Falling short of replacement: Wireless carrier plans compete with landline but don't cut it out of the equation

Although wireless replacement of wireline is all the buzz, few wireless carriers position their services as wireline substitutes. Nonetheless, some wireless operators offer service plans with features such as wide home calling areas and a high number of included minutes which could give wireline carriers a run for their money.

Companies such as AirTouch, Sprint PCS and Airadigm offer extended home calling regions in some markets where the local call rate covers an area much larger than the local landline coverage area. For example, subscribers to Sprint PCS service in Texas and Oklahoma and Airadigm's Einstein PCS service in Wisconsin have a home calling zone the size of the state. AirTouch offers digital customers in San Diego and all customers in Los Angeles a home calling region of Southern Califor-nia, from San Luis Obispo to the Mexican border.

Surprisingly, the smallest of these companies, Airadigm, is the only one to position wide home calling zones as a potential landline replacement.

Airadigm subscribers choose to use PCS phones instead of landline to make calls to areas outside their landline home area for a cheaper rate, said Jim Wurm, director of marketing and public relations for Airadigm.

Airadigm also offers a high-volume plan that includes 500 minutes for $50-more minutes for less money than most other PCS players' high-volume plans. "It's beyond what wireline could do for $50," Wurm said. Coupled with the statewide local calling area, this plan has resulted in more usage than Airadigm expected, with average minutes of use reaching 300 to 400, he said.

Beyond residential customers, Airadigm looks to replace landline services in businesses. "Our goal is to replace Centrex systems," Wurm said. Airadigm has focused buildout of its macro network on in-building coverage to target businesses.

AirTouch crafted its California Connection plan, which offers the Southern California home calling area, to make roaming easier rather than replace landline. "Roaming historically has been difficult and expensive," said Robert Pickell, director of business development for AirTouch. Particularly in Southern California, where people are tied to their vehicles, roaming has been a significant issue, said Pickell. California Connection allows subscribers to avoid high roaming costs.

Wide home calling areas are used mainly to make roaming easier, said Kent Olson, consultant at The Strategis Group. The Strategis Group published a study dating back to 1993 when roaming was more difficult and more expensive. The study showed that 44% of subscribers were unlikely to use wireless phones outside their homes, for reasons ranging from high fees to confusing plans. Today's plans were created to alleviate some of these concerns and increase overall usage, Olson said.

Digital providers with large home calling area rates often don't position these services as competitive to wireline, said David Berndt, program manager for The Yankee Group. "They're not advertising it that way, but it is a displacement," Berndt said. Consumers who are "really looking at their telecommunications costs are going to pick up on that." He sees carriers using these plans to compete against cellular players, who often don't have the capacity to offer high-volume or wide home zone plans.

Operators target geographic markets for extended home regions based on several factors. In regions where one carrier offers large home zones, others are sure to follow to stay competitive, Olson said. Network buildout plays a role in extended home zones because carriers won't offer it unless they have coverage to support it. Also, particular market behavior determines how some rate plans are structured, as is the case with AirTouch in Southern California.

Sprint PCS says all its markets eventually will have large home calling areas. In fact, a company spokesman envisions the whole eastern seaboard as a future home zone.

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