By JESSICA TOLEDANO
Staff Reporter
Fueled by cheaper rates, the number of cellular phone users in the Los Angeles area has doubled in the past four years to an estimated 3 million subscribers.
The trend mirroring soaring use of cellular phones nationally is also tied to increasing use of cell phones for personal calls, which now account for 70 percent of all cell phone use, according to one industry expert.
Once reserved largely for doctors, stockbrokers and high-end real estate brokers, cell phones are now commonly seen at supermarkets and video outlets, as shoppers call home to check an item on the grocery list or consult on the evening’s movie rental.
“There is a whole new breed of people using cell phones,” said Melissa May, a spokeswoman for Airtouch Cellular. “Now we are seeing people buying phones just to talk, when before it was just for business.”
Many of the new users are on discount plans that give them free use of the phones on weekends making the palm-size gadgets ubiquitous on golf courses, beaches, youth soccer fields and shopping malls each Saturday and Sunday.
Taking into account the free weekend use, the average per-minute charge in Los Angeles is now 44 cents, a 38 percent discount from the 1994 average rate of 71 cents, according to Mark Lowenstein, a retail consultant for the Yankee Group, a Boston-based consulting firm.
Lowenstein said personal calls now account for 70 percent of cell phone use, whereas five years ago 70 percent of usage was tied to business.
And nationwide, the average monthly cell phone bill is now below $50 down from nearly $100 in 1987, according to Cellular Telecommunications Industry Association.
Because of the competitive nature of the business, cell phone companies declined to reveal how many people subscribe to their services. But officials with L.A.’s two biggest companies AirTouch and L.A. Cellular both estimate that the number of subscribers in the county has doubled to 3 million since 1994.
“There has been a substantial increase,” said Steve Crosby, a spokesman for Torrance-based L.A. Cellular. “It is really not that expensive anymore if you need to be in touch with your loved ones. Everyone can now have access, from the person who makes $15,000 a year to the person who makes $150,000 a year. The industry has come a long way from where it began.”
One of those new users is Barbara Mendez, a retiree in Paramount.
“My cell phone is a necessity for me. I don’t know how I ever lived without it,” she said. “I had a liver transplant and I need to keep in touch with my family all of the time. I have three daughters and a son who want to be in constant contact with me.”
When cell phones first came out, the federal government limited competition to two providers per market. For more than 10 years, L.A. Cellular and Airtouch Cellular were the sole providers in the L.A. market. With no other competition, prices remained fairly stagnant.
But the Telecommunications Act of 1996 allowed the Federal Communications Commission to sell off $20 billion worth of new licenses to companies that wanted segments of the airwaves. This opened the door for long-distance and regional phone companies to enter the wireless business.
The deregulation allowed phone-company subsidiaries like Sprint PCS and Pacific Bell Mobile Services to set up shop in Los Angeles. And both companies came into the market with much lower prices.
“Prices have come down dramatically because the FCC has licensed so many new carriers and the existing ones have had to lower their prices to stay competitive,” said Richelle Elberg, an analyst for Carmel-based Paul Kagen Associates Inc. “The customers are the ones who are benefiting.”
Among those who have noticed the increase in cell phone usage for casual chats is the manager of the Blockbuster Video outlet on Pico Boulevard near Beverly Hills.
“Cutomers used to use our phones to call home and see if the people at home saw the video. Now they use their own phones,” said the manager, who asked that her name not be used. “A lot of times customers will ask us to turn the TV monitors down in the store so they can hear themselves on their cell phones. It happens every day, and a lot on the weekends. We pretty much don’t even notice anymore.”
The rise in personal and overall usage has led to corresponding growth at L.A. Cellular, which now has 2,400 employees and 47 stores, up dramatically from 957 employees and seven stores in 1994.
AirTouch, which originally sold its products through third-party retail stores, now has its own chain with more than 37 stores in Southern California.
Nationwide, the estimated total number of subscribers has gone from 7.5 million in 1991 to 55.3 million in 1997, and is projected to hit 71.7 million by the end of 1998, according to the Cellular Telecommunications Industry Association.
As the cellular industry has grown, it also has begun rolling out more-advanced technology.
Old analog technology is being replaced by digital services. Analog devices, such as radios and conventional cellular telephones, transmit signals of the original sound or image over the airwaves. These signals are then reinterpreted at the receiving end. Digital devices, on the other hand, provide greater clarity and faster transmission by breaking down the video or sound signals into their simplest components the ones and zeros of basic computer code and sending those over the airwaves.
Digital transmissions are also more secure for the customer because they are nearly impossible to “clone,” the process whereby criminals snatch mobile identification numbers out of the air, and use them to make unauthorized calls.
Mike Croft, a real estate investor for CommonWealth Partners in Los Angeles, moved from the analog system to digital a year ago.
“I changed over and it was great,” said Croft. “You also get a lot of added features with digital-like voicemail and e-mail. The technology seems to be evolving very rapidly and the quality is getting better and better.”
Customers have been jumping on the digital bandwagon. A month before the November 1997 launch of Sprint PCS service in L.A., the company had signed on thousands of subscribers.
“We blew a hole in the market that wasn’t there in the past,” said Rodney Egdorf, area vice president for Sprint PCS. “The customers were clamoring for another choice.”
Pacific Bell Mobile Services also experienced tremendous interest in its digital technology, capturing some 300,000 L.A. subscribers after only 18 months in the L.A. market.
Now all the L.A. service providers are offering digital service.
“In 10 years, we predict 58 percent of the Los Angeles (wireless) market will be using digital technology,” said telecommunications analyst Elberg.
Elberg added that someday down the road, wireless will be as cheap as a home phone and may replace ground-line phones entirely.
But for many highly mobile Angelenos, ground-line phones are already essentially a faint memory.
“My cell phone has definitely become a necessity,” said Adi Kabatchnik, an actress from Brentwood. “I am constantly paged for auditions or to pick up scripts and I need to call people back immediately. I use it a lot. I sometimes use it in my car to see if stores are open.”
