Subject: [NEXTEL-1] Wireless carriers still open to deal with T

From: Marcel <[email-masked]>
Date: Wed, 30 Oct 2002 22:31:37 -0500

http://www.boston.com/dailyglobe2/301/business/Wireless_carriers_still_open_to_deal_with_T+.shtml/Wireless_carriers_still_open_to_deal_with_TP.shtml

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Wireless carriers still open to deal with T

Financial terms for tunnel service at issue

By Peter J. Howe, Globe Staff, 10/28/2002

AMBRIDGE - Despite last week's collapse of a $15 million plan to bring cellphone coverage throughout Boston area subway tunnels, leading wireless carriers say they remain interested in the concept if the financial terms can be restructured.

AT&T Wireless, Cingular, and Verizon Wireless, the three biggest carriers in Greater Boston, all said they hope to find a way to enable MBTA riders to use their cellphones throughout the system's 19.5 miles of subway tunnels and 29 underground stations.

While none of the three companies could cite changes in the proposed financing that would guarantee they would go ahead, executives said a major problem with the deal were the heavy upfront capital costs, which they would want to spread out over several years. Another problem they cited was the T's proposal to collect as much as $3 million in annual rent in addition to heavy installation and maintenance costs for wireless transmitting gear.

Massachusetts Bay Transportation Authority officials say they remain open to changing financial terms for the deal. They see wireless service underground as both a convenience for riders and an aid to public safety in cases of crime, an accident, or a terrorist attack. ''I know that we're not going to give up on it,'' said Joe Pesaturo, a spokesman for T general manager Michael H. Mulhern, although Pesaturo could not predict how soon a new deal could be reached.

Interviews with a dozen T riders last week, most of them cellphone owners, indicated many would like the convenience of being able to start or continue a conversation underground and use wireless data services. Some, however, said the subway is probably too loud to talk, and they would find it annoying to be in a subway car or trolley full of riders chatting on cellphones.

''I'd definitely like to see the service,'' said Lara Lukomski of Boston, an intern at WHDH-TV. ''It would probably make people feel safer, plus there are a lot of times that the T is running late and it's nice to be able to call your employer.''

Justin Carofano, a 25-year-old Volkswagen of America marketing executive from Watertown who rides the T frequently, said: ''It's kind of an inconvenience that you can't get calls down there. Considering emergency situations, I think it should be available, but I hope it wouldn't be abused. I shouldn't have to sit there and listen to 100 people having conversations on the subway.''

Last year, Illinois-based Andrew Corp., a leading wireless transmission system company, won a T contract to act as a ''neutral host'' for wireless carriers and install antennas in stations and miles of so-called leaky coaxial cable in tunnels to carry wireless signals. However, with a deadline coming up this Thursday, Andrew said it was unable to get any of the six carriers in Boston interested in signing up, and it was dropping the plans for now.

Chuck Jacobs, president of Andrew's wireless in-building unit, said: ''At the end of the day, the business models we put together to them were just not compelling enough. I think everybody wanted it to work, but their capital budgets just are not as robust as they were two years ago, and the business model just isn't as strong as it could be for other sites.''

Jacobs said Andrew, in late stages of negotiations, offered a four-phased approach that would start with a $5 million project covering the four core transfer stations - Downtown Crossing, Government Center, Park Street and State - and the Green Line stations and tunnels from Park Street to Kenmore. Andrew's proposal was that a carrier could sign on for the first phase without being committed to any additional phases, but they still turned it down.

To varying degrees, the three largest carriers all said they still hope to forge a deal. AT&T's Marty Nee said: ''We're very interested in continuing our discussions with the MBTA, but right now we can't justify it economically. The up-front costs are just prohibitive. But I can't emphasize enough how badly we want to be in the tunnels.''

Cingular spokeswoman Cecelia Bender said her company would be ''very interested'' in pursuing a plan that involved at least three carriers, deferred start-up capital costs for a year, and postponed ''final capital investment until the end of the project.''

Richard Enright, director of engineering for Verizon Wireless's New England operations, agreed that ''we don't want people to have to wait 15 minutes before they pull out their phone.''

But Enright said: ''When I looked at the cost vs. the opportunity, it was a very high risk,'' especially given pressing demands to use scarce capital funds for above-ground upgrades elsewhere in New England that looked far more profitable. ''There will be service there [in the subway tunnels] at some point,'' Enright said. ''We just have to figure out a cost-effective way to do it.''

At Nextel Communications, spokesman John E. Redman said a much higher priority for Nextel is completing wireless service in the new Boston Big Dig highway tunnels.

''If they came back with another proposal, we'd look at it, but we'd have to look at our priorities,'' Redman said. ''Who knows how much usage it would get? Trains are noisy, and how much people would want to talk about business matters with someone sitting in the seat next to them is not clear to me.''

Sprint PCS and T-Mobile, the two other carriers, also concluded the service would not be justifiable economically.

Christopher J. Foster, a wireless industry analyst with Technology Business Research in Hampton, N.H., said the project might become affordable if carriers that use the same wireless protocols teamed up, with Sprint and Verizon building a shared underground ''CDMA'' mode network, and AT&T, Cingular, and T-Mobile sharing a ''GSM'' network.

Foster estimated that mobile carriers have gross margins of about 7 or 8 cents per minute of wireless usage. That suggests the wireless carriers would have to get about 80 million to 100 million minutes a year of net new phone use in the T stations and tunnels to cover costs. That's roughly equivalent to 50,000 to 65,000 riders each making or taking a five-minute call every Monday through Saturday. The T has 670,000 daily weekday subway and trolley riders.

Verizon's Enright and other wireless analysts say the T environment might be more suitable for wireless data and e-mail, rather than conversation.

The T already has an estimated 762 pay phones across its system that are provided by Verizon Communications, with AT&T as the interstate long-distance carrier.

Peter J. Howe can be reached at [email-masked].

This story ran on page C1 of the Boston Globe on 10/28/2002.

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