New York City Transit is one step closer to
building a cellphone network in its 277 subway stations, but it remains
to be seen if mobile phone providers such as Verizon Wireless are going
to pay to offer the service to their customers.
Next
week, the board of the Metropolitan Transportation Authority is
expected to vote in favor of letting Transit Wireless, a consortium of
telecom and construction companies, build an underground cellphone
network.
Under the plan, Transit Wireless will pay New York City
Transit at least $46.8 million over a 10-year period, according to the
MTA. The firm will also spend an estimated $150 million to $200 million
on installing the network.
If approved, the company will build
networks in six downtown Manhattan stations within two years and
complete the rest of the stations in the next four. But before people
can start using their cellphones in the subway, their carriers will
have to agree to pay Transit Wireless fees to offer the service.
Some
question how Transit Wireless will recoup all the money it has to spend
on building the network. While it will be technically challenging to
wire the stations, once a network is set up and operational, the
success of it is riding on the wireless carriers’ participation.
Carriers will have to determine if offering cellphone service on the
subway platforms and stairwells will generate more revenue per user or
reduce churn, analysts said.
“It is a business issue,” said Ellen Daly, analyst at Forrester Research. “Carriers have to assess whether it is worthwhile.’’
“We
are confident that carriers will respond,” said Gary Simpson, chief
executive of Nab Construction Enterprises, one of the members of the
Transit Wireless consortium. Simpson said he has already received a
call from an unnamed carrier. “Once we get the official approval by the
board, we will proceed to discuss with carriers,” he said.
A
spokesman for Sprint Nextel Corp. said the company will review the fees
and determine if it makes sense for the company to participate.
Verizon
Wireless and T-Mobile USA Inc. would not comment on their plans.
AT&T Mobility, which led a competing consortium made up of the
other major carriers, declined to comment because it said the MTA had
not informed the company of its decision.
The MTA started
accepting bids from companies to build a cellphone network in late
2005. It said it selected Transit Wireless, which also includes Dianet
Communications Inc., Q-Wireless and Transit Technologies, because it
outbid the three other competing offers.
Amanda Fung is a
reporter for Crain's New York Business, a sister publication of RCR
Wireless News. Both publications are owned by Crain Communications Inc.
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