Federal regulators yesterday opened the way for new competition in cellular telephone service, giving tentative approval to a small New Jersey firm to set up rival systems in six U.S. cities.
The Federal Communications Commission said Fleet Call Inc. could install new digital technology that could expand by fifteenfold the capacity of two-way radio systems that it already operates for drivers and dispatchers of commercial trucking and delivery companies.
Fleet Call said it expects customers will use the added capacity to tie their radio systems into the conventional phone network in the same way that cellular systems operated by local phone companies and others do now. At the same time, the company would offer the service to individuals, who could make and receive calls on the move as customers of existing cellular companies can.
Some analysts believe the system might have disadvantages over today's cellular systems, however, such as the inability to make calls from neighboring service areas.
While there are some differences in the systems, the practical effect of yesterday's FCC decision is to expand competition in the cellular industry by allowing three -- rather than the current limit of two -- companies to operate in the six cities. The FCC said it would be willing to consider granting licenses in other cities in the future.
Pricing for the new cellular service has not been set. "We'll have to keep an eye on cellular prices, whatever they are in the next two years," said Morgan O'Brien, Fleet Call's chairman.
The move was fought by the cellular telephone industry, which since its inception in the early 1980s has operated under rules allowing only two companies to be licensed in each market. The 1990s are seeing new demands for radio services that range from satellite television broadcasts to wireless data networks. The FCC is trying to figure out ways to accommodate these demands to a broadcast spectrum, which by its physical nature is limited.
"We must encourage more spectrum-efficient technologies if we are to satisfy the demand for mobile communications in this country," said FCC official Michael Lewis.
The FCC already has licensed, on an experimental basis, systems that would use other frequencies to operate lightweight pocket telephones. Fleet Call's authorization, which still must obtain further FCC approval, is for a full commercial system in the six cities, on permanent frequencies.
Privately held Fleet Call had sales last year of $65 million. To build the six systems, which it estimates would cost about $700 million, it will need to line up a major corporate partner to help with financing. O'Brien said the company hopes to begin operating the new service in Los Angeles in two years. It also has the go-head to build systems in Chicago, New York, Houston, Dallas and San Francisco, a job it hopes to complete by the end of 1995.