that PCS handsets are programmed with preferred roaming lists (PRLs) but also have a memory component that "remembers" how it accessed service previously. Sometimes that feature can usurp the PRL, causing the handset to connect to a less desirable network. The limited selection of dual-mode handsets also limits the possibilities for correcting problems and improving service, they say.

None of the problems will ground their service, however, and they expect to resolve the signal power problem soon. But "there is some lag between what you'd like to do and what you can do," says Richards.

While PCS carriers such as WirelessNorth are ironing out wrinkles with such services, 800 MHz cellular carriers have been developing them for a couple of years. U.S. Cellular has been developing and deploying wireless PBX applications in its Iowa markets for about 18 months, says Russell Williams, area general manager for U.S. Cellular's Iowa/Missouri cluster. Customers include both campus-style businesses and large farms.

The primary difference is that large businesses require microcell sites and a private frequency for a wireless PBX, while the farm-oriented application involves integrating a wireless phone into the wireline system at the farmhouse, Williams says.

If the handset is within 1000 feet, a base station connects to the copper in the house and rings all the landline phones when the cellular number is dialed. Such calls are billed as wireline calls. Outside that radius, the phone kicks over to the cellular network. The cellular phone doesn't replace the wireline service, but users need only give out their cellular number to be reached at any time, Williams notes.

"It's like a cordless phone in the house and a cellular phone out in the back 40," he says.

Even though the cordless/cellular capabilities are new, demand for advanced communications services has been growing inrural areas much as it has in urban settings.

"Some [farmers] spend as much on a tractor as we might spend in a house," says Dave Atkins, operations vice president at Little Rock, Ark.-based Alltel Communications. "As early as eight years ago...we installed bag phones and antennas on tractor cabs. And we installed antennas on houses so the phones could be used from there."

Alltel is in a somewhat unique position as a smaller carrier offering wireline, 800 MHz analog and digital cellular, and 1.9 MHz PCS services (see story on page 28).

Atkins says Alltel recently consolidated all those businesses, which once were separate companies, in order to offer its customers all services under a single billing entity. That reflects a growing demand in Alltel's service areas for more sophisticated telecommunications services.

"People in rural areas want the same services and the same convenience" as urbanites, Atkins says. "They're expecting more and more."

Advanced mobility solutions may be better suited for less-populated areas than for large cities, according to Jaime Ridgway, an advanced wireless specialist for U.S. Cellular.

"Your channel pool is abundant" in rural areas, he says. In Ames, Iowa, for instance, Ridgway recently developed a system for a 3-D animation software company. In that area, out of 301 possible frequencies, only 96 were unavailable. That means there's plenty of spectrum available for other private users and for handling increasing traffic.

In U.S. Cellular's system, the PBX dials a four-digit extension on the private network, then transfers to the cellular network after a certain number of rings, Ridgway says. It then transfers to voice mail if the call isn't answered. The ability to take one phone everywhere is crucial for rural businesspeople who must travel long distances to connect with clients and suppliers, Ridgway says.

"They have to have that mobility to travel and remain in contact with their counterparts," he says.

For most companies, the most difficult part of the buying decision for a wireless PBX system is weighing cost vs. benefits, he notes. WirelessNorth executives are trying to hash out their cost for putting together such systems and how much they should charge their customers.

But working out such details may be crucial for success in markets where the sheer weight of population won't generate enough subscribers to ensure success.

Ridgway says that while some prospective customers have passed on advanced wireless applications because of a "fear of technology," those that have made the leap offer prime opportunities to maximize network usage.

"We're teaching them to use that handset like it's their left hand," Ridgway says.