Cellular demand increasing, but market tightens for retail outlets

As the demand for cellular service increases, the number of providers and their local offices continue to increase, too.

"When wireless started in the early to mid '80s, the experts said if we could hook up 10 percent of the U.S. population by the year 2000, that would be phenomenal," said Mark Dickey, president of Chief Communications Inc. "Here we are at 2002, and nationwide approximately 40 percent of the population has a wireless phone. And by the end of 2006, they expect that number to double.

"It's taken from the early '80s to 2002 to get 40 percent of the population hooked up, and then in about 3 1/2 years they're going to do that again. We're going to see a huge wave of people coming to wireless."

While those projections are impressive, there is some concern by local companies about the number of retail outlets.

Jason Conover, general manager with Atlas Communications, said sales of cell phones have dipped 20 percent from June-August 2001 compared to June-August 2002. Atlas is a reseller of Alltel.

"The pie is getting too thin," Conover said. " There's been no recent overall increase in sales. We do a lot of upgrades because phone models change so fast, existing customers can get new equipment, at a discounted price every year."

Many of the retail cellular offices are resellers of services. Randy Taylor, assistant store manager for AT&T Wireless, a corporate-owned store, said the number of resellers chops up the profit pie but gives better name recognition to the parent company. "The cellular industry and the growth in this market, as far as new (resellers), has slowed," Taylor said. "This is a rural market to an extent. What some of the carriers are realizing is that this is a hard market because of the size. There is only so much room here.

"As far as our portion of the pie, it does affect it. But it should increase business for the company as a whole. In general, it hasn't hurt us badly. While at the same time it does (take business away), it also heightens awareness. We see business driven in from our name being out there more often."

Dickey attributes the increased number of local retail locations to an increase in the number of wireless providers.

"You've got a lot of different carriers," Dickey said. "Originally in Springfield you had AT&T and Alltel. Now you've got Nextel, Sprint, Cingular you've got more choices. With that there's more sales pressure and more people are being exposed to the product and services, so you're adding more customers."

Bill Bryan, regional market manager for Cingular's two corporate stores, said the competition among service providers has caused the rates to decrease. As a result, Bryan said, the number of Cingular's sales are up from last year.

Cingular was known as Southwestern Bell Wireless before its merger with a Bell South cellular subsidiary. Cingular was created in January 2001.

"Wireless activations have increased over the past year, primarily due to inexpensive, national rate plans," Bryan said.

Change on the horizon

There are some changes looming on the wireless horizon.

A Federal Communications Commission rule about how much band spectrum a company can hold in a particular market is changing at the end of the year.

"(It) will allow companies to own more spectrum," Dickey said. "Companies like AT&T and Cingular will perhaps merge. After the first of the year, we will start to see some mergers, possibly.

"It may be good or it may be bad, nobody knows. It could be bad in that the consumer has less choice. You're going to see some shakeout where different companies are absorbed, bought out, merge or whatever.

Bryan agrees.

"The bigger carriers will buy out the smaller ones. The smaller ones will be absorbed," he said.

(Ann Bucy, freelance writer, contributed information for this story.)