THE FUTURE OF BASIC COMMUNICATIONS SYSTEMS –
COMMUNICATION IN THE EIGHTIES

UNIVERSITY OF CALGARY. MAY 1, 1984

I suppose one form of communication is speaking out of both sides of your mouth. In the early 1970’s, at the time of the federal government Telecommission studies, I was a leading proponent of the Wired City. While in the computer services business as President of a company called Systems Dimensions Limited I had actually acquired Ottawa Cablevision. My intention was to put together a broadband communication system with a computer service organization to lead Canada into the Wired World.

This bold plan went the way of the Avro Arrow, the hydrofoil and a few other Canadian ideas. The CRTC turned the application down on the grounds that such applications on cable were, “premature.”

I obviously had not learned my lesson because when I finally left the computer business I moved in to the cable tele vision industry, still with the hope of bringing to Canada some of those avant-garde new applications we all had talked about. However, my reason for saying I am speaking out of both sides of my mouth these days is that I am really here today to talk about the wireless world which I am now promoting as Chairman of Cantel. Not that I am giving up on wired networks. There is just too much wire out there to ignore.

Ed Ogle in his book “Long Distance Please” reported that there is enough wire and cable in Canada to span a distance equal to 121 return trips to the moon! With that kind of invest ment you can be sure we will be tangled up in a wired network for a long time to come.

What led me away from my hard wire background in computers and cable into the wireless world was a request by Philippe de Gaspe Beaubien of Telemedia, Marc Belzberg of First City, and my associate Ted Rogers of Rogers Cablesystems, to head a consortium to chase cellular mobile radio licenses. Without going into all the details of a rather hectic 1983, the consortium called Cantel was successful. On December 14th, 1983 we were awarded what is effectively a national license to provide a wireless telephone network.

Having led this successful bid for licenses I thought I could then peacefully return to Vancouver. However, the three partners then asked me to stay on as Chairman of the new company to help get it established. I can expect another couple of months yet living out of a suitcase until everything is ready for permanent staff to take over.

SELLING CELLULAR

With the excellent telephone service we now have, one might ask why there is a need for a competitive service in the area of mobile or portable telephones. There is nothing particularly new about mobile telephone service. The Detroit police began using such services as early as 1921. The first commercial mobile service was introduced by Bell in St. Louis in 1946 in the 150MHz band.

However, the 150,000 or so users in North America of the Improved Mobile Telephone Service (IMTS) which was inaugurated in 1964 generally have to endure long waits for dial tones due to congested frequencies in large cities. There are often only about 12 channels to accommodate all users in a major urban centre.

This is not a situation that people are used to in Canada. In fairness I should point out that in other countries waiting for a dial tone is a way of life. In Argentina it often takes an hour to get a dial tone. The standing joke there is that the only thing worse than not having a telephone is having one – there are over a million Argentineans on the waiting list for telephones.

France is on a major upgrade programme with the aim of providing everyone who wants one with a telephone. With wait ing lists of ten years in some cases in Paris, the standard joke there is that half of France is waiting to get a telephone while the other half is waiting to get a dial tone!

However, in Canada we are spoiled. A better system for mobile phones clearly needed to be developed and the cellular concept seemed to be the answer. In late 1982 the DOC announced its intention to free up in Canada the same frequencies that had been allocated in the United States for the use of mobile telephones. This would allow up to 666 channels to be available in the 800MHz band instead of the 12 previously useable in the 400MHz band. These frequencies would be divided equally between the regional telephone company and, as it turned out, Cantel.

But, as most of you know, it is not the number of channels available but rather the efficiency with which this spectrum is used that gives cellular its great advantage. By keeping the power in each transmit/receive ‘cell’ quite low these frequencies can be reused in nearby though not adjacent cells.

As users of mobile telephones move from cell to cell, sophisticated computers track the signal and switch the user from the channel he or she is using to a new channel at the new antenna site. This is done imperceptibly to the user. This results in almost limitless capacity as the cells can be packed closer together as the need for channels increases.

With this technical capability the design objectives for cellular are now that one should get a dial tone within a couple of seconds 98% of the time even in the busiest hours.

The federal government has indicated that the telephone companies and Cantel will be allowed to start this service on July 1st, 1985. Cantel plans to start its service in Toronto arid-Montreal to be followed shortly by service in the Ottawa/Hull area, the Hamilton/St. Catharines area, and Vancouver.

The initial systems we expect will sell for about $2,000 plus perhaps $250 installation. The units however could be leased for perhaps $60-$70 per month. In addition, there would be a basic monthly charge for the use of the service plus a per minute charge. In the United States the initial experience is that monthly bills seem to run in the $200 area in total.

As one of the features of the cellular network is its interconnection with the regular hard wired network you are provided with all of the advantages of the regular telephone system plus useable mobility. You could of course initiate a call from your car to London, England, Los Angeles or wherever you wish. Naturally, you would also have to pay the long distance charges at their normal rate.

All of this indicates that initially this will be an ‘up-market’. At Cantel we anticipate that the initial users will be those who are interested in improving productivity, e.g.

– professional people such as lawyers who charge for their calls in any case;

– people who must be reached on short notice such as doctors or newspaper reporters;

– people in the selling game such as real estate salesmen;

– those trying to improve the efficiency of a service network, e.g. a small plumbing business;

– rent-a-car services;

– business executives.

Cantel expects to place only about 8,000 units in Toronto and Montreal in the first year or so of operation. However, as the cost of the units comes down we expect that the sales will increase dramatically. The AGT system in Alberta with nearly 25,000 phones installed is proof of the demand for the service.

PERSONAL COMMUNICATIONS

However, I have also been asked to briefly touch on where we go after the first year. Cantel believes it is in the personal communication business. We feel that over-the-air communication is a rapidly developing phenomena that will affect all aspects of wired communication.

In the cable field we are already seeing this with Direct Broadcast by Satellite (DBS), and Multipoint Distribution Services (MDS). These will find an application in parallel with the cable network, particularly in less densely populated areas.

We believe that in person-to-person communication the attraction of mobility will cause people to want to be in touch wherever they are. The concept is that one should not have to go to where a telephone is to be in touch.

We are a very mobile people. The sale of over 80 million Sony Walkmans in 1982 alone is some indication of how people want electronic conveniences while they are on the move.

This is part of our reason for believing that the mobile telephone, i.e. a unit mounted in a car or boat, is only part of the answer. Already several manufacturers are producing portable units that fit in a briefcase. There seems little doubt that these units will continue to come down in price, size and weight to the point where a true pocket or purse telephone will be a reality. Once this happens the sky is literally the limit.

We expect a whole range of services to be available wherever people are, for there is nothing that you can do on a regular telephone in terms of data, Telidon graphics or other services that you cannot do over a mobile or portable unit.

From Cantel’s standpoint we are a national telephone company. In fact, we are really the only national telephone company given that Telecom Canada is a co-operative of a number of independent regional telephone organizations. With that in mind we are developing our strategies to be able to provide a choice to people in as many services as we can.

Projections in the United States indicate that within less than a decade the cellular related sales including the net work equipment, the customer units and the air time could exceed a $10 billion a year industry. Even if Canada is less than a 10th the size of the U.S. market it will still be a major industry in Canada. Cantel is in a unique position to become the Communication Link for all those wishing to stay in touch wherever they are.