NEW YORK-Mobile Telecommunication Technologies Corp. hit the ground running last fall with its nationwide SkyTel 2-Way paging launch, stumbled over unforeseen obstacles and has now dusted itself off and resumed the race to commercial operation.
That was the self-evaluation provided by Mtel Chairman John Palmer on June 17, at the Bear Stearns & Co. Inc. Technology Conference.
“SkyTel 2-Way paging didn’t have the coverage down adequately and the network also has not performed as it should,” Palmer said. “We called in Lockheed Martin, which said our basic technology is sound. But they are working on the software in the network.”
During the second half of this year, Mtel, of which SkyTel Corp. is a wholly owned subsidiary, expects to have the top 15 markets ready to go commercially with SkyTel 2-Way paging, Palmer said. The top 15 equal 60 percent of the marketplace, he added. Mtel’s system already is built out in the top 300 markets, he noted.
By early May, Mtel, based in Jackson, Miss., had spent about $300 million on the SkyTel 2-Way launch, according to Moody’s Investors Service, New York. “The initiation of large-scale marketing of the two-way messaging service isn’t likely to occur before the third quarter of 1996,” according to a Moody’s report. “Mtel will be under pressure to rapidly expand its customer base in 1997 in order to meet its required break-even rate.”
Both Moody’s and Standard & Poor’s Corp., New York, have placed some of Mtel’s outstanding debt securities issues under ongoing review for possible downgrade, although neither credit rating agency had downgraded the company’s debt as of June 20.
Based on 20: 20 hindsight, Mtel also has altered its sales and marketing strategy. “Last year, our thinking was we were the only ones to have a nationwide two-way network, so we should be the only ones to market it,” Palmer said. “That wasn’t so smart, so we have expanded our distribution with third parties, including MCI (Communications Corp.) and Sony (Electronics Inc.)-a very important alliance-to go after the retail and consumer market.”
Since the launch of SkyTel 2-Way, Mtel has sold “several thousand units each month,” and will begin marketing them aggressively in September, Palmer said. The break-even point is about 450,000 subscribers, he said.
Asked about competition in the nationwide two-way paging market, the chairman offered this assessment: “For a nationwide system, our window (of exclusivity) may be bigger than we thought it would be. Some other companies have become more cautious about their rollouts because of our problems, so I think we will have the field to ourselves for 18 months.”
Meanwhile, Palmer said Mtel began delivery this month of its new AccessLink two-way messaging product, which adds new capabilities including the ability to initiate messages directly from the messaging unit. AccessLink was developed in partnership with Wireless Access of Santa Clara, Calif.
