PCS Subscribers Are Full Of Surprises; Cheap Talk Converts The Old, Lures The New And Paves The Way For Landline Displacement
August 19, 1997
PrimeCo Personal Communications
trend has been building for the past decade, but the recent surge in
demand is due in part to a new digital technology known as
personal communication services.
PCS is making talk cheap and enticing hundreds of thousands of new
subscribers to take a walk on the wireless side. Most entrants to the
wireless world don't know analog from digital, but their attitudes and
emerging patterns of use are redefining the business, says PrimeCo
Personal Communications L.P.
"PCS subscribers are full of surprises," said Lowell McAdam, COO of
PrimeCo, the first-to-market player that won nearly 200,000
subscribers within the first two quarters of this year. "The biggest
surprise is usage. The average PrimeCo customer is already using their
wireless phone almost three times more than the average cellular
consumer." That deceptively simple statistic is hard evidence of just
how fast PCS is changing the wireless landscape.
PCS represents a new frontier with lots of space. Increased network
capacity, in itself, is proving a dynamic catalyst within the
marketplace. For more than a decade, traditional wireless carriers
operated under the 20/80 principle, meaning 20 percent of the
subscribers gobbled 80 percent of network capacity. Leftover capacity
was marketed to consumers as a "safety and security" blanket, which
brought in new customers but discouraged use.
Enter PCS. In a matter of months, its "priced-to-use" strategy
catapulted wireless phones out of the glove box and into the
That mainstream, however, represents uncharted waters. Half of
PrimeCo's subscribers are first-time wireless users who think of PCS
phones as a logical extension of their home phones, according to
McAdam, which helps explain increased talk time. In the past, wireless
phones were viewed as one-way communicators, something subscribers
primarily used to place a call.
The sound of phones ringing in the grocery store, the mall, and the
gym are testament to the fact PCS users are now receiving nearly as
many calls as they place. The increased usage also indicates
subscribers are reaching for their PCS phone to make dozens of casual
calls once reserved for landline connections.
"This shift in attitude literally speaks volumes," McAdam said. "To
enter the mainstream, you have to offer a product that can appeal to
millions. What this out-of-the-gate spike in usage proves is that when
quality and cost are in line with consumer expectations, demand is
Not only have consumers embraced PCS phones for everyday use, some are
selecting them as second phones for home or as an alternative to
wireline service altogether. This early trend toward wireline
displacement is bolstered by PCS marketing strategies that bundle
popular features and services associated with home phones such as
voice mail and caller ID.
Innovations like flat-rate pricing plans for regional local calling,
which consumers often view as "free" long-distance service, narrow the
gap further. McAdam characterizes PCS as the cross-over product
between wired and wireless networks, and agrees with analysts who
predict roughly 20 percent of all telecommunications traffic will
migrate to wireless networks over the next five years.
To contend in this increasingly competitive arena, PrimeCo is
reshaping its coverage footprint to reflect the usage patterns of its
Typically, traditional cellular subscribers used their phones most
during weekday drive time within central business districts and along
major traffic corridors. PCS subscribers are taking wireless off the
beaten path and out to the suburbs, soccer fields, golf courses, ball
parks, lakes and other getaways. As a result, PrimeCo's subscribers
are using PCS service just about as much on the weekends as they do
This phenomenon impacts all kinds of business decisions, chief of
which is how to efficiently design a network to offer service not only
where subscribers work, but also where they live, shop and play.
PrimeCo is responding with an aggressive 1997-98 network build that
rivals its historic 16-city launch. Some of the new sites are
earmarked to enhance existing coverage, but about 75 percent of the
new sites target new geographic areas.
In fact, when this agressive build is completed, PrimeCo will cover
roughly two thirds of its 61 million potential customers. The
availability of dual-band phones that work on both PCS and traditional
cellular networks, coupled with roaming agreements slated to begin
taking effect later this year, soon will enable the start-up company
to offer subscribers virtual nationwide service.
Handling these logistical obstacles, according to McAdam, clears the
way to tackle the biggest challenge facing wireless carriers wading
into the mainstream - changing wireless communications' "private club"
image to one that welcomes the mass consumer. That's a tall order
involving everything from adopting simple-to-understand pricing plans,
to eliminating long-term contracts, to creating payment options that
make it easier for more people to take advantage of the convenience of
"As we learn, we adjust course a bit, but our basic strategy hasn't
changed," McAdam said. "Because unlike Columbus or other explorers, we
know what we've discovered. PCS is a whole new world of wireless
PrimeCo Personal Communications provides digital wireless service in
19 major cities: Norfolk and Richmond, Va.; Fort Lauderdale,
Jacksonville, Miami, Orlando and Tampa, Fla.; Chicago; Madison and
Milwaukee, Wis.; Mobile, Ala.; New Orleans; Austin, Dallas,
Fort Worth, Houston and San Antonio, Texas; Honolulu and Maui, Hawaii.
The company, which was formed by an alliance of AirTouch
Communications, Bell Atlantic, NYNEX and U S WEST Media Group, owns
PCS licenses covering 19 states and 61 million potential customers in
11 MTAs and has more than 2,800 employees. PrimeCo sells its phones
and service through its own direct sales force, the company's 44
stores, more than 2,000 indirect retail outlets and a toll-free
telephone sales line. The address for PrimeCo's interactive
Website is www.primeco.com.