Everything else being equal, this implies significant erosion of LEC landline revenues. The new PCS providers are building out their networks and improving the quality, capacity, and cost effectiveness of the wireless infrastructure. High-capacity technologies such as CDMA, GSM, and TDMA have been deployed, tested, and adopted by customers. All of this moves us closer to the realization of the scenario outlined above. To capture the incremental impact of wireless competition, the economic model we use considers a number of variables including access lines lost and message and non-message revenue lost.
Cellular providers have no choice but to modernize their networks to digital.
The price, capacity, and quality established by PCS is irresistible in all but the short term. LECs need to aggressively pursue those opportunities that take best advantage of the strengths of their landline networks and provide high-speed digital access, including Internet access, to the mass market. For continued growth, LEC owners must continue to expand their range of operations beyond the local exchange to wireless services, long-distance, international operations, etc. Relying on resale and unbundling. Regulators need to account for the reality of wireless competition in structuring the regulatory environment of the competitive era, including their assumptions about equipment lives and depreciation.