Emerging Personal Communications Services

There is a revolution underway, and your telephone is in the middle of it. Changes in technology and regulation are creating opportunities for companies to introduce what has come to be known as PCS, or Personal Communication Services. Initially PCS will look a lot like existing cellular telephone, but will grow into an interconnected network bringing voice, data, and even video to wireless users. Two-way voice and data messaging over fully digital networks are just the first stages of what will become the PCS revolution.

FCC Auctions

But first, some background. In the United States, the authority to allocate commercial radio spectrum lies with the Federal Communications Commission (FCC). In the past, the FCC granted licenses either by lottery or by having a judge determine which potential licensee would "best serve the public interest." When the FCC granted cellular telephone licenses more than a decade ago, they gave out two licenses in each Metropolitan Statistical Area (MSA). The existing local telephone company received one, and the other was awarded by lottery. Businesses who received those licenses did not pay very much for them, but most made quite a bit of money over the following years, either by actually building a cellular system, or by selling their license to someone who would.

In 1993 Congress changed all that. The Omnibus Budget Reconciliation Act authorized the FCC to sell portions of the spectrum to raise money for the US Treasury. At the same time the unexpected popularity of cellular telephones and pagers created additional demand for radio spectrum from the wireless industry. The FCC responded by announcing an auction strategy for regional and nationwide personal communications service licenses in three basic categories: broadband PCS, narrowband PCS, and unlicensed PCS. The areas that each license covers are identified as either a Major Trading Area (MTA), basically a large city or metropolitan area, or a Basic Trading Area (BTA), which is essentially a set of highly populated counties or regions. The FCC used Rand McNally's Commercial Atlas and Marketing Guide as a starting point to define 51 MTAs and 493 BTAs in the United States and possessions.

Narrowband PCS

Narrowband PCS lies in three 1 MHz slots of the 900 MHz band, at 901-902 MHz, 930-931 MHz, and 940-941 MHz, and was the first group to be auctioned off. In the Summer of 1994 the FCC awarded eleven nationwide licenses, being split between 50/50 kHz paired (for two-way service), 50/12.5 kHz paired (also for two-way), and 50 kHz unpaired (one-way only). This generated more than $600 million for the US Treasury. In the Fall of 1994 the FCC auctioned 30 regional licenses, six in each of the five regions of the United States. Two licenses in these regions are 50/50 kHz paired and four are 50/12.5 kHz paired. Eleven of the 30 licenses were won by businesses owned by women or minorities, and four bidders managed to win the same frequency block in each of the five regions, effectively creating four more nationwide service providers.

The Narrowband PCS frequencies are already being used for their expected purpose, namely voice messaging, two-way paging, and other low bandwidth one- and two-way services. One interesting application yet to appear is a pinpoint location service, to allow owners to precisely locate objects or vehicles containing a PCS transmitter.

Auction Type	Geographic Area	Number of Licenses
50/50 kHz paired 50/12.5 kHz paired 50 kHz unpaired	Nationwide	12
50/50 kHz paired 50/12.5 kHz paired	Regional	30
50/50 kHz paired 50/12.5 kHz paired 50 kHz unpaired 12.5 kHz unpaired	Narrowband MTA	357
50/12.5 kHz paired 12.5 kHz unpaired	Narrowband BTA	986
12.5 kHz unpaired	Narrowband Response Channel MTA and BTA	2176

Broadband PCS

Broadband PCS is the bulk of the spectrum allocation. Although the FCC does not regulate the specific services offered, most license holders are either offering or planning to offer two-way voice services. This will bring some competition to the existing "duopoly" of cellular providers, as well as creating new services.

The FCC allocation for Broadband PCS lies between 1850 and 1990 MHz. Twenty MHz of that block is set aside for unlicensed applications, with the remaining space broken up into six frequency blocks, A through F. No single licensee is allowed to hold more than 40 MHz in any particular market, but the blocks are laid out such that a bidder may "aggregate" adjacent blocks to reach 40 MHz.

The auctions of the A and B blocks, completed in 1995, garnered more than $7 billion for the US Treasury. The FCC had previously granted three A block licenses under "pioneer preference" in the New York, Los Angeles, and Washington D.C. areas, leaving 48 A blocks and 51 B blocks to be auctioned. Eighteen bidders won the 99 licenses.

The C and F blocks are referred to as "Entrepreneur's Blocks," and were set aside to be bid on only by smaller firms who fall below certain financial thresholds. The C block auction suffered some controversy and a Supreme Court challenge in the way the auction was handled; by the time you read this the 493 BTA licenses should have been awarded.

Auctions for the D, E, and F blocks, each of which contain 10 MHz of bandwidth, are scheduled to begin in late summer 1996.

Unlicensed PCS

Unlicensed PCS lies between 1910 and 1930 MHz. Low power, short range applications such as local area networks, cordless private branch exchanges (PBX), and cordless telephones are expected to make their appearance using this band. Since no coordination is necessary other than transmit power limits, manufacturers are free to introduce products almost immediately, rather than waiting for signalling and modulation standards to emerge.

