Wireless Warrior

Within the past six months, the wireless telecommunications industry has witnessed two of the most significant milestones in its young history: In November, Sprint Spectrum affiliate American Personal Communications christened personal communication services by turning up a commercial network in Washington, D.C./Baltimore. Three months later, Congress and President Clinton opened the competitive gates by passing the telecommunications reform act of 1996.

For unprepared cellular carriers, that one-two competitive punch might have foretold certain doom. For Bell Atlantic Nynex Mobile President and Chief Executive Officer Dennis Strigl, the future couldn't look brighter.

When PCS infiltrated its territory, BANM was ready with competitive services and pricing packages rivaling the offerings of Sprint Spectrum. When regulatory reform became reality, BANM's network was already equipped to make the first move toward expanding into new realms by offering wireless long-distance service.

Strigl is a 28-year veteran of the telecom industry, having served in various capacities at New York Telephone, AT&T, Wisconsin Bell, American Bell, New Jersey Bell, Bell Atlantic Corp. and Ameritech. He has been at the forefront of the wireless industry since its inception in the early 1980s. As president of Ameritech Mobile, Strigl helped launch the nation's first cellular network. He was appointed president and CEO of Bell Atlantic Mobile in 1991 and later oversaw the company's merger with Nynex Mobile, which was completed in July 1995.

Telephony Associate Editor-News Jason Meyers interviewed Strigl recently to gauge his views on new competition and the changing role of wireless on the telecom battlefield.

Q: How have you dealt with PCS competition so far, and what do you expect to do in the future as even more players enter the fray?

We have been positioning our company very aggressively for a number of years in anticipation of new PCS entrants. But the important thing to remember here is that there is no real difference between PCS and cellular except for where it's positioned on the spectrum. Customers don't care about frequencies-they care about how well a service meets their needs.

For instance, the simplicity and affordability of our TalkAlong service has done a great job of providing comparable alternatives to other PCS players. We feel very good about how we're positioned against the new entrants.

A great indication of our response to PCS competition is that we saw some of our highest sales ever in December and January in the Washington/Baltimore market. I have to believe that the increase in awareness that will come from more competition in the future will drive even better results for Bell Atlantic Nynex Mobile.

Q: To what extent will the emergence of PCS drive cellular providers throughout the industry to differentiate themselves by upgrading their networks to digital, offering services that more closely rival what PCS providers plan to offer?

There is almost nothing that we are doing differently now that there's a new competitor in town. It has always been our goal to provide the best available digital technology. In fact, we began converting our networks to digital even before there was an issue of new market entrants, and we've offered TDMA capabilities in the Washington/Baltimore area since early 1994.

Q: Why did you choose TDMA, and will that be BANM's choice for the future?

Unfortunately, TDMA didn't provide the kind of quality of signal we felt comfortable with for the long run. Back then it was the best digital technology available and it met a competitive need. However, we knew that to meet the long-range needs of customers and our own networks, we needed to eventually leapfrog to the next generation of digital: CDMA.

We began testing that technology several years ago and got hooked on its call quality and other benefits. Today, we have a commercial trial of CDMA in the Trenton, N.J., area. But that is not predicated on competition.

We expect to begin commercial service using CDMA technology by mid-year, and I'm confident that the product will be there.

Q: How do you see BANM's current position-from both the network viewpoint and the marketing and branding viewpoint-changing as its parent companies participate in the PCS PrimeCo consortium?

We're working very closely with PrimeCo on making services work seamlessly between all of our markets-from cellular market to cellular market and between 800 MHz and 1900 MHz markets. The same is true for brands of services we'll provide to customers, giving them a common look and feel. What we'll be providing with PrimeCo and AirTouch is a service that is simple and something that our customers will be able to recognize and use all across the country.

Q: What is your long-range view of how the newly competitive wireless industry will evolve?

