Why You Still Can't Hear Me Now

Mergers, Years of Investments
Fail to Fix Dropped Calls;
Silence on Lake Shore Drive

By LI YUAN
Staff Reporter of THE WALL STREET JOURNAL
May 25, 2005; Page D1

In an attempt to eradicate the dropped calls and dead zones that plague cellphone users, wireless companies have spent small fortunes trying to improve their networks. As part of a telecom mergers boom, last fall, Cingular Wireless bought AT&T Wireless for $41 billion, in part to get access to additional network capacity.

But billions of dollars in investments later and several mergers further -- and at a time when some 11 million customers have ditched their traditional phone service and become more reliant on cellphones -- the long-promised improvement still hasn't come. This is an enormous source of bafflement and irritation to consumers, whose patience has begun to run out as evidenced by a continuing high volume of complaints.

Roughly one out of three cellphone calls had quality problems of some kind last year, according to an online survey by J.D. Power & Associates of 21,700 wireless customers. The result was essentially unchanged from the 2003 survey, the first year it was conducted. Besides dropped calls and an inability to connect, callers constantly experienced interference, echoes and voice distortion.

Deadcellzones.com, which lets consumers post locations where their calls are routinely disconnected or fail to go through, lists scores of well-known places: from the intersection of Interstates 80 and 55 in Chicago to the campus of the University of San Diego.

Wireless companies contend that if they spent the money required to fix all the problems, their customers would have to pay more for service. They also cite local opposition to building new cell towers, which are the primary means of connecting wireless calls.

But there is still plenty the industry could do to improve service. Wireless carriers, for example, rarely let their customers roam onto another carrier's network in a large market where they already have their own infrastructure. This lack of cooperation inhibits better service.

Also, the mergers haven't necessarily led to better connections. It has been seven months since Cingular Wireless acquired AT&T Wireless, becoming the nation's largest wireless company. Since then, Cingular has been trying to push former AT&T Wireless customers from an old network to a newer network. As part of that, it has been spending next to nothing to maintain the old network, leaving customers who don't upgrade in the lurch. Cingular Wireless had the highest rate of consumer complaints received by the Federal Communications Commission in the fourth quarter of 2004, its first quarter as a combined company.

How reliable are cellphones these days? Don Fenstermacher needs two cellphones to stay connected. A lawyer based in Albuquerque, N.M., Mr. Fenstermacher has to travel to small towns in the sparsely populated state to file lawsuits. Because his T-Mobile BlackBerry phone doesn't work most of the time on the road, he keeps a Verizon Wireless phone as well. A T-Mobile spokesman says its network "is strongest where the large majority of Americans live, work and commute."

But coverage problems affect customers of all the major cellphone providers and encompass many well-trafficked areas, according to deadcellzones.com.

In New York, for example, some Sprint PCS subscribers say they have trouble making calls on the campus of Columbia University, while Cingular subscribers have reported choppy coverage in the heart of Central Park. In Chicago, Nextel customers have experienced problems in a 10-block stretch of Lake Shore Drive near the Museum of Science and Industry, while Cingular subscribers say calls made on highways near O'Hare International Airport can easily get dumped.

In New Orleans, service can be spotty for Sprint PCS customers along the popular lakefront. Coverage for Verizon Wireless customers in Los Angeles can be patchy near the intersection of Sunset Boulevard and Pacific Coast Highway, two of the city's major arteries.

Most call problems are traceable to gaps in the quality of the network, including the number of cell towers and the number of radios connected to the towers. Lack of proximity to cell towers -- and the insufficient number of radios in the towers -- can also lead to service problems because callers are unable to get a signal.

Wireless companies have made some strides in improving coverage over the past few years. In places where it's more difficult to install cell towers, U.S. wireless companies have been deploying micro-cell sites, or antennas that provide coverage in very local areas. These have been added in tunnels, airports and some neighborhoods to improve overall network quality. Some carriers also use repeaters -- devices that amplify cellular signals -- to improve indoor coverage in office buildings, shopping malls and convention centers.

As a result, Verizon Wireless customers can now use their cellphones in the Baltimore Harbor Tunnel, for example, and in the Lincoln and Holland tunnels in New York, says Dick Lynch, chief technical officer of Verizon Wireless. Cingular says it has improved coverage at a number of sites in the greater New York City area, including the train platforms at Grand Central and Penn stations, the Port Authority Bus Terminal, and baggage claim in one terminal of Newark Airport. Cingular, meanwhile, says it has improved coverage in Chicago -- around O'Hare Airport and Wrigley Field, among other places.

But in other areas, progress has been slower. Cingular continues to push former AT&T Wireless customers to move from their old TDMA network to Cingular's newer GSM network, which requires those customers to upgrade their phones.

Although 28% of aftermerger Cingular subscribers are still using the old TDMA network, the company is investing close to nothing in that infrastructure, says Ed Reynolds, Cingular's network operations president. The TDMA network is "emptying out," and handles only 16% of Cingular's total air minutes, he says. Cingular says the combined network will ultimately improve coverage, but the integration will not be finished until June 2006.

Wireless companies are also investing heavily in developing more advanced -- and potentially lucrative -- third generation or "3G" services. Eventually, such networks will be more reliable, analysts say.

But the new features could end up competing with voice services for room on the network. For their part, the carriers say investment in the 3G network will also increase their ability to handle more phone calls.

Verizon Wireless is investing altogether $1 billion in its 3G network in 2004 and 2005. Cingular Wireless declined to disclose its investment, but said its spending on 3G network over the next two years will be comparable with that of Verizon Wireless.

Wireless companies say they have designed their networks so that 98% of the time calls can go through. But in many bigger cities, the success rate often feels a lot lower than that.

During the 40-minute commute to his office in Oak Brook, Ill., Adam Kriger uses the downtime to make cellphone calls to his business partners. Or, at least he tries to.

Like clockwork, his calls consistently get disconnected along the same 10-mile stretch of highway, about halfway into his commute. "I can't start a call and expect it to last through," says Mr. Kriger, an executive at McDonald's Corp.

Mr. Kriger says he has complained about a dozen times to his provider, AT&T Wireless and now Cingular. He says he is often told that the problems are the result of heavy cellphone traffic volume from commuters. Why then, he wonders, doesn't the coverage get any better over the weekend when the traffic is light.

Cingular says: "We have those highways well-covered in Chicago, as you may imagine, but that's not to say everything is perfect. We are working hard in Chicago and elsewhere to continue to improve our network coverage."

By the end of last year, some 182 million Americans had cellphones, up 14.7% from 2003, according to CTIA-The Wireless Association, a trade group. In Europe and Japan, where wireless growth has long been brisk, there is now some evidence of saturation.

In the U.S., the number of people with cellphones will continue to grow, despite the service snafus, analysts predict. But, as they have in the past, customers will continue to express their frustration by switching carriers, the analysts say.