Name: Robert F. Stott
Occupation: President of Bell Atlantic Mobile’s Northeast region. (BAM has about 6.5 million customers and posted more than $900 million in revenues last year.)
Backround: Started with NYNEX’s New England Telephone Co. in May 1966 as an equipment installer. Moved to NYNEX Mobile Communications Co. in 1986 as New England’s general manager of engineering and operations. In 1993, he became vice president of New York Standard Metropolitan Statistical Area and was responsible for restructuring the Bell Atlantic Mobile/NYNEX Mobile partnership there. Became vice president/general manager of rural markets in 1994. Was president of the Philadelphia -Tri State region before taking on his current position in January 1998.
Education: Master’s degree in business administration from Pace University; bachelor’s (math major) from the University of Lowell in Massachusetts.
Age: 52
Residence: Windham, N.H.
Family: Married, two children
PBN: What is the competition like in the mobile and wireless phone industries?
STOTT: It’s pretty intense right now. Up until a few years ago it was a duopoly and things were moving right along. Then we had PCS (Personal Communications Services) companies such as Sprint, AT&T, and Nextel and another one that’s PCS is Omnipoint. In most of our markets we have about six competitors, particularly in the Northeast there are about six competitors in every market that we have in this region. There’s been a lot of, I wouldn’t call it noise, but a lot of advertising in the newspapers. A lot of consumers open the newspaper — you have a full-page ad on page four. So you’re seeing a lot of ads. What it’s done for the consumer is bring prices down. We’ve seen phenomenal growth in our business.
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People have been used to cellular technology for awhile; now there’s digital service. Is it getting harder to explain the difference to consumers?
Consumers are pretty savvy. They’re right on top of the digital. I think that goes back to when the CDs came out and they saw the differences there; now they’re looking at analog versus digital wireless. The PCS companies came out at a time (when it) was very good for them, because when they came out the digital technology was already viable. For cellular: it was in 1984 we began operations and analog was the only technology available. Then we had to migrate to a digital technology when it became available, which was coincident with the PCS players coming online. But it’s been an absolute boon to everybody, both the companies because we get capacity advantages out of the digital networks. With the CDMA (Code Division Multiple Access, which digitizes phone conversations during transmission) system you can get six to eight times the calls than you would get on a single channel in analog.
That’s from the company’s point of view; you get more calls per channel?
Our prime resource is spectrum allocation, frequencies that we were allocated by the FCC (Federal Communications Commission). On an analog system you’d have one radio channel, one conversation. In a digital system we’re seeing six to eight conversations on that same channel. And what that’s done is allow us to reduce our costs, because we’re getting eight times the capacity. In the last year, our prices have gone down 30 percent or more.
Is cellular going to be obsolete at some point?
Well we’re still cellular. Even though it’s digital, it’s digital cellular. PCS is the same thing. It all depends on the frequency band. Our analog network and digital network are in the 800 megahertz range. PCS companies, they were allocated frequencies in the 1900 megahertz range. Are you asking if analog is eventually going to go away?
Right.
We’re seeing thousands of customers migrate from analog to digital today. But there will always be a niche somewhere. For example, most safety type customers, the customers who just want the phone and will never use it. They’re staying with analog. They don’t need the bundles of minutes you can get with digital plans. They just want to have a phone to use if any type of safety issue comes up. I don’t know whether you’re aware of this or not, but across the country there are about 98,000 9-1-1 calls made per day (from mobile phones).
There are patches in New England where customers can’t get calls or reception is bad. Why is that and can we expect it to be fixed?
Since it is a radio technology and the propagation of frequencies is what it’s based on, you have topography issues. Imagine for example if you have a large hill or mountain, it could be shadowed (obstructing transmission). We’ve been in this business since the early ’80s and our network has grown very expansive. Now what we do is we identify spots like that and we go into areas and try to build towers and provide the technology in that area. But there are some (dead spots), but they’re fairly infrequent with us at this point. The newer players, it’s a larger issue at this point. They’ve been in the business a couple of years now and they’re continuing to build rapidly.
Over time it will be ubiquitous, but at this point you have spots. It depends on the carrier. For example, you could be with us and not have any problems at all going down Route 93. You could be with say, an Omnipoint, and go down Route 93, not have any problems, and as soon as you get off the exit you can’t make any calls. (That’s) because the newer companies focused on the major arteries, then their secondary focus is on building off the arteries coverage. They’re getting there; they’re not there yet.We’re trying desperately, all these companies are trying desperately, to fill in any ‘holes.’ Our build program is it’s got to be just under $200 million in this region alone.
There’s all sorts of phone features, like text messaging and picking what kind of ring you want your phone to have. What are customers responding to?
You’ve hit on a couple of them. It depends upon the segment. We have the availability of digital numeric paging, you don’t need a separate pager. With digital numeric paging someone will keep your phone number and the phone will page you. So we do have a segment that looks at that. Text messaging is another one. For example I use that, I get the Dow Jones several times a day, the S&P, NASDAQ, all that type of information – any business information regarding the communications industry I’ll get messages during the day on my phone. We do have a lot of customers that look for that.
