Almost everywhere you look is an example of a little guy trying to compete with a big guy-your local neighborhood video store competing with Blockbuster, David taking on Goliath or traditional specialized mobile radio carriers trying to find a way to keep up with the Nextels and the Geoteks of the wireless world.
Digital subscriber growth last year surpassed analog subscriber growth in the SMR industry for the first time in history, according to a report issued earlier this year by The Strategis Group and the American Mobile Telecommunications Association. The groups said the industry added 210,000 digital subscribers and 80,000 analog subscribers during 1996.
Strategis and AMTA concluded that the success of digital is attributable to Nextel Communications Inc.’s business strategy of converting its analog networks to digital service. With a number one ranking on RCR’s Top 20 SMR list earlier this year at 1.1 million subscribers, Nextel holds the lion’s share of SMR customers.
But while Nextel continues to add customers to its planned nationwide enhanced SMR network, all is not lost for the smaller SMR providers trying to compete.
“The traditional customers that SMR providers serve may not require those (enhanced) services,” said Michael F. Murphy, principal consultant, telecommunications, for Abt Associates, a research-based consulting firm. “There’s probably a good portion of the market that wants cheap and dirty SMR service,” he said. “They don’t care about all these bells and whistles and they also don’t want to pay $80 to $100 per month.”
Most analog SMR services are priced in the $15 to $20 range, he said.
That idea is one that traditional analog SMR providers have focused on since Nextel began launching service, but some analysts say smaller providers also can compete by capitalizing on the one thing that would seem to put them at a disadvantage-their small size.
“That’s the classic strategic issue,” said Murphy. “How do you take what may be perceived as a disadvantage and turn it into an advantage?”
Small providers can become “a much more localized, service-oriented business, where customers feel you’re going to give them much better service because you’re local and you care about their business, instead of some large, big company that’s located a thousand miles away,” said Murphy.
Alan Shark, president and chief executive officer of AMTA, said smaller providers must begin to do things differently in order to compete with their larger counterparts. He advises smaller players to stop trying to compete with cellular and personal communications services and instead focus on the industry’s traditional stronghold-business-to-business service.
Smaller SMRs also need to improve marketing and product offerings, said Shark, including strategic alliances, improved product definition, increased coverage areas, lower handset pricing and more flexible pricing.
Murphy agreed. “The marketing side is going to be critical for these small providers-getting very creative about promotions-so when a Nextel or a Geotek comes in and tries to steal your customers, you need to be very creative in developing loyalty programs that are going to keep the customer with you,” he said.
Smaller SMR providers need to rethink what it means to be a mobile service provider, said Shark.
“I think the days in which a provider just offers customers 800 MHz SMR dispatch or voice work group is no longer that common,” he said. “What is happening is that our people are realizing that they need to diversify. More and more of our people are becoming agents for the various other wireless services.”
William Landis, president of TuWay Wireless, has been doing just that. He said he began selling Nextel service because it was the only way to stay competitive in the market. His company, which owns and operates SMR channels in the Lehigh Valley area of Pennsylvania, was founded in 1953 as an authorized Motorola Inc. service center and dealer.
“What people like me have done is we’ve positioned ourselves by going to the 900 MHz spectrum, put up SMRs, networked with other people and put up purely dispatch 900 MHz SMRs,” said Landis. “So we can take people who want purely dispatch radio and move them over to 900 MHz.”
TuWay also differentiates its service by providing its customers with data capabilities using software provided by PadCom Inc. The software allows data messages to be transmitted over the best possible wireless channel as defined by parameters set up by the customer.
Also critical to competing with large SMR providers is developing a common analog protocol, similar to cellular’s common analog technology. Shark said announcements of these type of agreements should be coming in the near future.
