**The following article appeared within a sponsored supplement to Strategy.

Bell mobility veterans say that Bob Ferchat likes to tell the troops a story of the time he toured a zoo and came across the serpentarium. He walked by a glass cage that held a huge boa constrictor. He asked the zoo guide, ‘Can that snake break out?’ Yes, the guide replied, who explained that the cage was constructed from regular glass. ‘If he knew he could smash the glass, he would,’ said the guide. ‘But he doesn’t know that.’

The moral of the story: You never know how good you are until you try, and that means making the effort to break out of the box. It’s a spirit that Bell Mobility has embraced since it was formed 10 years ago. So is this corporate parable true?

‘Hell no,’ exclaims Ferchat, Chairman and CEO of Bell Mobility Cellular. ‘When I was at Northern Telecom in the late 1970s, the story was told to me as a metaphor for a breakout strategy. But it’s symbolic for us at Bell Mobility. Most of the time people are constrained by themselves, not by reality.’

The people least likely to be constrained are pioneers, and Bell Mobility has been just that for the past decade. It was July 1, 1985 that cellular service became available in Canada, and ever since Bell Mobility has blazed the trail in the country’s wireless industry.

Just where that trail would lead was largely unknown at the time. This wasn’t just the start of a new company but a brand new industry in Canada.

True, cellular offered far greater clarity, flexibility and availability than previous mobile communications. But how would this new technology catch on? Remember, these were the days when handsets cost anywhere from $2,500 to $5,000.

Some early media coverage even ridiculed the necessity of cellular. In May 1985, an article in the Kitchener-Waterloo Record predicted a rise in car accidents ‘as drivers receive calls from creditors who aren’t being paid because all their money is going toward paying for their cellular phone.’

‘I don’t think any of us knew what to expect,’ says Joe Sarnecki, now Vice-President, Sales and Marketing, Wireless Networks at NORTEL, but back then Bell Mobility’s second employee. ‘If we had forecast then what the size of the industry would be 10 years down the road, they would have come in white jackets to take us away.’

Conservative Projections

It wasn’t just Bell Mobility’s projections that were highly conservative, but the entire cellular industry’s.

‘Back then, the conventional wisdom was that there would be 1 million subscribers in all of North America by the year 2000,’ says Ferchat. ‘Now, in Canada alone there are 2 million subscribers, and in the U.S. there are 20 million. By 2000, I would think that the total would be at least double that, maybe 50 million, and even that might be low.’

At the bottom of his desk, Tony Schultz, Vice-President of Engineering for Bell Mobility, found some of the first presentations to the BCE board, based on early business plans. In February 1985, the Canadian market by 1989 was projected as 26,000 customers. A few months later, based on how cellular was taking off in the U.S., the projections became more optimistic, speculating that Bell Mobility could have 45,000 customers on its own by 1989.

Well, by 1989 Bell Mobility had 141,000, and that total is now over 700,000 in its Ontario and Quebec coverage areas. Mobility Canada, which is owned and operated by the wireless affiliates of the provincial phone companies, now has over 1.2 million cellular customers.

Ferchat now figures that the company should grow by 35-40% a year for the next three or four years at least.

And to think, with all this success, one of the company’s own presidents hesitated when asked to come aboard.

‘I almost didn’t join,’ laughs Bob Latham, who became the second president, from 1986-1991, after Bob Rowland. ‘Bell had been in the 40-channel CB radio business about a year before, and the bottom fell out. I said to myself, Why would I want to get involved and put my career into the radio business? There were a lot of question marks.’

Gunslinger Days

Now Latham refers to the company’s infancy as the ‘gunslinger days’. It was a time when working a half day meant 12 hours, and business was doubling every quarter.

Tim McChesney, the company’s first Vice-President of Marketing (he is now President and CEO of MobiLink in Chicago), says that ‘Without question this was the most energized, intensely focused, spirited work environment I’d ever been in.

