SIC 4812 Radiotelephone Communications


SIC 4812

Establishments included in this category are primarily engaged in providing two-way radiotelephone communications services, such as cellular telephone services. This industry also includes establishments primarily engaged in providing telephone paging and beeper services and those engaged in leasing telephone lines or other methods of telephone transmission, such as optical fiber lines and microwave or satellite facilities, and reselling the use of such methods to others. Establishments primarily engaged in furnishing telephone answering services are classified in SIC 7389: Business Services, Not Elsewhere Classified.





Cellular and Other Wireless Telecommunications


Telecommunications Resellers


The first wireless telecommunication services, apart from radio, were developed in the 1960s, and the first experimental cellular systems were installed in 1979. Even by 1985, only a few hundred thousand Americans were using cellular telephones. Rapid growth during the 1980s and 1990s, however, catapulted the wireless telecommunication industry to prominence.

The wireless telecommunication services industry in the early 2000s was comprised primarily of cellular telephones, paging services, and personal communications service (PCS) networks. These various services allow customers with mobile telephones to send (and receive) calls to (and from) people with landline phones, pagers, or hand-held wireless phones. As digital wireless technology became more pervasive (accounting for about 89 percent of subscribers in 2002), data of various types including short messages, news reports, and Internet content were also transmitted over digital wireless systems. Cellular service subscribers typically pay a monthly subscription fee plus an additional per-minute usage charge. According to the Cellular Telecommunications and Internet Association (CTIA), in 2002 there were an estimated 140.8 million mobile wireless subscribers, generating about $76.5 billion per year.

Like the rest of the telecommunications industry, the wireless industry was marked by significant turbulence as the 1990s drew to a close. The sweeping changes in the regulatory landscape brought about by the Telecommunications Reform Act of 1996, and the emergence of PCS systems as viable competition to cellular networks, promised lower costs and improved services to consumers. It also increased the stakes tremendously for industry players. A boom in infrastructure investments during the late 1990s led to overcapacity and high debt for these firms. In addition, as the market for wireless services became increasingly saturated, competition for new subscribers became fierce.


By the end of the 1990s the general consolidation of the telecommunications industry had blurred the distinction between the traditional landline telephone companies and wireless. Companies that aspired to be dominant players in the industry moved to establish themselves in all types of communication delivery. Moreover, success in the fiercely competitive mobile market was seen to hinge to a great extent on national coverage. However, the huge capital investment required to build the networks necessary to be a big winner created the need for mergers, joint ventures, and other forms of strategic alliances.

How a Cellular System Functions

A cellular telephone system consists of three main components: the cellular site or station, the mobile telephone switching office (MTSO), and the mobile telephone unit or pager. The mobile telephone unit is simply a low-powered portable transceiver. A pager is a wireless receiving device.

The term "cellular" refers to the network of cells or transceivers that support a company's service area. Each service area is broken down into several communication cells that have a radius of 2 to 20 miles. Each cell is equipped with a low-power transceiver and antenna, known as a base station, which sends and receives wireless telephone transmissions. Ideally, the cells should be arranged so that they efficiently canvass an entire service area, but cells often overlap or miss certain areas.

When a mobile phone user makes a telephone call, the transceiver in the cell receives the call and immediately routes it to the regional MTSO that oversees all the cells in its service area. The MTSO, which acts as a central nervous system, is connected to each cell by a landline or a microwave link. The MTSO analyzes the telephone call to determine whether the caller is a "roamer" (someone operating outside of his or her home service area) or a subscriber. Once it determines how to bill the call, the MTSO connects the call to a landline, or "trunk." Depending on the number dialed, the call is routed to a long-distance or local carrier. Among other tasks, the MTSO monitors the caller's signal strength within other cells. If the caller passes from one cell to another, the MTSO will "hand-off" the call to the next cell without interruption.

When a caller on a landline telephone calls a cellular phone user, the call is received by the MTSO, which sends an individualized "page" message to its cell sites to locate the mobile phone. The cellular phone responds to the page by sending a signal to the cell, after which the MTSO causes the mobile phone to ring. If the user elects to answer the call, the MTSO establishes contact between the communicators. The entire process requires only milliseconds. The MTSO works similarly for cellular callers that are contacting other mobile phones and for callers that are trying to reach a person's paging device.


The advantage of using a cellular system is "frequency reuse." Because the Federal Communications Commission (FCC) grants a limited number of channels, or frequencies, to the cellular telephone service industry, it would be impossible to have only one or a few transceivers in each service area. Multiple cells allow the same channel, or frequency, to be used by many callers in the same service area. Furthermore, each cell can be subdivided into sectors, usually three, using directional antennas. As a result, a single service area can have thousands of callers communicating on several hundred designated channels.


PCS systems operate similarly to cellular services. However, PCS systems use comparatively low-powered phones that operate at a higher radio frequency. As a result, the systems use smaller cells that allow a greater concentration of users. In addition, PCS systems utilize digital technology that transmits a caller's voice as a numerical code. Most standard cellular systems, in contrast, used analog technology that mimicked sound waves. Many systems were being converted to digital in the second half of the 1990s, and by the early 2000s nearly 89 percent of all wireless subscriptions were digital. Digital transmission delivers greater sound quality and makes more efficient use of limited frequencies.

The net result of PCS differences is a cellular network with as much as 20 times the capacity of a standard cellular service area. This...

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