Cellular Phone Rentals Thrive

14 Mobil Product News; May 1993

In the last five years, the cellular phone rental business rapidly expanded with companies such as Action Cellular. Low start-up costs and high-profit margins have attracted about 50 medium-sized companies and roughly 350 entrepreneurs to the rental business, which earns approximately $500 million per year according to the US Commerce Department's Industrial Outlook 1993. The combination of consumers' desire to use cellular but reluctance to commit to a carrier's service agreement has created a prime opportunity for the growth of cellular phone rental business.

"Fueling cellular rental business' growth are factors inherent in the cellular industry such as: service contract requirements, for example the purchase of a full year airtime; rapidly changing technology, the digital versus analog debate; and cumbersome roaming procedures." source the US Commerce Department's Industrial Outlook 1993.

Action Cellular started out renting only cellular phones but has added pagers and the mobile data credit card verification unit, the Mobile Merchant, to its service offerings. Action initially thought pagers would detract from phone rentals, but now with the phone-rental aspect of the business solidly entrenched, the company has decided to diversify its products.

As a rental company, Action owns the cellular phones and phone numbers and pays wholesale rates for the airtime.

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