I’ve noted before that vendors of the personal Air Communications Technology protocol-one of the newest contenders for two-way paging and messaging systems, and being implemented by AT&T Wireless Services Inc. over its nationwide two-way channels-have their work cut out for them since Motorola Inc.’s FLEX family of products was well on its way to becoming the de facto standard.
pACT
I have just learned that the “old” pACT, as designed, will not be implemented by AT&T Wireless. In fact, a new, downgraded one-way version of pACT will be deployed. One-way pACT will compete even less with Motorola’s ReFLEX two-way paging system than the original pACT would have. Over the course of the past few weeks, I have spoken with various members of the pACT Forum, some insiders at AT&T Wireless, and various industry insiders in an attempt to gain a better understanding of exactly why AT&T Wireless feels compelled to make a major shift in its two-way paging and messaging direction, how this new system will function, and how it will benefit users.
At this point, it appears as though the deciding factor was one of network economics alone. I have been told by many of those directly involved in this project that the true cost of the full version of pACT for a nationwide deployment was considerably more than AT&T Wireless was willing to spend. The figures that I have been given indicate that it would have cost AT&T Wireless in the neighborhood of $400 million to deploy the pACT network as originally designed.
Once the decision was made to scale back pACT-to offer an outbound alphanumeric paging system with network-only acknowledgment-the next step was to review the pACT specification as well as the competing ReFLEX protocol. Then, based upon a number of cost and time to deployment factors, a decision regarding pACT lite vs. ReFLEX could be made. My investigation revealed that the decision to redo the pACT specifications to operate as a one-way alphanumeric system with system acknowledgment was not based upon a technological review. Rather, it was based upon the fact that AT&T Wireless had already committed to purchasing $70 million in base station and network equipment from two vendors-AT&T Wireless’ initial orders for what was going to be a much larger final system order.
AT&T Wireless wanted a new system that would continue to promote pACT, and honor these initial orders, without committing to the expense of a total system buildout.
Further, in an effort to “save” these orders, both vendors worked with AT&T Wireless to devise a way to scale back pACT so that a less robust nationwide service could be offered. This investigation resulted in “pACT lite.” In an amazingly fortuitous coincidence, the cost to implement this new system is estimated to be $70 million!
Alpha plus
What will alphanumeric paging with system-level acknowledgment do? It will provide users with the ability to receive both numeric and alphanumeric pages just as they do with today’s one-way systems. However, the network will be able to determine in what region a user is located. The pager will be a two-way device and it will return an acknowledgment that it received the message back to the network. This acknowledgment will be received at one or, at most, several receivers colocated with the outbound transmitters. This is how the network will “know” where the paging user is located.
There is really no advantage to this type of system as far as the end user is concerned, but there is a tremendous advantage to the network provider. Each page does not have to be sent out over the entire nationwide network to reach the individual for whom it is intended. The network tracks the location of the user and outbound pages are only sent to the transmitters closest to the last known location. This frees up the balance of the network, thus more users can be served by the network.
It is interesting to note that ReFLEX, Motorola’s protocol for two-way paging systems, enables network system providers to offer the same type of outbound alphanumeric paging with system-level acknowledgment, as well as user-level acknowledgment and user-level response depending upon how the network is deployed.
What we have here
Thus, what we really have here with this downgraded pACT is alphanumeric outbound paging with system-level acknowledgment. The minutes of the latest pACT Forum meeting state that “AT&T Wireless will be making some changes to the spec to support a revised business plan that puts more emphasis on enhanced one-way alphanumeric paging services, deferring some of the more advanced and speculative data applications to a later time when the market shows more maturity. The changes provide for an unacknowledged message mode while using the reverse channel for device location for frequency reuse to expand capacity.”
The question in my mind, then, is why AT&T Wireless believes that it can build a single nationwide network using a vastly different protocol than the one already in use (or committed to) by most of the other paging network vendors.