PCS Pioneer

One early PCS provider is American Personal Communications (APC), based in Bethesda, Maryland. In 1995, partnering with Sprint Spectrum L.P., APC introduced Sprint Spectrum, the first PCS-based communication network in the United States, offering wireless telephone, paging, and voicemail services. Utilizing more than 300 Ericsson PCS-1900 base stations to communicate with Nokia, Ericsson, and Motorola handsets, Sprint Spectrum is proving to be a popular alternative to existing cellular services, and now serves more than 80,000 customers. Handsets are sold at more than 200 retail outlets in the Baltimore-Washington, D.C. area, and activation is accomplished by calling an 800 number. Customers need not wait in a store filling out contracts and waiting for activation, as is normal for starting a cellular account.

Each handset holds a Subscriber Identity Module (SIM), which is a smartcard containing serial numbers, the user dialing directory, and text messages. Moving the SIM from handset to handset allows customers to quickly and easily change equipment in different service regions. At present Spectrum customers can take their SIM cards to Europe, rent a GSM phone, and make and receive calls as if they were back in the Washington, D.C. area (except for the roaming charges, of course).

Sprint Spectrum uses a standard known as PCS-1900, which is essentially GSM (General System Mobile) operating at 1900 MHz. GSM operators currently offer service in more than 90 countries, typically in the 800-900 MHz range. In the United States this band is allocated to traditional cellular service, so cell sites and handsets have been modified to operate at 1900 MHz. All communication between the handset and cell sites is digital, as opposed to traditional cellular service where the voice channels are broadcast as analog. The data stream is also encrypted, so besides providing a clear, static-free audio connection, it also enhances security by making electronic ID theft (cloning) and eavesdropping much more difficult.

Since a digital connection is standard, data messages can flow as easily as voice, and this is where the existing cellular providers will have to play catch-up. In addition to normal voice calls, the system also supports text messaging. For an additional monthly charge, users can send and receive up to 100 brief text messages using the Short Messaging Service (SMS) feature. SMS delivers up to 160 bytes of electronic mail, alerts, or other text, which are received by the handset in a manner similar to alphanumeric pagers.

Caller ID is also built in to the system, so a Sprint Spectrum user may decide not to answer a call based on the caller ID display. That caller ID information is also saved when the answering machine feature is used. If a Sprint Spectrum user's handset is off, or if a call is not answered, the system will automatically switch to an answering machine feature and record the message, the time the call came in, and the caller ID information. Sprint Spectrum users can dial an 800 number, or a service number on their handset, to retrieve those answering machine messages.

If a text message or call comes in when the handset is powered off or out of the service area, the information is not lost. When a Sprint Spectrum handset is powered up, the network will deliver any pending text messages and inform the user of any voice messages waiting in the answering machine service.

Sprint Spectrum has also been aggressive in their pricing. Subscribers have a relatively simple set of choices to make, based on the amount of time they expect to be talking each month and what features they'd like to use. Each "package" is typically less expensive than the competing cellular price, especially since Sprint Spectrum does not charge for calls that last less than one minute. Also, some features are simply not available with cellular: Caller ID and Call Forwarding are already included with a Sprint Spectrum account; Call Waiting and Text Messaging are available for an additional monthly fee.

Usage patterns reflect the difference in pricing. Typical cellular calling patterns peak during morning and evening rush hours and are relatively low at other times. Roughly 80 percent of cellular calls are placed from the cell phone (going mobile to landline), the implication being that most cellular subscribers don't give out their number. Network traffic for Sprint Spectrum, in contrast, rises during the morning rush hour and stays high for the rest of the day, and about 50 percent of calls are placed from the handset. Because of a better cost structure, customers are using the Sprint Spectrum network more often, and relying on their PCS handset to stay in touch throughout the day.

FEATURE	SPRINT SPECTRUM	TRADITIONAL CELLULAR
Voice	Digital	Analog
Paging	Yes	No
Voicemail	Yes	Add-on
Caller ID	Yes	No
Messaging	Yes	Requires additional equipment
Cell site range	2 - 3 miles	5 - 10 miles

Additional PCS voice systems are operating in Hawaii and Utah, with more to come. The challenge that all PCS operators face is not just fielding this new technology, but to actually turn a profit doing so.

Welcome

If you've made it this far you've already got an idea of what this column will be like. The focus will be on the emerging technology that drives Personal Communications Services. Future topics will include cellular systems, paging services, data transfer networks, and other new communications ventures, looking at both the technology and the business of putting advanced techology in the hands of consumers like you and me.

Speaking of me, I'd like to say thank you to the staff of Monitoring Times for welcoming me on board, and I look forward to working with them. I also look forward to hearing from you. Send comments, questions, ideas, and even criticisms to me, via electronic mail, at dan@decode.com.

Until next month, happy monitoring!