New Bells Are Ringing

By John Greenwald

Phone companies begin offering a dazzling lineup of services

What Henry Ford said of his famed Model T had long been just as true of the telephone: Americans could have it in any color they wanted, as long as it was black. Those plain, hardy phones later evolved into a rainbow-hued array of shapes and sizes, but the instrument's electronic heart remained essentially unchanged. Now, however, the familiar telephone is undergoing rapid and dramatic improvements. Among them:

Mobile Phones. Edward Bennett Williams, the famed Washington trial lawyer and owner of the Baltimore Orioles baseball team, spends an hour and a half a day making calls from his new automobile and carry-along phones. Says he: "It's a sensational improvement over the old mobile phone. When I heard about this, I went for it like a bear going for honey."

Teleconference Calls. If Selby Shaver, communications director for Allstate Insurance Co. in Northbrook, III., urgently needs to convey some complicated information to a regional office in Menlo Park, Calif, he sometimes holds a teleconference. Shaver merely steps from his office into a room equipped with television cameras and shows his distant colleagues what he means during a televised phone call. Says he: "It's the next best thing to being there."

Voice Mail. When advertising executives in Doyle Dane Bernbach's San Francisco office want to reach staffers traveling around the U.S. or Europe, they simply tap out a telephone number and leave a message in an electronic "voice mailbox," a kind of computerized answering service. Later the traveling employees can listen at their convenience. Says Executive Vice President Brice Schuller: "Most of us are usually on the go, so we just dump a message into a guy's phone mailbox and he can step into any phone booth and get it."

Some of the technology for the new telephone equipment has been around for years. The predecessors of the picture phones used in teleconferencing were first seen at the New York World's Fair in 1964. But the voice mailboxes are based on new developments in computers. And all the new phones are part of the drive to increase white-collar productivity.

The wealth of new services has already triggered battles among companies vying for position in fast-growing markets. One of the hottest fights is over mobile phones, which could grow into a $10 billion industry within a decade. In June, 194 applications flooded the Federal Communications Commission to provide the service in the 30 largest U.S. cities. Applications for the rest of the country will be taken through March.

Mobile phones were first introduced in 1946, but they have been confined to a tiny number of people because all calls had to be handled by a single transmitter. In New York City, for example, there are currently only 700 car phones. New technology, now on trial in Chicago and Washington, makes it possible for an urban area to have a network of transmitters each covering a 13-to 300-sq.-mi. cell. Computers then switch calls from transmitter to transmitter as customers travel around town. Result: crisp, clear reception rather than the weak, fading connections characteristic of earlier mobile phones. New York City might eventually have up to 250,000 car phones. Some of the new phones could also be portable, hand-held units no bigger than a pack of cigarettes. The new service will initially cost from $2,500 to $3,200 for the equipment, plus additional monthly charges that are expected to run $30 or more.

Telephone officials believe that teleconferencing will finally make picture phones a commercial success. During a teleconference, business people sit with microphones around their necks in softly lit, carpeted television studios and talk with colleagues in similarly outfitted rooms in other locations. Computers translate all voices and images into telephone signals and send them via satellite and conventional lines between the different rooms, where the participants can see one another on color monitors. These electronic meetings can save executive time, travel, and wear and tear.

AT&T opened its first two teleconferencing centers in New York City and Washington in July. The company plans to have eleven public studios operating by January, up to 42 by the end of next year. A one-hour session between New York and San Francisco is $2,300 an hour. Firms can install their own facilities for about $230,000, plus a monthly rental fee of nearly $12,000.

Voice mailboxes were spawned by the pesky problem of telephone tag, when employees keep missing one another and accumulate piles of call-back memos. If a person is busy or absent, a computer takes a message and plays it back at any time. The same message can also be sent to hundreds of people simultaneously. American Express, Atlantic Richfield and Westinghouse now use voice mailboxes. Gordon Matthews, chairman of Richardson, Texas-based ECS Telecommunications, developed one of the first voice mail systems, which was installed at the headquarters of the 3M company in St. Paul in 1980. IBM and Wang Laboratories are now offering similar computer phone systems. Typical cost: $525,000 for a network serving up to 3,000 users.

While the new equipment and services are expensive, experts predict that costs will drop when the products go into mass production. And for customers with a touch of nostalgia, the new phones can even be black. --By John Greenwald. Reported by Jay Branegan/Washington and Stephen Koepp/New York

With reporting by Jay Branegan, Stephen Koepp

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