The issues I see with this tactic are as follows:
1. Will there be sufficient paging device volume for companies to commit resources to building and selling pACT devices?
2. If some companies do decide to build pACT devices, how many will do so?
3. With 2,000 base stations-the stated number to be deployed-can the network provide the acknowledgment-back coverage necessary to “find” the pager and take full advantage of system acknowledgment features?
4. Does AT&T Wireless expect other vendors to resell on this one-of-a-kind system?
5. If AT&T Wireless decides to go it alone, can it populate the system and reach a positive cash flow position?
6. Is Cellular Digital Packet Data so important to AT&T Wireless that it will stick with it even over a one-way alphanumeric system? (pACT is derived from Internet Protocol-based CDPD technology.)
7. In a one-way alphanumeric system, is there really any advantage to using CDPD or the IP protocol?
8. Is this decision based on sound business models, or is it really about being “against” Motorola?
9. What does this do to AT&T Wireless’ credibility?
10. Will pACT be successful in this form?
11. Does AT&T Wireless really plan to build out two-way pACT in the future?
My thoughts on these issues are as follows:
1. I do not believe that more than one or two paging device vendors will step up to build devices for this network. It does not make economic sense to build pagers using a protocol that is limited to a single network. Whether pACT is a better protocol or a more efficient protocol does not matter (I have no evidence to indicate that it is either). It is an economy of scale-most of the systems will employ the same non-pACT protocol and vendors will be able to build millions of paging devices for use on them, driving down prices over time. Unless AT&T Wireless intends to subsidize the cost of paging devices for pACT, I do not believe that they will be competitively priced.
2. If more than two vendors build pACT pagers, the number of units per vendor will decrease, making it even more unlikely that they will be competitive or that any of them will make money on their devices.
3. The pACT system, as explained to me, will be a symmetrical system. This means that for each transmitter there will be a single receiver and it will be colocated at the same site. Outbound power levels need to be fairly high to provide inbuilding penetration. It is likely that in many instances the receivers will not be able to hear the pager’s low-powered transmitter returning the system acknowledgment. Thus the system will function better for users who do not move around and remain “registered” in one location. But most people who do not move around much do not need pagers.
4. I have heard of no other paging service provider that expects to resell on this net
work. Further, if AT&T Wireless intends to drive the cost of alphanumeric paging down-as I have heard it plans to-most resellers will not be able to make money reselling on the pACT system and will choose other networks.
5. The question of network population and positive cash flow is what drives the paging business. AT&T Wireless has a big marketing engine and has done well with its voice cellular systems. However, the CDPD group has, to date, had little success selling two-way messaging or even rolling out CDPD in a timely fashion. After four years of effort, there are fewer than 5,000 users nationwide on all of the CDPD networks.
6. In addition to the monetary issues already discussed, I believe that the compelling reason AT&T Wireless is sticking with pACT is that if it abandons pACT in favor of the entrenched two-way protocol, it would be an admission that CDPD and IP are not as important to AT&T Wireless as it would like us to believe. In reality, IP is an important protocol for any form of wireless-but not over the airlink. It does not take IP to access a one-way system, nor will this system be used by information managers to move corporate information to users’ notebooks or handhelds. It will become yet another one-way paging system with the same access points currently offered by the other one-way systems. Internet access to a one-way pager does not require the pager to be IP-based.
7. The need for IP is negated with one-way alphanumeric paging. AT&T Wireless tells me that this downgraded pACT is a first step and that it will be deploying full two-way pACT over time-or if a customer demands it and is willing to pay for it in a given area. This is the same line AT&T Wireless has been using for the future deployment of CDPD.
8. I have been assured by AT&T Wireless that nothing it is doing is “against” Motorola-its engineering assessment indicates that pACT is a better technology than ReFLEX. However, AT&T Wireless has admitted to others that ReFLEX is a more robust protocol and is ahead in the technology curve.
9. AT&T Wireless made a lot of noise about deploying a full-blown pACT nationwide network, at least inside the industry, and it went after the other nationwide paging carriers trying to convince them to deploy full-blown pACT. With more systems up and running, pACT hardware vendors would be assured of multiple networks on which to sell their equipment. AT&T Wireless was not able to entice a single network provider into signing up for pACT. In retrospect, this is probably a good thing since AT&T Wireless itself is not going to be deploying pACT as it was described to the rest of the world.
