WASHINGTON — A partnership headed by Mobile Communications Corp. of America said Tuesday that it has settled a dispute over the franchise to build a new cellular mobile telephone system stretching from the San Fernando Valley to south of Long Beach.
Terms of the agreement call for the partnership, headed by Jackson, Miss.-based Mobile Communications, to pay about $8 million to another partnership headed by Washington-based MCI Communications. In return, the Mobile Communications group--known as Los Angeles Cellular Telephone Co.--will acquire the assets and more than 2,000 cellular resale customers of MCI in the Los Angeles area.
A key part of the settlement is MCI's agreement to drop its appeal of a December, 1984, Federal Communications Commission ruling that awarded the cellular franchise for Los Angeles to the MCI group's competitor, Los Angeles Cellular.
Serve 6,000-Square-Mile Area
In addition to Mobile Communications, the partners in Los Angeles Cellular are LIN Cellular Communications, FMI Financial and Western Union Telegraph. Their plan is to cover nearly 6,000 square miles and include 10.6 million people.
"This is really important to us," said John N. Palmer, Mobile Communications' president and chairman of the Los Angeles Cellular partnership, of the agreement. "We're really excited about finally being able to go ahead.
"If all goes well," Palmer said in a telephone interview from Jackson, Los Angeles Cellular will offer service in Southern California by next summer. He said the new company already has about 10,000 customers in the Los Angeles area because it is allowed to resell cellular service that it buys wholesale from a partnership headed by PacTel Mobile Access.
As the cellular phone market has opened up across the United States, the FCC has awarded two franchises in each city: one to a telephone company and one to a non-telephone company. Pacific Telesis, the parent company of Pacific Bell, offers cellular service through its subsidiary, PacTel Mobile Access.
Permits 500,000 Phones
Cellular telephone technology--which divides a geographic area into small "cells" equipped with their own transmitters--is expected to permit as many as 500,000 car and other mobile telephones in Los Angeles. Before the advent of cellular technology, only a small number of car phones could be used simultaneously in the same area.
John Houser, a spokesman for MCI, said that "we're pleased with the settlement," which is subject to FCC approval. Because MCI has more than a 50% interest in the partnership that it heads, "we'll realize over $4 million from the settlement."
MCI's partners include ICS Communications, a subsidiary of Metromedia, and Cellular Mobile Systems, a subsidiary of Graphic Scanning.
In February, 1984, an FCC administrative law judge tentatively awarded the Los Angeles non-telephone franchise to the MCI partnership. Last December, however, the FCC voted 3 to 2 to reverse that decision and grant a construction permit to Los Angeles Cellular.