The higher level of competition truly will be a great benefit to the consumer. It will make us more sensitive to customer service, both in how we handle each call and how we build our network. More than ever before, customer service is critical in bringing in and keeping a loyal customer base. New competition will also benefit the customer by bringing prices down even further and driving innovative services back into the marketplace even more quickly than today.

The interesting thing about competition in every industry is that it always comes down to survival of the fittest. Some will take the lion's share and others will pick from the bones of those that just can't make it. But you can bet there will be a lot of jostling around the water hole.

There will be a lot of ways carriers can win in this marketplace-by bringing the best services to market or by marketing their services best. If we end up in each market with five or six or more carriers, it will be those that do things first and best that will be fittest. Those that find the niches that others miss will survive.

Q: BANM has already seized new opportunities in long-distance as a result of the telecom reform act. What infrastructure alterations will be made to the wireline side of your network to better equip it to carry long-distance beyond your borders?

We will continue to modify our network. However, we had anticipated-with fingers crossed-that Congress and President Clinton would give us a bill that provided for interLATA capability, so we've been building our network for the last year to facilitate our entry into the long-distance business and at the same time to realize better economics with regard to our own systems.

It's fascinating to think back and know that within a LATA, we had to stop at imaginary borders, hook up to a long-distance provider and pick it up again at the other side of another imaginary line. You can imagine the cost savings gained by engineering within our own territory. Just looking at the plans we've rolled out over the last six months, it's obvious how inefficient the imaginary LATA boundaries made us from a networking perspective. I'm very encouraged about our capability to be able to bring down our costs further and help us get more competitive rates to benefit the consumer.

Q: Will that be a joint effort with BANM's parent companies?

No. We continue to be a stand-alone entity. Our parents are Bell Atlantic and Nynex, but the engineering that we do will be engineering for our cellular wireless network.

Eventually, you will find that this bill brings greater possibilities for what we describe as a full service network. But initially going in-particularly during the first year-we do have the immediate latitude to offer long-distance service, whereas our parents are required to go through some further regulatory checks. We are engineering for the provision of mobile long-distance service.

Q: What do you see as the specific role of wireless in that multiservice future, when network operators will transport voice, data and video over both wires and airwaves?

Wireless will be able to provide a full-service offering. It's clear to me that we now have the capability of doing voice, data and video-albeit slow video-and we have the capability of doing it mobile local and mobile long-distance. There's no reason in the future that a wireless carrier would not be able to do even more, including the provision of residential telephone service. The question will be whether you can make money at it.

What I think will evolve over the next 10 years are a lot of efforts to piece together a full service wireless network. However, I'm not sure full service ten years from now will be what we're thinking about in the way of full service today-that is, a replacement for residential, business, landline, the whole gamut. People will find that the economics of provisioning local landline telephone service will probably be better served as it is today.

Q: How has telecom reform changed BANM's marketing efforts?

The telecom reform act won't change our overall marketing strategy, but it will step up marketing activities. Look at what happened in Washington/Baltimore in December: As Sprint Spectrum came on-line, they spent considerable advertising dollars and marketing innovation. I just see stepped up activity in the whole marketing area as a result of more competition.

One of the things that Bell Atlantic Nynex Mobile offers is one-stop shopping for our customers. We do that primarily through our wireless communications stores. When a customer comes into one of our stores, it's a great advantage to them and us because we can sell not only the telephone itself and the service, but accessories, batteries and data products. Add to that the possibility of paging and long-distance in a single bill and it opens all kinds of marketing possibilities.

Q: How would BANM be affected if its parent companies merged?

It's a highly speculative question. Both of our parent companies have said they are open to exploring the possibility of mergers with almost anyone.

However, let's speculate and say that our parent companies were to merge. There would be no difference in how we operate, at least from my vantage point. We are very focused on the mobile market, and we would continue to be so. We're also, for both of our parents, the fastest growing portion of their business at this point and contribute significantly to their growth in earnings per share. So I don't see anything that would derail the way that we're operating today, regardless of what direction our parents may move.