Subject: [NEXTEL-1] Competitive Nature

From: [email-masked]
Date: Thu, 09 Oct 2003 10:56:55 -0400

Competitive Nature

By Stuart Carlaw

How much of a threat are commercial networks to providers of traditional
mobile radio technologies?

The DEN network operated by Nextel illustrates how commercial technologies
can impact the land mobile radio market. Within a short time, Nextel has
succeeded in significantly reducing the number of SMR operators in the
United States. The company's Direct Connect push-to-talk (PTT) feature
continues to attract new customers, and it can be argued that the continued
success of DEN will negatively impact the number of private radio users.

A far greater specter looms on the horizon, however, as cellular carriers
begin rolling out their versions of PTT services. The transmission of voice
communications in IP form over standard cellular data connections allows
cellular operators to offer many of the same services that are available
with typical mobile radio systems. Exactly what effect will this have on the
private mobile radio market?

Launching cellular PTT services requires no capital expenditures; however,
there is a considerable level of ongoing operational expenses associated
with payment for service provisioning. Cellular PTT can match simple mobile
radio solutions on most features with two major exceptions: Cellular PTT
users will have to share network capacity with standard cellular users;
dedicated service provision cannot be guaranteed, which seriously limits the
appeal of this service for mission-critical operations. Also, call set-up
times for commercial PTT will
be measured in seconds rather than milliseconds as they are with mobile
radio. With these factors in mind, it is likely that commercial PTT
will limit the growth of the private mobile radio market, but will not
penetrate significantly into the existing private radio user base.

Other Competition

Another significant competitor to traditional licensed private mobile radio
is license-free radio. The success of family radio service (FRS) can be
attributed to a considerable uptake of these technologies in the small
business arena. This service compares with other technologies in terms of
price, but it offers far less in terms of functionality. With private user
requirements in mind, license-free radio appears to be a great fit on the
surface. Since its range is limited and the spectrum is shared, license-free
radio does not offer the same level of privacy and dedicated operation users
of private, licensed mobile radio enjoy. Digital radio technologies are also
gaining ground among private wireless users: however. its penetration is
likely to be limited to larger enterprises for the foreseeable future unless
the price of infrastructure and equipment drops significantly. And the
availability of high-speed data and innovative applications has yet to
translate into market demand in the private sector, especially within small
and medium-sized enterprises.

Stuart Carlaw heads up the wireless communications division of IMS Research,
a market analysis firm based in the United Kingdom. Prior to joining IMS,
Carlaw attained a BSc degree from DeMontfort University in the United
Kingdom, and went on to become a signals technician in the British Army. He
can be contacted at [email-masked].

www.mccmag.com

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