NEW YORK-“The dam is about to burst on outsourcing in the wireless world,” and LCC International Inc., the giant radio-frequency engineering firm, is getting ready to ride the resulting rapids into new lines of business, said Geoffrey S. Carroll, its new president and chief executive officer.
“What I saw from the outside is that the wireless industry had been defined in terms of new technologies for the last 10 to 15 years,” said Carroll, who formerly was an executive of Electronic Data Systems Corp.
“Today, it is entirely driven by impacts on the balance sheet, on [profit and loss statements] because wireless carrier margins are under increasing pressure.”
A huge debate is under way within and among carriers as to which of their 50 to 60 operations comprise their core business, Carroll said at last week’s “Wireless & Satellite Conference,” held by Donaldson, Lufkin & Jenrette Securities Corp. In his assessment, just 10 “are integral” to each wireless telecommunications provider.
“Network operations and assets represent 45 (percent) to 50 percent of (carriers’) embedded cost structure,” Carroll said.
“Network operations (comprise) about $10 billion in the [United States] and three-to-four times that internationally. Companies like ours can take $2 (billion) to $3 billion out of the cost structure, so a brand new [multi-billion-dollar] industry is about to be created … as we did in the [information technology] world.”
To take advantage of that opportunity, LCC joined forces several weeks ago with Dean & Co. to create a new outsourcing service “that will be focused only on bringing down the cost structure of [the wireless telecommunications] industry,” he said.
The primary target market for this new offering will be the 200-plus carriers in 60 countries that account for more than 80 percent of annual revenues for McLean, Va.-based LCC. However, Carroll added that LCC also sees great opportunities in Africa, Europe and the Middle East, where new carriers are owned by railroads, financial institutions and power companies, “which have lots of money but little experience in telecommunications.”
The new outsourcing consultancy comes on the heels of LCC’s decision late last year to enter the business of owning, managing and marketing wireless telecommunications towers. LCC has 160 tower sites up and running in the United States, with a total of 500 anticipated to be completed in this country by year-end, Carroll said. However, he noted LCC believes “the biggest piece” of its new tower business will be in markets abroad.
“We are making a very big investment on a global basis in outsourcing of network operations and tower management. I don’t know any [other company] like us. Our competitors would be Andersen Consulting or IBM (Corp.), but our greatest resource is knowledge, and we are sitting on a pile of it,” Carroll said.
“There will be consolidation in (our) industry, and we will be a consolidator. We are in the process of creating a global services company.”