10. AT&T Wireless will have to find out the hard way if pACT can be successful over time. It has paid the government for the use of the spectrum, committed $70 million to purchase base station radios, and made further expenditures to provide an intelligent switching network and backbone system. My bet is that pACT-in its downgraded form-may be partially built out. But a nationwide system will not materialize, and most of the pACT Forum members will lose their enthusiasm for the project and move on to other endeavors. I am assured by AT&T Wireless that it will build out this downgraded version of pACT and then begin turning the network into the “real” pACT system.
While AT&T Wireless promised the world that CDPD would be all things to all who wanted and needed wireless data, it has not made a huge success out of CDPD-even after regrouping and dropping the frequency hopping feature. I believe that this change in pACT strategy-the downgrading of what is to be built and how it will work-is the beginning of the end for pACT.
AT&T Wireless is convinced that it can build out an alphanumeric system that is essentially one-way from the users’ perspective and then, over time, enhance it to become the full-blown, robust system pACT was supposed to have been from the beginning. What AT&T is missing with this reasoning is the fact that the rest of the industry will not stand still while AT&T Wireless is busy building out its one-way system.
SkyTel Corp. is making great strides with its ReFLEX two-way systems. It has learned some hard lessons and, together with Motorola, it is sticking with it and getting it right. Meanwhile, Motorola is selling and beginning to deliver additional ReFLEX systems as well as the first of its InFLEXion voice systems. RAM Mobile Data USA L.P. and Ardis-which many have written off as non-contenders for the messaging business-have some surprises up their sleeves for the non-believers. And Code Division Multiple Access, Time Division Multiple Access and Global System for Mobile communications folks are rolling out their voice (but data-capable) systems at a rapid pace-including AT&T Wireless’ own systems.
Not about best
Every time I hear the argument that one technology is better than another, I realize that the people making these statements look at life from a technology point of view rather than from a marketing or real-world perspective. There are dozens or even hundreds of cases where a company has entered a market with what it truly believed was a technologically better product-some of which really were better-only to find that the market, customers, and end users do not discern technological differences. They are led by marketing and salesmanship, and want “standards,” perceived or real.
Users care about costs, features, and functions, but they don’t give a tinker’s damn about the underlying technology or whose technology is best. What they buy is what is best marketed to them, what they see their neighbors using, and, in the case of pagers, what they see being worn on other users’ belts or carried in their purses.
PACT pagers will not compete with SkyTel’s two-way pagers-such as the Wireless Access Device or the new Motorola PageWriter. They will compete with pagers designed for use on ReFLEX alphanumeric systems with system-level acknowledgment, and they will compete with standard one-way alphanumeric pagers. End users couldn’t care less whether or not the network can determine which geographic region the device is in by “hearing” an acknowledgment signal.
Thus, AT&T Wireless will find itself to be simply another nationwide paging provider competing with all of the other one-way paging providers on a local, regional and nationwide basis.
Nothing will set AT&T Wireless apart from any of the other service providers except for its belief that it has a “better” technology. But better for whom? If it isn’t better for the user, it must be better for the network. If the plan is to knock the bottom out of the pricing model, AT&T Wireless hasn’t correctly identified the category in which it will compete during this first phase of pACT’s deployment.
Final comments
AT&T Wireless seems to believe it can simply announce products and the world will beat a path to its door. The Wireless Group has done well with cellular voice phones, as has every other cellular provider.
However, it does not have a good track record in wireless messaging systems with its CDPD deployment. Now AT&T Wireless expects the user community to accept on faith that it is going to provide a nationwide paging solution that is better than any of the others because it is based on a “better” technology (AT&T Wireless’ words, not mine).
I think that vendors that have gone along with AT&T Wireless on the first pACT ride may not be so inclined this time around.
The rules of engagement have not changed.
Andrew Seybold is an industry analyst, consultant, newsletter publisher, and cofounder and president of the Personal Computer and Communications Association.
