Now that the crisis is over and paging service has been restored, the paging industry is debating exactly what the pre-Memorial Day pager outage means for its future.
Carriers that had backup plans felt they handled matters well. But since this was the first incident of its kind, no one really knew how backup plans would work. Today carriers are looking to see how they can do things better, and likely cheaper, if such an event were ever to happen again.
“After something like this happens, we’re going to have discussions to see what we can do better next time,” said Paging Network Inc. Director of Corporate Communications Scott Baradell, in essence summing up the plans of the other carriers.
Estimates of how much the outage cost carriers are beginning to trickle in. AirTouch Paging said the cost of returning service and crediting affected customers totaled $2 million. PageMart Wireless Inc. estimated about $1.5 million. Other carriers still are tallying their costs.
Multiple satellites
The options of how to improve recovery plans are many, and it is a bit premature to say how things will change, but the consensus is the industry already has changed one part of its business plan.
“We have changed the paradigm and paging will be distributed over multiple satellites instead of single points of failure,” said Bob Egan, research director at the Gartner Group. “I would maintain that both end users and the carriers themselves feel they can’t afford not to.”
The top 10 paging carriers’ signals today are sent over several different satellites, rather than one, and it likely will stay that way. If a satellite were to go sideways today, only one or two carriers would lose service. Mission-critical customers, like hospitals, can take several steps to ensure they never lose service. They can choose a provider that offers full system redundancy, like SkyTel Communications Corp., or they can sign service agreements with carriers that use different satellites.
Preparedness positioning
Already, some carriers are jockeying to position themselves as having been the best prepared when the disaster hit, as a way of hyping their network’s reliability.
MobileComm placed an ad in the Wall Street Journal and USA Today after the incident that said most of its customers had no glitch in their service. Only 37 percent of MobileComm customers were affected because the other 63 percent were never on the satellite link. While the company had reserve capacity on a backup satellite already, it still had to reconfigure its transmitters, like many of its competitors.
While some industry insiders said the ad was in bad taste, MobileComm spokeswoman Krista Grossman said she was not aware of any negative feelings about the ad.
“The philosophy behind it was that MobileComm is very proud of its networks and wanted people to know we already had a backup in place,” she said. “Not every paging carrier had a backup plan in place.”
If the paging industry not been so financially strapped in recent years, carriers might have bought better backup systems. “This is an issue of capital availability, which the industry has been under pressure for the last few years,” said Bob Lugee, Arch Communications Group Inc.’s vice president of investor relations.
Future changes
As carriers make inroads to becoming profitable, this may change.
Some carriers say they already have reserved satellite space on other satellites in case the primary one goes down. But that won’t ease the time-consuming task of reconfiguring receiver dishes on transmitters, which was the chore that cost the most money and manpower.
Carriers could choose to adopt SkyTel’s model and have all transmitters pre-configured to two satellites, but this is highly expensive and would raise the cost of service. It is unlikely all companies will go to full system satellite redundancy. However, carriers may opt for satellite redundancy on hard-to-reach transmitters, the ones that took the most time and effort to get to, or on transmitters in major markets.
Yet another option is to have some sort of frame relay or other terrestrial-based backup in place, again either on all transmitters or only in certain markets, or perhaps a mix of dual-satellite transmitters and terrestrial-based backups.
Selling reliability
Carriers building two-way networks could use its built-in redundancy as a selling point. If customer don’t want a single point of failure, they can subscribe to the advanced network instead.
While some customers may be enticed toward a carrier with a network that has been proven to be more reliable, few analysts believe network reliability will act as a value-added service by itself.
“Getting yourself a satellite backup is not going to triple your ARPUs,” said John Bensche, an analyst at Lehman Brothers. “Everyone’s trying to move upstream to better customers, but this one facet is not going to do that.”
Some carriers may decide this was a one-time event and they do not need to add satellite or frame-relay redundancy; that paying a few million dollars every decade or so is cheaper than spending funds on backup infrastructure.
“I think they have to be real concerned. I’m not so sure this is a one-time event,” said Egan. “Some people like to go to Las Vegas and play the high-roller slots. Those people who play the high risks usually will lose … Those that have redundancy built into their systems will win and those that don’t will lose. It’s going to be a point of differentiation. They can’t afford to take that chance because it’s already become a changed paradigm.”
Not all industry insiders are convinced the event will spark any kind of revolutionary change, other than carriers using different satellites.
“I think it was handled in a superb fashion by the carriers and I don’t think it should change anything,” said Jeanine Oburchay, associate director and paging analyst at Bear Stearns & Co. “I think the reliability of the satellite system has proven to be unparalleled … In the long-term, it will just be a blip on the screen.”
Paging stocks seemed minimally affected by the outage. PageNet stock fell from $14.30 just before the outage May 19 to $13.37 at press time. Arch maintained a $5 price throughout and fell slightly to $4.87 at press time. PageMart dropped slightly from $9.06 May 19 to $8.78 at press time, and Metrocall Inc. fell from $6.31 May.
