Arthur D. Little/WirelessNOW survey predicts pricing will determine winner of PCS/cellular...

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb. 28, 1996--According to a recent survey of the wireless communications industry, conducted by Arthur D. Little, the international consulting firm, and WirelessNOW, senior executives were divided on how Personal Communications Service (PCS) providers will compete

The survey revealed that the overriding strategy for both PCS and cellular providers will revolve around price.

Nearly half of the survey's respondents believe PCS licensees should pursue the mass market in the areas where today's cellular providers do not currently compete effectively. In order to profitably implement this type of marketing strategy, PCS operators will need to build inexpensive networks, taking advantage of digital technology.

"To offer full service, including roaming, PCS operators will need to establish inter-carrier agreements with cellular operators," explains Stu Lipoff, Vice President and Director of the Communications and Information Technology Practice at Arthur D. Little (ADL). "However, these agreements are a double-edged sword for cellular providers. On one hand, they offer additional revenue, on the other, cellular is helping its competitor steal market share and build its customer base."

Another 12 percent of the survey's respondents thought PCS should directly compete with cellular for the same customers, but at a lower price. This strategy might also attract a mass market. Another 13 percent believed that PCS should position itself as a replacement of or substitution for residential wireless service.

"We were surprised more respondents did not select to directly compete with cellular at the same price, using technology to lower marketing, provisioning, and operating costs," says Lipoff.

Over one-third of the survey participants indicated that the cellular community will protect its customer base by accelerating investments in digital technology in response to PCS competition. This tactic will drive down the cost of delivering wireless service and should enable a new set of features, such as extended battery life and short messaging. Digital technology will allow customers to use cellular PCS as a replacement for their home phone.

One-third of the respondents believe cellular providers will reposition themselves to offer services to the mass market, while 20 percent think cellular providers will restructure and redesign their business processes with possible strategic investments in productivity enhancing information technology to reduce cost of operations.

An alternate potential strategy is for cellular providers to focus on the premium business customers. Price does not have to be sacrificed. The cellular community can leverage their strong roaming capabilities and provide value-added services to retain high usage customers.

Respondents clearly indicated a list of features - including roaming support, indoor coverage, high speed hand-off and extended battery life - which they felt PCS providers must offer to be competitive. Sixty-four percent thought roaming support was vital to the success of PCS offerings. However, this will be a challenge due to high costs of establishing networks while trying to provide low-priced service.

Extensive indoor coverage and high speed hand-off scored as important to over 70 percent of respondents. Over 60 percent indicated that handsets under $175 were a very important feature. The last feature of great importance was extended battery life. -0- About Arthur D. Little Established in 1886, Arthur D. Little Inc. is one of the world's premier consulting firms, with offices and laboratories around the globe. Headquartered in Cambridge, Mass., Arthur D. Little provides consulting in three areas: technology and product development, management consulting, and environmental, health and safety consulting. The Communications and Information Technology practice at Arthur D. Little provides technology based consulting services to help clients leverage technology for competitive advantage. For more information, visit the Arthur D. Little home page http://www.adlittle.com

About WirelessNOW WirelessNOW is a service of CommunicationsNOW. It provides financial and management announcements, technical and marketing discussions, and a comprehensive library of documents and federal contract opportunities to wireless industry professionals. Several hundred senior managers representing wireless service providers, equipment manufacturers, and software companies subscribe to the service. For more information, visit the CommunicationsNOW home page http://www.commnow.com. -0-

                  THE SURVEY RESULTS ASSIGNED A VALUE TO
                          EACH OF THE FEATURES

The scale ranges from 0.00 to 5.00

0.00=Not Valuable
1.00=Marginal
2.00=Valuable
3.00=Important
4.00=Very Important
5.00=Vital

The following are mean scores:

Extensive Indoor Coverage         3.96
High Speed Handoff                3.87
Handset - less than $175          3.81
Extended Battery Life             3.70
Roaming Support                   3.62
Dual Cordless/Cellular            3.33
Cellular-like Coverage            3.28
Mobility Management               3.19
Screened Calling                  3.07
Calling Party Pays                2.71
Short Digital Messaging           2.58
Packet Data Pricing               2.41
Follow Me Service                 1.93
Advanced Information Services     1.76

CONTACT: Arthur D. Little, Cambridge

Randi Alterman, 617/498-5119

or

GCI Group, New York

Kirsten Bollen, 212/546-1646