‘I feel proud to be associated with the people who helped build that company. We created a culture that attracted people who would think nothing of working around the clock. In fact, one of the first times I used a cell phone was to call my wife and tell her I was on my way home because it had been another long day at the office.’

The culture of the company was shaped by the needs of the marketplace, says Schultz. Bell Canada, as a monopoly, was understandably focused on rate of return. Bell Mobility was thrust into a highly competitive market and, by necessity, was a much faster paced and entrepreneurial environment.

Says Sarnecki: ‘The people who left Bell Canada to go to Bell Mobility were round pegs who didn’t fit the square holes. Our people had the skills sets to build a business, and were struggling with the bureaucracy at Bell Canada. The first couple of years, it was freewheeling. It was an experience and an opportunity that few people get in their career.’

Sarnecki vividly recalls the company’s first live, on-air cellular demonstration. It was at the February 1985 auto show in Toronto, at the convention centre near the airport. There were only about 15 people in the whole office, and everybody worked the show.

‘We got a special experimental licence from the Department of Communications, and had a series of kiosks with mobiles mounted,’ says Sarnecki. ‘We had cell sites in Etobicoke and Bramalea, and people could place a call anywhere. But a lot of people were sceptical. They thought the phones were somehow wired.’

Building the cellular network was a scramble in those days. Schultz, whose job it was to plan, design and deploy the network, says the first view of the industry was that they would capture a niche market, the business market.

‘The network configuration plans were based on very conservative marketing projections,’ says Schultz. ‘We got behind the market in the early years, with many more customers than the network could handle properly. So we had blocked calls, noise, static and so on.’

Schultz likens the situation to the automobile taking off before sufficient roads were in place. A network isn’t something you can turn on a dime, he explains. It takes 12-18 months to establish a cell site, which is the base station that transmits and receives signals from the customer’s unit.

‘In 1985 we had 30 cell sites, and by 1990 we caught up to the demand curve, doubling the size of our network. We had 250 cell sites by 1989, and have over 540 today.’

He says that for he and his team of engineers, the satisfaction of building the network will always be a highlight of their careers. ‘When I was with Bell Canada, I did some design work and had no idea if some of the things were actually built. Here, the network has some of the flavour of you in it.’

Lightning in a Bottle

Accurate marketing forecasts were almost impossible in those early days, ‘like trying to capture lightning in a bottle,’ says McChesney. Ferchat admits that the first few years of explosive customer growth was ‘a wonder and a surprise’.

‘When we started, we and our customers rather narrowly saw cellular phones and pagers as business productivity tools,’ says Ferchat. ‘I don’t think it was until the early part of the 1990s when we realized the business wasn’t going to stop growing.’

Promoting the cell phone for safety and security, which became the second reason for having a phone in your car, came later. Latham remembers putting a set in his wife Bonnie’s car, because he didn’t want her driving in the city without a phone.

‘I sold a lot of phones to colleagues for that same reason,’ he says. ‘But when we put in a plan with 30 minutes free air time a month, a lot of people didn’t want to pay $24.95 a month to have the phone sit in the car unused most of the time. Even my wife wanted to take the phone out of the car. I said, You can’t do that. The president’s wife should have a phone in the car! We ended up creating a $9.95 a month plan, Lifeline, with a 95 cents-a-minute rate. I called it the Bonnie plan.’

Ferchat says that the people who signed on for a phone for safety and security reasons obviously used it less than others. ‘We ended up offering free nights and weekends to try to make cellular a part of their lifestyle. We promoted usage during off-peak hours, so people would start to build cellular into the way they lived and worked.’

To Ferchat, however, the realization that the cellular phone could be a consumer product for very wide use probably took place only in 1994 at Bell Mobility, with the launch of Liberti. Right now, 65% of Bell Mobility customers use their cell phone for business, and 35% for non-business use.

