The 220 MHz specialized mobile radio industry, sometimes known as the final frontier of wireless spectrum opportunity, gained a major player when four of its larger operators agreed in principle to merge into what should replace Roamer One as the nation’s largest 220 MHz SMR provider.
The combination of Incom Communications Corp., US MobilComm, SMR Advisory Group L.C. and Narrowband Network System-a subsidiary of SMR equipment provider SEA Inc.-would create a company with 220 MHz coverage in more than 325 sites across the country.
According to its president, Gene Clothier, Incom will be the controlling company in the merger, with a stake of more than 50 percent. Its Irvine, Calif., offices will be the combined company’s headquarters, and the Incom name tentatively is the combined company’s title.
The merger comes just weeks before the upcoming Phase II 220 MHz SMR auctions scheduled for May 19, but Clothier said the merger is about much more than bidding clout.
“It would be an error to say that’s the only reason, but that’s a compelling reason,” Clothier said. The merger took place because Incom wanted to generate a greater footprint to offer nationwide accounts, he explained. The impending auction influenced when the merger would take place. “The timing is important because of the auction,” he said.
“This consolidation and the soon-to-be-held 220 MHz spectrum auction will give this new entity the most significant nationwide 220 MHz footprint and a unique opportunity to provide strong leadership for the SMR radio service,” Clothier said.
Industry watchers mostly have praised the alliance.
“What it creates is two companies that are going to try to make a business of wide area networking, something that doesn’t exist today,” said Steve Virostek, director of wireless data research for The Strategis Group, referring to the combined company and Roamer One.
Alan Shark, president of American Mobile Telecommunications Association, said the merger is a positive step. “I think it helps,” he said. “People will feel assured that this is a viable industry … The perceived value goes up when a company is bigger.”
Wall Street is more willing to invest in larger companies, Shark added, which will help the new alliance when securing spectrum during this auction. “I am very, very bullish on what they have done.”
The merger will allow the combined entity to offer a nationwide network to court such national customers as Incom’s Airborne Express account.
“For four years, each company-NNS, Incom, USM and SMR-has had different strategies and philosophies regarding their business plans,” said Albert Koenigsberg, president of SMR Advisory Group. “Today, working together, our strategies complement each other to offer the business community an unprecedented wide area footprint for business communications.”
Clothier said there will be direct sales offices at its headquarters in Irvine, as well as in Florida, San Francisco, Chicago, New York, Houston/Dallas and Washington, D.C. The D.C. office also may include regulatory personnel.
The merger also brings to light a positioning battle between the only two 220 MHz SMR equipment providers in the industry-Securicor Communications Ltd. and SEA. Each manufacturer uses its own operating system, and each manufacturer now has a stake in a large 220 MHz carrier. The two systems are not compatible.
Securicor is the majority shareholder in Intek Global Corp. Roamer One, a subsidiary of Intek, was the largest 220 MHz SMR operator in the country, with 30 percent of the national market.
All four of the companies merging use equipment provided by SEA. The merger is beneficial to SEA in that the vendor now can point to a national 220 MHz SMR network built with its equipment. While this is not a seamless network, national companies with regional operations likely will want those operations using the same type of network.
Clothier said he plans to encourage other radio communications dealers to obtain 220 MHz licenses and become independent partners through roaming and joint-venture agreements.
With the auction only weeks away, the chance that several new 220 MHz SMR players will enter the market soon is great. Strategis’ Virostek said to expect unique bidders in the upcoming auctions, like a Federal Express, a local utility or even a local telephone company, some of which may need to purchase the appropriate equipment.
“220 represents the last spectrum opportunity that exists today,” he said. “It’s the last frontier.”
