Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
Where are the best positions in information and communications technology?
That was, in essence, the question posed last month by a jobless recent law school grad to a panel of former top FCC officials who were convened in Washington to discuss the Commission’s future under the next president. The question was so timely that several of the former FCC Chairmen and Chief of Staff panelists revisited the question later during their mini-conference, sponsored by George Mason University’s Law School at the National Press Club.
Understanding that tough financial times require creativity, former FCC Chairman William Kennard (1997-2001) advised the Syracuse University grad to fulfill her enthusiasm for high-tech legal work by using it to help enable non-ICT (information and communications technology) sectors to expand their efficiencies through better communications. He should know a lot about this in his current job as managing director of the Carlyle Group’s global media and telecom group.
He cited society’s growing needs in such areas as energy, public safety and health care. These are requirements that either a Democratic or Republican incoming administration will need to address vigorously – but with diminished financial resources. In this instance, much-improved technology is one of the few viable options, given the global credit crunch.
This area of business development in “vertical markets” – defined as those outside of retail channels that are available to consumers – was a major focus during the last of my 15 years at the Wireless Communications Association International (WCA) after the association was able to prevail on the vast bulk of its most vital U.S. regulatory issues.
With the encouragement of system integrators and suppliers especially, some of us saw vertical markets as a key strategy to achieve measurable successes in new markets where government or corporate buyers have ample funds to pay for major enhancements. The opportunities for a creative strategy to make a positive impact in a targeted application may be better than in the fiercely competitive consumer market. In the latter, computer processing power that could formerly guide a rocket ship is now just average for a handset, and so innovation sometimes needs to be correspondingly immense in scope.
Helping build new markets (including their regulatory components) rather than normal regulatory activities is thus an intriguing path apt for these times.
In a pioneering report published this fall, Senza Fili Consulting founder Monica Paolini predicts growth from vertical market revenues to rise from less than 5% in total for cellular operators today, to 23% of WiMAX service provider revenues by 2014. That kind of growth represents an impressive opportunity, even though it’s not quite an apples-to-apples comparison because cellular carriers overlap only in part with WIMAX operators heavily comprised of new entrants.
Among her reasons for identifying these vertical applications as crucial to the success of WiMAX operators are:
1, The operators can accelerate path to profitability with very limited marginal cost;
2, Demand for vertical applications is largely not addressed by mobile operators; and
3, This is an opportunity that well-suited to WiMAX operators.
Vertical players are showing a keen interest in mobile broadband functionality to improve their operations and reduce costs. This potential was illustrated by Senza Fili and numerous other speakers Sept. 30-Oct. at the WiMAX World 2008 annual convention in Chicago, with success stories featured in such varied areas as energy extraction (Redline Communications ) and public safety ( Northrop Grumman Information Technology).
Similarly, the health care industry has done an impressive job in selling government policymakers (including those in the presidential campaigns) and foresighted members of industry on the need to advance health IT. The focus has been on the savings that can be achieved via such steps as electronic health records and broadband transmission between various interested parties, such as insurance companies and government.
Yet none of us from the ICT world should assume that the path forward in this is easy despite presidential campaign comments and suggestions from private industry about the large savings and/or profits to be made from implementing health care IT. For instance, how many of us have seen “tele-medicine/tele-health” as a bullet-point suggesting these themes on a conference PowerPoint? Much of the time that’s all there is to it – just a bullet point, with scant follow-up on the specific market needs, and the practical and regulatory obstacles that abound.
One serious obstacle for U.S. tele-medicine is the insurance reimbursement system, which is far from friendly to long-distance care. Another obstacle arises from varying state-by-state requirements for privacy and security – which is hardly an academic problem in health care when denial of coverage can be so financially devastating and so many have some pre-existing problem at the same time they are changing jobs.
Similar obstacles and traps for the unwary abound in other sectors, with a path to success existing only for those from our ICT world who understand both the specific needs of varied customers, the ever-increasing array of solutions that our sector can provide, and also success strategies to overcome political, regulatory and other legal obstacles.
That all adds up to a lot of work and opportunity – both for that young lawyer from Syracuse and many others.
Andrew Kreig, former president of the Wireless Communications Association (WCA), is managing director at Eagle View Capital Strategies, a Washington, DC-based consultancy, and is research affiliate at the Information Economy Project at George Mason University’s School of Law. As WCA president from 1997 to this summer, he led the association’s regulatory and business evolution from fixed wireless to advanced mobile applications.
Comments or questions? You may contact Andrew at Andrew@EagleViewDC.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.
