WASHINGTON-The industry created two decades ago to foster dispatch wireless communications in the United States stands at a crossroads as regulatory, technological and market forces conspire to put mom-and-pop two-way radio businesses out to pasture.
Nextel Communications Inc., the largest specialized mobile radio operator, has grabbed headlines in the press in recent years by aggressively acquiring local SMRs around the country and converting clusters of systems into cellular-like networks that provide users with a package of dispatch, paging, two-way messaging and mobile telephone services.
But Nextel’s success has created a schism in the fledgling SMR industry. Small dispatch radio system licensees believe new laws and ground-breaking regulatory changes under consideration are being driven by big business and by the government’s desire to enrich its coffers.
However, some SMR operators have gotten rich fast from being a Nextel conquest.
That, in turn, has prompted a huge increase in the number of speculative SMR applications filed-a problem believed partially responsible for the overflow of filings at the Federal Communications Commission’s licensing offices.
For the FCC, which favors auctioning a majority of 800 MHz SMR channels for wide-area wireless networks and letting local telephone companies and cellular carriers compete in the dispatch market, the question is change at what cost.
For small SMR operators, who account for about two-thirds of the 1.8 million SMR customers, the cost of not changing is a big question.
The American Mobile Telecommunications Industry Association, the leading SMR trade group, said it supports lifting restrictions that bar telephone companies from holding SMR licenses. But AMTA opposes allowing wireline carriers from owning 220 MHz licenses until narrowband rules for that band are completed.
And AMTA does not want cellular operators getting into SMR dispatch.
Many small SMR operators disagree with AMTA’s support of allowing telephone companies to own SMR licenses.
But landline telephone companies and cellular carriers are all for removing barriers that keep them out of an SMR industry that grew 18 percent in 1993.
The FCC has granted some waivers for telephone companies to own SMR systems, while other such requests remain pending.
“Elimination of the restrictions will enhance opportunities for wireline carriers and mobile radio licensees, making possible partnering and other business relationships that are now effectively precluded,” said the United States Telephone Association.
McCaw Cellular Communications Inc. said “concerns about cellular and other common carriers devoting substantial portions of their spectrum to dispatch offerings simply are not realistic.”
Opinions differ over whether the days are numbered for small SMRs.
“I think it’s going to be difficult for small operators to stay in business for the next five or six years down the road,” said Elliott Hamilton, a communications consultant at Malarkey Taylor Associates-Economic and Management Consultants International Inc.
Dale Hatfield, a former telecommunications policymaker who now advises wireless companies, sees room for both high-end and low-end SMR services. “I think there’s a strong dispatch market that will be around for a long time,” said Hatfield. He recommended that small SMRs keep prices down and emphasize customer service to stay afloat.
The challenge is different for Nextel and other wide-area SMR operators, according to Hatfield. “It depends on how well they compete with the cellular people.”
More specifically, next-generation SMR operators are targeting corporate white-collar and blue-collar industrial customers that today source cellular, dispatch and paging from different vendors.
