Cellular: It's Still A Bumpy Highway For Data

A few years ago, it took Co-Op Building Consultants 10 days to assess fire or hurricane damage and get the paperwork to an insurer. Now, equipped with cellular phones, consultants at the risk-management firm based in Corpus Christi, Tex., fill out an estimate on a laptop, wing it via cellular to headquarters for approval, and hand over a faxed copy to the insurance adjuster--all in 90 minutes. Says Co-Op President Clay Page: "We can handle about 60% more work with the same number of people."

Satisfied as Page is, he's part of a tiny minority of cellular customers--about 5%--who use their wireless phones to transmit data. Why so few? Carriers have been too busy building networks, signing voice customers, and paying off debt to promote data services. And because today's cellular nets are designed for voice, they have some disadvantages.

But that's about to change. As wireless data networks such as Ardis and Ram come on strong, cellular operators want a a piece of a market that may be theirs to lose. No. 1 carrier McCaw Cellular Communications Inc. says it will unveil plans for data services next month. Says PacTel Cellular President Susan Swenson: "We've got a highway out there, and we'd like to put more cars on it."

CALLING THE COPS. Cellular players are betting on heavy traffic. By 2000, nearly 13 million users of mobile data terminals will spend about $50 a month each on cellular network calls, predicts Michael McLaughlin, a consultant with Booz Allen & Hamilton Inc. Moreover, adding data traffic could bolster cellular profits, since carriers wouldn't have to install much new gear.

Portable computers and data terminals wouldn't be the only market, either. Vending machines could use cellular to automatically send data to computers at headquarters, and alarm systems could call the police.

But cellular carriers have a lot to do first. Today, noisy cellular lines often scramble data. Data also can be lost when a caller moves from one cellular relay station to another. And cellular costs more on brief calls: That can triple the cost of a typical 10-second data message.

Still, cellular has advantages: It already covers hundreds of cities. And new technologies soon may fix many of its problems. Some carriers are planning this year to add packet networks similar to those of Ardis and Ram. That would eliminate the hassle of programming modems and allow the same instant connections, cutting transmission costs.

The biggest boost may come this year as carriers begin to replace their analog networks with equipment using the same digital language as computers. That will improve reliability and speed transmissions. It also will triple capacity, leaving more room for data.

But for now, it's uncertain how many customers will wait for the improvements. Unless cellular carriers ease the path for data, they may find customers taking another highway.

Before it's here, it's on the Bloomberg Terminal.