When people think of domestic iDEN carriers, the most common name mentioned is Sprint Nextel Corp., which serves more than 13 million customers on its Motorola Inc.-designed network. But that shouldn’t be where the conversion ends; Atlanta-based SouthernLINC Wireless operates its own iDEN network throughout Georgia and Alabama. And while its approximately 300,000 customers — many of which come from parent company Southern Co.’s electrical operations.— pale in comparison to the other iDEN operator, SouthernLINC has a steady and loyal base. SouthernLINC President and CEO Robert Dawson, who also is on the board of the Rural Cellular Association, provides his views on being a small carrier in a rapidly coalescing industry as well as how SouthernLINC uses iDEN to serve its customers.
How has industry consolidation impacted smaller carriers in general and SouthernLINC in particular?
The impression I got from talking with the RCA folks is that people were seeing the economy impact sales more than the general competition. And while they were still selling, hitting their numbers was getting tougher. So, I don’t know if it’s industry consolidation that is impacting them as much as it’s the economy. One of the impacts is that fewer of the people I know are showing up at meetings because they are getting bought out, but at the RCA show we had new members, so there are still folks out there. As we get to fewer players, there is talk that we are getting to a duopoly and it looks like we might be getting that way. But I keep thinking that where some of these smaller carriers have their systems, the big carriers still aren’t going there. As they add 3G and 4G systems, my bet is that they are going to pour money back into the larger markets. So short term I would say it’s not consolidation that is hurting small carriers as much as the economy.
Who do you see as your biggest competitors in the markets you serve?
You take the top four biggest carriers and they are the biggest competitors we have. Also if you walk into a Wal-Mart or into a gas station, you see all the prepaid cards that are from companies reselling on these systems and we are not seeing fewer of those.
What are your strengths in relation to those larger carriers?
We have a stronger reach into some of the smaller tier-two and tier-three markets. But we also do well in some bigger markets. I think we have more room to grow, but clearly we are stronger in the smaller markets where a lot of the competitors have not come to yet.
What’s your view on Cyren Call Chairman Morgan O’Brien’s proposal that a consortium of rural carriers should make a play for the 700 MHz D-Block license?
I found it very interesting. I thought positively about the whole plan of a consortium of folks building out different pieces of the geography and tying it all together. And then I read where [Rep. Edward Markey (D-Mass.)] said that no one should be making a profit on public safety and that seems to roll off the tongue. I know Morgan didn’t say this but you’ve got the politicians saying, “Yeah, someone ought to do this,” and they just blow past this incredibly expensive system. If you are making a profit at all right now, it would seem that you are making a profit off of the public-safety people too. It’s the political piece of this plan that would scare me the most. I think Morgan did a good job of laying out the complexity of getting that many people together, getting the rules tied down and the pre-negotiations with public safety before the auction begins so you know what you’re getting into. But, as good a customer as the public-safety folks are, they are a pretty demanding group. And nobody would go out and build a system only to meet the public-safety needs if you were getting investor kind of money. You couldn’t afford to. And clearly there is not enough money on the public-safety side to gouge them, but if they are going to play that test I think the politicians will kill the plan.
What’s your view on the backup power proceedings and what is SouthernLINC doing in the area of natural disaster preparedness?
I was on the Katrina panel and the rumor was the larger carriers that were also on that panel and watching that panel were concerned that SouthernLINC through me was going to push the idea that everybody was going to have to put generators at all their sites. To which I replied, “Why would I do that? That would just make them better and take away some of our competitive edge.” So I never proposed that, but we do it. In terms of what Congress is trying to do with backup power and generators, we are there. But it’s fun to watch Congress as they want carriers to run around and do all this stuff and then they beat on them for wanting to charge customers for the service they are providing.
How has the 800 MHz rebanding process gone for SouthernLINC?
I’d say it’s going well. We’d like for it to go faster. We had a massive rebanding effort with more than 700 sites and I think we touched all of them the night of Jan. 24 starting at about 10 p.m. and going into about 10 a.m. on Jan. 25. We touched all of sites, and [SprintNextel Corp.] had to touch all of their sites to get out of the space we were going to and us to get out of the space they were going to. It was well coordinated. We are set up to do that again in about a month and there will probably be a third go-round after Feb. 17 after everyone has a set-top box to get their digital TV signals.
How comfortable are you with SouthernLINC’s spectrum position?
A lot of people have asked what are we going to do after iDEN, and I always say that we don’t have any other spectrum and we don’t have the kind of money to go after it. I don’t see the need to change the radio system, and I do believe that while I am comfortable with what I have today, after rebanding and it’s contiguous, it’s going to be even better.
What’s your view on iDEN as being a long-term solution for SouthernLINC?
From what I have heard from Motorola and our work on the international iDEN operators’ forum and watching Motorola work with other countries to turn up new systems, we are comfortable. I’ve heard Motorola say they are willing to sign up for a number of years into the future. They don’t promise forever. Even with all the stuff happening at Motorola, some have said that they could just stop doing iDEN, but I think Motorola is smart enough that they would monetize that and sell it to somebody. Could the prices be different in the future? Could there be a change in the development in the future? Sure, but I think we are as current a technology as you can get with next-generation dispatch. We might not be as sexy and we won’t be broadband as all the other folks out there with their ever-changing “Gs,” but if you want to talk, iDEN is there.
Do you think SouthernLINC can remain competitive without offering next-generation services?
Well it’s personally frustrating that we can’t do that, but from a business perspective you have to get a return on the money you are putting into the ground. Sexy doesn’t always get the return. Would we like to be doing some of that other stuff? Sure. I wouldn’t want to be walking down the street in a black-and-white ad telling people my name, but there are some other television commercials I would like to do.
Where do you see SouthernLINC in five years?
I still feel good about it. We’ve got to ride through the economy right now, but I hope we are bigger and better. I think we can do that. We see customers leave us and try some of
that sexy stuff and they come back because they like the customer service. And it’s good being local. A lot of people can look at being local and rural as being a negative, but we look at it as a positive because we speak the same language and we are in the same communities and we can be involved in those communities and when you call us, you are talking to people that are local. I think people will get turned on by all the glitz and the glitter, but at the end of the day they really want good customer service and I find that people are shocked when they find it.
