Maryland's Wayne Schelle built the first U.S. cellular system. Now he's ready to hang up the old and ring in a new technology.


October 08, 1990|By Leslie Cauley

In 1981, Wayne Schelle gave a speech before 1,200 mobile-phone executives in New Orleans in which he painted a bright future for cellular communications, a new field of technology his small, Baltimore-based paging company was poised to enter.

After the speech, Mr. Schelle said, his wife, Elaine, who had been sitting in the audience, hurried up to him with a concerned look on her face.

"She said, 'You know, Wayne, I hope you're really sure this thing is going to work because people all around me were saying you were crazy. Everybody was saying how crazy you were,' " recalls Mr. Schelle, who today serves as chairman of Schelle Cellular Group Inc. in Baltimore.

As history now proves, Mr. Schelle was crazy all right.

Crazy like a fox.

Following a gut instinct that cellular communications was about to ignite like a wildfire, Mr. Schelle ignored some of his peers' shrill predictions of financial disaster and pushed ahead with plans to build the first cellular system in the United States.

The gamble paid off. The District of Columbia's first cellular system became operational on a cold Friday night in December 1981, and Mr. Schelle never looked back after that.

With that notch in his belt, Mr. Schelle snagged the commercial operating license for Washington from the Federal Communications Commission, then dubbed his small-but-growing concern Cellular One. Two years later, Cellular One was sold to Metromedia Corp. for $56 million. Today, Cellular One operates in more than 300 markets, including Baltimore-Washington, under the ownership of Southwestern Bell.

Today, none of this -- not even his role in bringing cellular to the fore -- seems to impress Mr. Schelle much. That's mostly because he's too busy looking to the future.

And in the eyes of Mr. Schelle, the future can be summed up in three letters: "PCN," short for "personal communication network," a new-age cellular technology that could, if it takes hold, represent a long-term challenge to conventional cellular systems and local telephone companies.

PCNs are designed to serve downtown areas where conventional cellular systems have become overly congested. Because of the all-digital nature of PCNs, they are easily able to handle two to three times the volume of conventional systems, which are based on an older, less efficient "analog" technology.

Digital technology, by comparison, uses a sophisticated computer language to translate the sound of a voice into a radio signal and back again.

Having proven the value of conventional cellular a decade ago, Mr. Schelle is now hoping to do the same with PCNs, a technology so new that most people outside the industry have never heard of it.

In February, Baltimore's American Personal Communications Inc., a wholly owned subsidiary of Schelle Cellular, received an experimental license from the FCC to test a PCN in Washington, one of the first awarded in the country.

Just last month, APC and its old partner, The Washington Post Co., announced they would build a PCN network in Washington by late 1991, once more with the blessing of the FCC. Under terms of the limited partnership between the two, Washington Post is financing the venture.

The idea is to build a PCN network that would allow people in downtown Washington who don't have the time or inclination to wait for a pay phone to make calls virtually anywhere: on the sidewalk, while waiting in a restaurant line, or in a taxi.

PCN phones will be small enough to stick in a coat pocket and cheap enough -- $50 to $75, with a $35- to $50-a-month service fee -- to be affordable for most people, according to Mr. Schelle. He sees the PCN as the first wireless network geared and priced for consumers and small businesses that still get sticker-shock from conventional cellular. That view is shared by Washington Post Co., which has dubbed the PCN project "son of cellular."

His strategy runs in the face of the time-tested, traditional marketing approach for cellular. The service continues to be sold as an upscale business tool, because monthly fees have remained high despite falling equipment prices.

A cellular phone that sold for $1,500 in 1982 can be purchased for as little as $300 today. But service fees -- the bread and butter of the industry -- are still stiff, typically $100 a month or more.

The reunion this year of Schelle Cellular and Washington Post, the erstwhile dynamic duo of cellular, was enough to make the industry take notice.

"They had a successful relationship the first time around, and there was every reason to expect that they would try again. I think people would have been surprised if they didn't," says Herschel Schosteck of Schosteck & Associates, a cellular consultancy in Silver Spring. "But the bottom line is this: What kind of market is there for the technology?"

A number of critics, including Mr. Schosteck, believe Mr. Schelle may be pushing his luck this time.

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