Of course voicemail is a huge feature. Another feature that many customers use is Info Assist, when they’re looking for information, you know just somebody else’s phone number.
Somebody else’s cell phone number?
No not cell phone number. If for example you’re looking for a movie theater, you could call Info Assist and say, ‘I’m going to be in Providence and I’d like to go to a movie.’ It’ll even tell you what’s playing. Then it will complete the call for you to the movie theater and restaurants also. Another feature is what we call Talk Dial, where customers can just talk into the phone and say call home and it will call home, or call the office and it will call the office. It’s a feature that a lot of customers look to for safety (while driving).
Others are looking for wireless data. They look for laptop computer service, where they can go wirelessly and log on to the Internet. There’s a lot of demand for that feature. Wireless data is probably about 3 percent of our revenues now, and I anticipate that to continue to grow to probably 10 percent over the next year or so.
You talked about Info Assist before; at this point there aren’t any listing services to get cell phone numbers. Are there any plans for that?
No. At this point, people don’t usually want to give their wireless phone numbers out. Part of that is because you pay for incoming calls as well as outgoing calls. Although now with the large bundles of minutes you get with the digital that’s kind of taken on a different way. But the FCC took some action this week (June 7-11) on what they call ‘Calling Party Pays,’ we believe it will allow mobile customers to better control their costs and make the services more attractive to consumers. What happens with Calling Party Pays, if you’re on a landline and you call me on my mobile phone, you would be given a recording saying: ‘You are calling a mobile phone customer and this call will cost you 25 cents.’ The mobile customer will not pay any charge on that call.
When could we expect that to take effect?
At Bell Atlantic Mobile we operate a market in the Southwest, the Arizona area. They utilize Calling Party Pays today – they did it as a trial and have continued with it. I haven’t got any data at all to be honest with you, but it seems to be on the front burner now. It will be sooner rather than later. Landline customers, I think, would like Calling Party Pays as much as mobile customers, because it gives them more access to mobile customers. This might be what drives directory assistance to mobile numbers.
What can we expect in the future from wireless service?
Wireless communications is mainstream. What we saw in the last 15 years, you saw corporate America and to a lesser extent the consumer start to get comfortable with wireless phones. The next several years you’re going to see Main Street get at home with them. Today where you see one-in-every-three new phone numbers is for a wireless phone service – that’s incredible. About one-quarter of the U.S. population has a wireless phone. Now we’ve seen simplified pricing come into play, we’re giving large bundles of minutes so you see higher usage. So you’ll see that simplified pricing trend continue and what’ll happen is pricing will come down even further.
We’ve estimated that about 40 percent of the 120 million workers in the U.S. workforce have what you could term as a mobile job. So while some of them might have been uncomfortable before with the thought of working out of a vehicle, working while they’re walking, I think they’re going to find mobility can be a significant advantage. I think what you’re going to see is the mobile phone is going to start to supplant the landline telephone.
You’ll probably see some exponential growth in wireless data applications. People using laptops wirelessly, or Palm Pilots wirelessly. Those are available. Those that use them have a common need to keep in touch with customers, suppliers, access corporate dispatch centers, corporate intranets, or the Internet, to file reports, access e-mails – all from wherever they are at any time, wirelessly. They can do it today, but it’s going to get faster and more efficient in the near future. We see it now with point-of-sale, where we have a wireless unit. You know, when you walk into a Macy’s store now and they swipe your credit card through their point-of-sale unit. The wireless point-of-sale unit is even faster.
Does that mean I won’t have to stand in such long lines while Christmas shopping?
Absolutely. We have a lot of this wireless data technology in field service automation, from electric and gas utilities to heating and cooling businesses and the like. Law enforcement is a big one; they use laptops mounted in patrol cars and have instant access to national and local criminal databases, regional motor vehicle databases. It gives more safety to the officer and also provides them information that can help.
For example, if you were to be pulled over speeding, by the time you stopped your car and put it in park that officer would know: who’s supposed to own that car, who should be behind the wheel of the car, is it a stolen car, are there any traffic warrants outstanding. They have this stuff at their fingertips; it’s really interesting. I saw in Delaware one time, where they had this drug bust and they actually did all the booking – they were in a small town – from the cruiser. It’s really a good technology and a safe technology. The other thing is it has helped to do in some locations is to alleviate the 9-1-1 dispatchers, because a lot of times these police cruisers on the road are calling the same dispatcher. This kind of free them up as well.
Speaking of 9-1-1, sometimes when people use a wireless phone to call for help they don’t know where they are. Can we expect developments to help pinpoint where people are for police?
That’s called Enhanced 9-1-1 Phase II. That development is coming down the road. The FCC is working on that one also. We’re trying to set the standards, there are some companies trying to provide that technology today. That’s going to happen. That stuff is being tested now. When it will be implemented, I can’t tell you.
