Cellular-Phone Rental Firms Mine A Neglected Market

The Wall Street Journal; Tuesday Sept. 1, 1992

After the 1989 California earthquake, Lee J. Dorfman was walking through a badly hit area of San Francisco when he noticed long lines at pay phones. He decided to rent out his cellular phones to those who didn't want to wait - and was inspired to make a living from renting cellular phones.

Today, his Action Cellular Rent A Phone Inc. of San Francisco is doing a brisk business, serving mostly corporate travelers and convention organizers. Mr. Dorfman, 37 years old, says revenue this year is up 35% this year from last. "Everyone is a potential cellular-phone user," he says.

Mr. Dorfman is just one of hundreds of entrepreneurs who have jumped into a neglected part of the burgeoning cellular phone industry. By reacting quickly to demand for easy-to-use phones in out-of-the-way places, they have carved an estimated $500 million slice of business for themselves in less than five years. They have also shown how small operators can thrive in a growing industry full of big players if they find a corner that most of the big companies have ignored.

Some customers bridle at a requirement, frequently made by sellers of cellular phones, that they buy a year or so of air time from the local carrier. Others balk at the prospect of buying a product that could become quickly obsolete; they would rather rent a device with all the latest gizmos.

Still others dislike the task of punching a long series of digits, known as a "roaming code," into their phones if they are making a call outside the territory where the phones are registered. (In other cases, two cellular carriers in two different territories may not have a "roaming agreement," meaning the user can't use his phone at all in the territory to which he is traveling.)

Renting a phone lets consumers avoid all those drawbacks...


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