U.S. wireless technology carriers are seizing an opportunity to expand cell phone coverage internationally, tapping new revenue streams and offering customers more options when traveling abroad.
But the development does not bode well for the many companies that have based their business on international cell phone rentals, frequently offering commissions of as much as 50 percent to travel agents.
“It will cut right into their business,” said Charles Golvin, a wireless technology analyst with Forrester Research. “They are bound to lose market share.”
Generally speaking, cell phones manufactured for use in the United States cannot access service in most overseas markets.
Likewise, foreign cell phones are little better than paperweights here. The best way for U.S. travelers to get phone service abroad has been renting, an increasingly popular option for travelers who want to stay connected in a troubled world.
In fact, a number of companies specialize in renting so-called “global phones.”
Cell phone rental companies say the market is worth $2 billion, and has yet to be tapped only 2 percent of all U.S. consumers say they are aware of the option.
“Business people have always taken advantage of our services,” said Bonnie Knieriem, an executive with Planetfone, a company specializing in international cell phone rentals.
It claims clients such as NASA, IBM and the U.S. military.
“But I think that we are getting a more diverse group of people now even leisure travelers. People do want to stay in touch when they travel,” she said.
Knieriem points out that rentals have some advantages over the international roaming packages offered by some cell phone companies.
Mainly, it is cheaper to rent, typically costing $20 to $50 a week and call are less than a $1 a minute.
For the traveler who spends a short amount of time overseas, rentals make sense, Knieriem said.
“The best thing is that it is something you can rely on,” she said. “It’s been tried and true.”
But now U.S. telecommunication companies see the growth potential of tapping the international market and are beginning to adopt Global System for Mobile Communications (GSM) technology, the standard for powering wireless networks in most of the world outside of North America.
New wireless products are being tailored to globetrotters, particularly corporate travelers who want one permanent phone number, something rentals cannot provide.
T-Mobile was the first company to offer U.S. customers an international roaming option, and has some of the best deals in place.
AT&T Wireless is in the process of building an international network and recently announced new agreements with GSM wireless carriers in more than 100 countries.
“We look at international as a $9 billion opportunity,” said Ritch Blasi, a spokesman for AT&T Wireless.
“Not only do you make money when people go overseas. You also get a share when people (from overseas) come here. It’s a new revenue stream for AT&T,” he said.
AT&T is catering its international service to multi-national corporations and business people who do a considerable amount of work abroad.
The company studied customer calling patterns to determine where most international calls were being made.
Anticipating the growth of global wireless networks, cell phone manufacturers also are expanding the production of “multi-band” devices that will work on different frequencies, because they may vary from country to country.
Qualcomm is expected to make a chip that will work on both its own Code Division Multiple Access (CDMA) technology and GSM.
Currently, carriers that use CDMA technology, such as Verizon Wireless and Sprint, offer international plans that involve switching a card in the phone to make it compatible with foreign networks.
Who to Call
Here are some global cell phone rental companies: