YOU ARE AT:Archived ArticlesAS PCS DAWNS, CUE PAGING EXPLORES NEW AVENUES FOR REVENUE

AS PCS DAWNS, CUE PAGING EXPLORES NEW AVENUES FOR REVENUE

NEW YORK-“Within three years, PCS will take the market away from local paging in the top 40 markets,” predicted Gordon Kaiser, chief executive officer of Cue Network Corp., a unique nationwide one-way paging carrier.

“I don’t believe PCS companies will ever have the coverage we have. If anyone is safe, it’s Cue,” he said. “The only way to get greater coverage is by satellite; if we have a competitor, it’s Orbcomm (Global L.P.)” Nevertheless, Cue Paging Corp., as the Canadian company’s American offices in Irvine, Calif., are known, isn’t standing still.

The advent of personal communications services-coupled with the fact that Cue’s Canadian-American network is close to capacity with its subscriber base of 170,000-prompted the company to explore new avenues for revenue. Cue hopes to announce two new projects this year that have been in development for 18 months. The first is a message alert in the form of an icon appearing on FM car radios for messages left on cellular phones. The second will involve-under an exclusive license arrangement-transmitting data to personal computers at 39,000 bits per second, “an increase of at least fivefold in data rates.” Unlike Cue’s core, one-way nationwide messaging business, these new services will involve FM subcarrier lease arrangements in the top 40 U.S. markets.

“Our philosophy is that the Internet will drive e-mail through the American economy the way the fax did 10 years ago,” Kaiser said. “You’ll be able to pick up your messages by voice, by telephone and cell phone, not just the PC. We’ll have a product we hope to announce this year.”

In the United States, Cue is the last of a breed of subcarrier paging companies that piggyback onto FM radio signals to transmit and receive signals. “This gives us more height and power than is largely permitted for paging carriers, which are allocated fixed frequencies” from the Federal Communications Commission, Kaiser said.

Cue claims it is the largest radio data network in the world, with five times the geographical coverage of the next largest paging company, Paging Network Inc. “Lots of paging companies cover 95 percent of the country. SkyTel (Corp.) will say it covers 90 percent, but we cover more cows,” Kaiser said. “If there’s a radio station on a lonely stretch of highway that we don’t have, we lease it.”

Calling Cue “a poor man’s Qualcomm,” Kaiser said its largest customer is AT&T Wireless Services Inc., which resells Cue’s services. “We don’t need any roaming agreements because we simulcast,” he said. “If you send a page to our terminals in Chicago, it comes down to 520 radio stations and will find you anywhere.”

Long-distance truckers, railroad companies and federal and state government agencies also comprise a hefty portion of Cue’s paging customer base.

Asked why Cue is the last of its kind, Kaiser cited several reasons. A $40 million investment was necessary before Cue made any profit at all. Newer technologies came down the pike “and people have a tendency to run off after them.” Additionally, Cue pays 490 FM radio stations in the United States and 30 in Canada a total of $750,000 each month for the privilege of using their frequencies.

Subcarrier paging is more common in certain Western European countries where FM radio frequencies are considered public property and aren’t leased out for a fee. But even in Europe, PCS has made significant inroads into this market.

“Nokia, which makes our pager, has stopped producing pagers for the European subcarrier market because PCS caused paging to drop like a stone,” Kaiser said. “There is no question that PCS will do severe damage to paging; all you have to do is look to Europe.”

The privately held Cue Network, which posted $40 million in sales last year, was founded in 1984 by Nokia Mobile Phones. In 1990, Nokia sold Cue to Radio Satellite Network Corp. of Toronto.

Most of Cue’s paging business is in the United States, according to Kaiser. “We would like to expand into Mexico, and have been trying for the past five years, but the regulatory and legal problems have been insurmountable,” he said. “We will try again.”

Cue, however, is curtailing its Asian ventures. “Like everyone else, we got caught up in the wave, trudging around to dinners. You have to remember, you’re not in China on a holiday,” he said. “If you’re a Motorola, you can complain to the State Department. If you’re a small company, especially in the service business, China is a mine field.”

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