The popularity of portable units also caught Ferchat by surprise. Portables cost more, and have just .6 of a watt versus 3 watts for fixed sets. ‘But people are paying for convenience,’ he says.

Convenience and convergence are two of Ferchat’s watchwords as the wireless industry continues to grow. On the near horizon is the launch of Personal Communications Services (PCS), which will bring together in one device the communication of voice, data and images. (See PCS: ‘A Brave New Wireless World’, on page 11 for an explanation of the service.)

PCS is viewed by some as an intrusion into the cellular market. But in other countries it has actually been a stimulant. The U.K., for instance, had a cellular growth rate similar to that of Canada. When PCS was launched there almost two years ago, the cellular growth rate jumped to 60%.

Customers are ultimately attracted by all this new technology not because they want to be technocrats, but because they are searching for solutions to their communications wants and desires. Ferchat recognizes the need to simplify those solutions.

‘How do we make the layers of technology – wireline, cellular, radio, satellite – transparent to the user, putting all those enhanced, integrated services into a terminal you can hold in your hand?’ asks Ferchat. ‘How do we marshal the resources to develop tools that will propel us beyond the Information Age and into the Knowledge Age? How do we create the smart agents to sift through the data chaff to find the knowledge wheat? That imperative presents the challenges.’

Dynamic and Creative

How is the Bell Mobility of today positioned to meet these challenges? The company is young not just in the years it has been in business, but in the age of its employees, who are in their mid-thirties on average. Yves Desjardins-Siciliano, Vice-President of Law and External Relations for Bell Mobility, says this relatively youthful profile is beneficial.

‘Our employees are young, dynamic, creative people, who feel they’re riding the wave of a new era,’ says Desjardins-Siciliano.

Constantin Loudiadis, Vice-President of Strategic Business Development, agrees. ‘Having people in their early or mid thirties, we expect them to be more open to new ideas and making them happen.’

But Loudiadis goes further, drawing an analogy between the nature of the business and the outlook of the people working in it.

‘There is a correlation between wireless freedom and freedom of thought and action, as opposed to land line carriers, which are defined and fixed. The environment we live in today does not nurture a fixed type of relationship. We’re mobile as a country. What we’re all striving for is the personal freedom to go anywhere, talk anywhere. Our objective is to bring that to as many people as possible.’

Where does that leave the prospects for the wireless industry in Bell Mobility’s second decade?

Rosanna Cavallaro, Director of Marketing Communications for Bell Mobility, reminds us that up until now only a small segment of the market has taken advantage of cellular service.

‘By 2005, I’m looking for the kind of penetration that the VCR or microwave had at a similar stage in their life,’ she says.

Steve Smith, Vice-President of Marketing, sees tremendous growth in the consumer side of the market, and a customer-for-life approach – from a 4-year-old in a snowsuit with a Power Rangers pager, on to every other life stage.

For his part, in the next 10 years Desjardins-Siciliano sees Bell Mobility as being a major player not only in Canada but around the world, as a wireless operator and partner. He came to Bell Mobility from IBM, and sees a real comparison between the wireless industry and the PC business.

‘In the early 1980s the PC was a tool that was sold on the basis of processing speeds and the like. Today, you start by deciding on the applications you need and want, and that dictates what kind of hardware you buy. In the next decade, PCS will bring that same type of reality, and will be a catalyst for the wireless industry.’

David Wells, who joined Bell Mobility in 1986 and is now President and CEO of Mobility Canada, talks about the transition over the next decade from voice to data applications. ‘We’ll look back and say, Can you imagine when we used wireless only to talk? We have only just begun.’

Ferchat echoes that view. ‘Every time we turn around, we find new applications for wireless communications,’ he says. ‘It will be used for everything, voice and data, home and office. Everyone will have it, because it will be unthinkable not to. All the ways it will change the way we live we can’t even dream. All we can do is put the infrastructure there. But I can say that the growth of the first decade will be nothing compared to the next 10 years.’