Two-way operators hope new technology aids capacity constraints.
Traditional small two-way radio operators are hoping new technology can ease their capacity problems and offer more integrated services to their customers.
“There is a real serious question whether smaller operators can exist in tomorrow’s marketplace,” said Alan Shark, president of the American Mobile Telecommunications Association. “The biggest dilemma is not having the frequency to grow.”
Small specialized mobile radio operators for years have struggled with capacity constraints on their analog networks and found that the digital technology offered today, primarily integrated Digital Enhanced Network technology offered by Motorola Inc., is too expensive to deploy.
“The real frustration is there is not a middle ground,” said Shark.
The lack of affordable capacity-enhancing equipment has changed the dynamics of the SMR industry. Many SMR operators sold out to giant enhanced SMR operator Nextel Communications Inc.
And today, some say they are finding it difficult to compete with Nextel’s ability to offer handheld phones that integrate a pager, two-way radio and cellular phone.
“Nextel had a dramatic effect on our industry because they created an easy exit strategy for the average SMR operator to sell and get out of the business,” said Marc Abrams, vice president of Mobile Relay Associates Inc., an SMR operator in Los Angeles. “We’ve had a mass exodus.”
Some smaller operators are hoping vendors this year finally will introduce new technology-talked about for many years-to solve operators’ capacity problems and allow them to offer more integrated services.
Motorola last spring unveiled a smaller and cheaper version of iDEN, known as iDEN Microlite, but has since kept quiet about the new product. When RCR inquired recently, Motorola declined to comment on the technology. Operators, however, are hopeful the new technology will become commercially available this year and allow them to offer the same integrated handsets Nextel offers.
“The handset Nextel is offering creates a problem when you try to sell a portable to customers and they say they can get a cellular phone for free,” said Abrams.
“Operators could provide service where Nextel isn’t reaching people,” said Shark. “Operators win because it increases capacity on their current frequencies by at least a minimum of three to four times.”
Nextel did not return phone calls seeking comment on whether it is willing to partner with smaller operators to help fill out its footprint.
Perhaps a technology that is more certain for SMR operators this year is one offered by Dallas-based Comspace Corp. Comspace plans to ship in April equipment using DC/MA technology, a digital air interface that allows carriers to convert their existing 25-kilohertz spaced channels one at a time into eight digital voice/data pathways.
Comspace has licensed the technology to several manufacturers, including a recent deal with Hitachi Denshi Ltd. of Japan, but has decided to jump-start the market by manufacturing equipment itself.
Many vendors are moving too slowly to meet market demand, said Steve Fulford, president and chief executive officer of Comspace.
“We had hoped to be a technology provider, but because of the fallout in the industry between Uniden, EFJohnson and others, we have found that our business plan depended on the efforts of those companies whose sales figures and market share are in decline,” he said. “We recently raised our second round of financing and have enough to do it ourselves and control our own destiny.”
Mobile handsets likely won’t become available until next year, said Fulford. While iDEN technology has the advantage of cheaper priced mobile handsets because of subsidies and volume, Fulford believes he can drive the cost of Comspace handsets down with subsidization to about $350, the average price of an analog unit today.
With increased capacity, carriers can become more creative in selling handsets by bundling airtime, rather than relying on the historical 30 percent to 40 percent margin they make from selling radios, he said.
“There’s a tremendous opportunity for our industry to be a multiservice provider to the same kind of customer traditionally attracted to land mobile radio,” said Fulford. Nextel, he said, has proven that carriers can obtain higher average revenue per user by offering integrated services.
