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How’s Business?: Cell Phone Mania

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You see them all over. They are in stores, offices, cars and buses, and people carry them walking in the street. It is the ever-growing cell-phone craze. Just a few years ago no one had them. Now it appears that people can’t live without them.

But this new and ever-expanding industry ranks up in the higher echelon in competitive activity. The major players are AT&T, Sprint, Nextel, T-Mobile (formally VoiceStream) and one of the latest guys on the block, Cingular. Yes, people are rushing to cellular phones, but the incentive is no longer just convenience.

With long distance costs on wireless phones running under standard phones, is it any wonder? The likes of AT&T Wireless, Sprint, T-Mobile, Nextel and Cingular have squared off to strengthen market share. Until recently, it was a use-them-or-lose-them situation regarding monthly minute allowances, but the heat is on and Cingular is changing the rules.

For example, Cingular’s $39.99 plan includes 450 anytime minutes and an ear-bending 3,000-nighttime/weekend minutes; the big kicker is that you can carry over your anytime minutes. That’s the one feature that has yet to be matched.

Then there are the partial holdouts such as Verizon Wireless. The company admits that it is more expensive, for example, than Sprint. The Verizon philosophy is that it offers a greater service for which it is worth paying a little more.

Touching on these services, I talked with Vivek Roy of A Wireless City, at 57-23 Main St. in Flushing. Roy advised me on some of the gimmicks one must watch for, such as the offer of free phones with the requirement of a large deposit. Then there is Nextel, whose programs seem too good in their pricing in conjunction with direct connecting.

So, how’s business with cell phones? Here is a consumer alert: The prices here in New York may be quite attractive but may be unsustainable. Like any other industry, there will be some casualties with perhaps just two to three survivors. When that happens, this presently attractive price environment may just be a blissful memory.

And what about those in the business as dealers? Roy said the potential is tremendous in view of the additional penetration to be made in this industry.

Joe Palumbo is the fund manager for The Palco Group, Inc., and can be reached at palcogroup@aol.com or 461-8317.

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