A new Denver company is applying the direct mass marketing approach to the two-way radio business, saying most radio customers “already know what they want.”
“They want what they have -analog dispatch service for $20 a month. But 75 percent of the [800 MHz] spectrum is full,” said Jeff Rhodes, president of SMR Direct.
SMR Direct formed late last year, then won 430 licenses of 900 MHz spectrum at government auction this spring. The licenses cover 70 million pops.
The company will have no local sales people. It won’t turn on a digital system or offer interconnection or paging. It doesn’t seek users in the nation’s most populated markets.
But it does intend to install analog 900 MHz networks in mid-size cities, ship radios for free and create an enormous distribution business. SMR Direct has headquarters in downtown Denver and a warehouse/fulfillment center nearby.
Here’s the pitch: customers don’t pay for equipment. They pay $20 a month per radio, with a one-year contract.
“Previously, the radios sold for over $500 a piece, and you dealt with a local company. But we have a centralized, low-cost approach. We’re buying 50,000 radios from the manufacturer, so we pay less. And we ship them to the customer for free. That’s why we’re SMR Direct,” Rhodes said.
SMR Direct buys equipment from E.F. Johnson Co. and Maxon America Inc., and is in negotiations with other equipment manufacturers.
Rhodes said many users are knowledgeable about their systems, and don’t need a local representative.
“We’re talking to other 900 MHz holders. We expect to bring in partners and grow this business and take this plan nationwide,” Rhodes said.
SMR Direct’s spectrum runs from the Ohio Valley through Minnesota, Nebraska, Missouri, Louisiana and throughout the East Coast, with the exception of five major cities.
“We’ve already constructed 10-channel systems in 21 cities,” Rhodes said, such as Minneapolis, St. Louis, Kansas City, Mo., Pittsburgh, Charlotte, N.C., Columbus, Ohio, and Indianapolis.
Rhodes used to be vice president and general manager of Denver-based OneComm Corp.’s specialized mobile radio business in 24 states. Rhodes started SMR Direct shortly before OneComm was sold to Nextel Communications Inc.
“Nextel should join forces with us,” Rhodes said. “We’ll take all their analog customers who don’t want to move to digital.”
SMR Direct also has its eye on South America. The company has a license in Lima, Peru, and recently installed an analog system at 800 MHz. “We’ve already loaded a thousand customers. We’re negotiating deals to buy spectrum in Venezuela, Colombia, Chile and Ecuador. There’s enormous opportunity there,” Rhodes said.
SMR Direct will consider buying used 800 MHz equipment from U.S. customers to deploy in South America.
