Metrocall Inc. and PageMart Wireless Inc. have entered a five-year strategic alliance that is part resale agreement, part shared network buildout relationship.
In the first phase of the alliance, to begin immediately, Metrocall plans to resell PageMart’s advanced messaging services in areas where PageMart’s narrowband personal communications services Wireless Internet Protocol network is available.
At this point, PageMart has made available only guaranteed messaging on that network, but plans to introduce two-way messaging in May or June. Once that happens, Metrocall plans to offer two-way service as well.
But the alliance goes far beyond mere resale. It is Metrocall’s way of announcing its two-way NPCS strategy for the future.
“We are now rolling out what is a very quick-to-market two-way strategy,” Scanlon said. “This is the fastest way for Metrocall to land with our sales forces’ feet running.”
On a more speculative note, Jeanine Oburchay, associate director of Bear, Stearns & Co., said the alliance eventually may extend well beyond the activities listed. “It hints at consolidation,” she said. “It allows them the opportunity to go through an extended courtship before consummating their relationship.”
The courtship refers to the second phase of the partnership, which calls for PageMart and Metrocall to share capital and operating expenses building their respective networks. When Metrocall begins building its network, it will set up its own outbound channels and PageMart will share its receivers. Oburchay estimates Metrocall will pay PageMart about $15 million for the shared receivers.
Metrocall said Motorola and Glenayre Technologies Inc. will provide infrastructure equipment for its NPCS network.
According to Scanlon, this model of sharing the buildout effort is similar to the one used in the early days of the industry, when carriers built out their nationwide one-way paging networks. “This is a successful model that built the first nationwide networks and so we’re going back to use the same model to build out a hopefully successful NPCS network,” he said.
Scanlon said PageMart and Metrocall will continue to share the construction effort until it would no longer be in their best interests to do so. “The deal holds together as long as it’s economically viable for both companies,” he said.
Meanwhile, PageMart also gains by sharing the cost of its network and from loading users onto the new network via Metrocall’s distribution channels, including AT&T Wireless Services Inc. stores.
“I’m hard pressed to see the cons for anybody, both for the industry and for the companies involved,” commented Oburchay. She agreed PageMart benefits in the short term from Metrocall’s distribution power, much like SkyTel Communications Inc.’s deal with Paging Network Inc.
Scanlon said Metrocall will begin building its NPCS network in about two years.
