In 1984 cellular systems served only 92,000 customers. Digital radio will soon replace analog technology in existing cellular networks, and this will bring about a tenfold increase in carrying capacity. The Federal Communications Commission has already authorized over 150 experimental licenses to test PCS, and has floated a proposal to license either four or five providers of PCS in every geographic market. This new competition in local telephony could spell real trouble for anyone assuming that the telcos still have monopoly power. Look at the economics.
Digital radio promises a vast increase in capacity, at modest additional cost.
PCS will be even cheaper. GTE recently announced that in Quitaque, Tex. it would replace wires entirely with an all-digital radio service. The McCaw deal, of course, is another end run around the local telcos. TCI's 500-channel cable is the largest of the straws being rammed through the neck of the old bottle. With cataracts of new cable capacity pouring into the local loop, and new generation wireless systems surging all around, the neck of the old bottle isn't what it used to be.