Moves made by the top 10 paging carriers in the last six months dramatically illustrate how paging carriers are changing to remain in the game.
The sun has set on the age of the cheap-beep model and is rising on a new era of value-added advanced services. Wall Street’s eye has strayed from the subscriber number column and now is studying the bottom line. These facts mark a significant shift in the way paging carriers do business, forcing many types of adjustments.
“It’s an indicator of an industry that’s maturing,” said Darryl Sterling, paging analyst at the Yankee Group. “This is a low-margin industry and players in it must be extremely efficient in order to survive.”
The adjustments being made range from the subtle to the dramatic. The most recent example being Arch Communications Group Inc.’s announced reorganization.
Arch’s organizational shift includes consolidating several regional divisions into national powerhouses and eliminating 10 percent of its work force. The move followed several months of upper management changes, which included a new chief financial officer and chief operational officer.
Arch’s restructuring plans are similar to those announced by Paging Network Inc. earlier this year.
PageNet also experienced a slew of executive-level roiling-which resulted in a new president, chairman and chief executive officer as well as a new CFO and a swapping of senior and executive vice president titles of sales, strategic planning and operations.
Then, in February, PageNet said it was consolidating various billing, customer-support and accounting functions into national centers and eliminating 1,800 jobs.
Both carriers said their respective restructurings were efforts to put a spring in their step so they might more easily shift paths to meet the paging paradigm of the future.
“We have a company now that can’t evolve the way we want the company to evolve,” said Scott Baradell, director of corporate communications at PageNet, at the time of the restructuring. “We’re not as nimble an organization as we want to be.”
Those sentiments were closely matched by Bob Lougee, vice president of investor relations at Arch. “Going forward, we needed to structure ourselves a little differently,” he said. “I think some streamlining is definitely in order.”
How will these changed prepare carriers for the future?
“A lot of these strategies to restructure are dealing specifically with back-office support structures,” said the Yankee Group’s Sterling, particularly in billing and customer support. “They’re preparing for deploying advanced services in the near future. Do it now. If you don’t have an effective billing system as a paging company … you have no leg to stand on.”
The paging industry’s evolution to advanced services requires more sophisticated billing and customer-support functions. Advanced services, such as value-added information services, have more complicated billing options and therefore a more effective system is needed, Sterling said.
While all carriers are making these adjustments, not all have announced such dramatic realignments as PageNet and Arch. According Sterling, it is no accident that the nation’s largest and more veteran paging companies needed to make sensational alterations to prepare for the millennium. These companies grew under the old paging business model to such a size that business agility was affected. Now that the paging paradigm has changed, these large businesses must slim down in order to move to that new path.
Up-and-coming paging operators like PageMart Wireless Inc. and SkyTel Communications Corp. entered the game later, so they were small enough to adjust internal operations along the way, instead of announcing a sudden reorganization.
PageMart didn’t come to significant prominence in the game until about 1994, when it first began marketing FLEX, Sterling said. Because the company was smaller, it took less effort to switch its billing and customer-support functions. PageMart was one of the first to implement dial-in pager activation for FLEX products. More recently, the company implemented its Paging Control Center software program that allows major customer accounts to have more control over account activation and other functions.
SkyTel from the start focused on premium services and advanced networks and has in place the necessary billing and customer-support systems to grow. While these carriers may be announce tweaks in their operations from time to time, it is unlikely either will revamp things as far as Arch or PageNet did.
Other paging carriers are conducting their own reorganizations, but in different guises. Metrocall Inc. this year completed its acquisition of ProNet Inc. and announced several back-office cuts and other changes as part of the integration process. Similarly, TSR Paging Inc. and American Paging Inc. merged to become TSR Wireless Inc. According to TSR President Mitchell Sacks, the new entity is realigning similar functions.
MobileMedia Communications Corp. is using the Chapter 11 bankruptcy process to firm up its financial structure and is expected by many on Wall Street to emerge with one of the best debt loads in the industry. The company also announced last week it is eliminating 100 jobs at its retail activation center in Jackson, Miss., and consolidating functions at the Dallas-based call center in an effort to improve customer-service operations.
