Subject: [NEXTEL-1] Motorola muscular in public safety-Competition can be heard, though, in radio systems

From: NEXTEL-1
Date: Wed, 30 Jun 2004 16:43:55 -0400

Motorola muscular in public safety-Competition can be heard, though, in
radio systems

By Barbara Rose
Tribune staff reporter
Published June 27, 2004

When it came time for the town of Kernersville, N.C., to replace its
30-year-old emergency radio system, officials didn't bother to shop
around.

They ordered a system from Motorola Inc. for $2.9 million, a big outlay
for a modest community of 20,000. When a competing vendor suggested they
could get a better deal if they requested bids, officials were unmoved.

"We're dealing with policemen's lives," one alderman said. "Cheapest is
not always the best way to go."
Motorola was outflanked in the 1990s by faster-moving competitors making
trendier cell phones. But in the market for the rugged brick-like radios
used by police and firefighters, the Midwest company's staid culture was
perfectly attuned to a public safety community that isn't willing to
take risks on the latest fad.

Combining engineering prowess with political muscle, Motorola turned its
65-year-old radio business into a profitable juggernaut that captures
more than half of the estimated $6 billion spent annually by U.S.
agencies on emergency communications.

Yet this once-sleepy market has never been more challenging. The push
has intensified since Sept. 11 to build larger and more complex systems
to allow police, fire and other agencies to talk to one another.

These computerized systems are some of the biggest and most complex
technical projects cities and states undertake. Costs can run into
hundreds of millions of dollars. Political bickering and lobbying is
intense. Technical problems are not uncommon.
In Philadelphia, where Motorola won a $52 million contract two years
ago, engineers are scrambling to understand why the new system
malfunctioned on a recent evening, leaving many of the city's 600 patrol
officers without full two-way communications for 30 minutes.

"We've gotten calls [about the failure] from all over the place, even
Seattle," said Philadelphia Police Department Deputy Commissioner
Charles Brennan. "And Motorola, I'm sure part of their concern is not
just to help a customer. They're looking at pending bids. They're very
anxious to help us solve this problem."

Despite the glitch, he said, "We probably could not have chosen a better
vendor."

Motorola's high profile is no accident. Since the middle of the last
century, the company has positioned itself as a public safety advocate
and expert. This ethos is evident in its rhetoric as well as its
promotional programs.

"People here largely feel a duty to serve and tremendous pride in what
they do," said Motorola's Gregory Brown, president and chief executive
officer of the firm's Commercial Government and Industrial Solutions
Sector.

When more than 2,000 fire-service leaders gathered at a Washington,
D.C., hotel in May for a dinner featuring Vice President Dick Cheney,
Brown presented a leadership award--one of several awards Motorola
co-sponsors with leading fire and police organizations.

"It's been a great partnership that's benefited us beyond financial
support," said Bill Webb, executive director of the nonpartisan
Congressional Fire Services Institute.  "Motorola provides a lot of
technical expertise, educating us and providing us the materials to go
up on the Hill."

In the technical arena, Motorola flexed its muscle by leading the push
to adopt industry standards. The aim was to increase competition by
ensuring that equipment from competing manufacturers is compatible.

Five hundred engineers collaborated for nearly a decade starting in the
early 1990s to write 27 sections in a set of standards called Project
25. Motorola contributed 90 engineers--more than any other organization.

"It was very frustrating for [competitors] at times because Motorola
would be dominant in every committee," said consultant Ron Hodge, a Booz
Allen vice president.

When the first standard was adopted in 2001, it included more of
Motorola's technology than any other company's.
"Three or four years ago, if you specified a Project 25 system, Motorola
was the only vendor who could build it," said Michael Thayer of Thayer
Consulting.

Bids for statewide systems

That was the case when Indiana solicited bids in 2000 for a statewide
system of radio towers and signal-boosters. Indiana decided against
requesting a Project 25 system because only Motorola would have
qualified to bid.
Motorola won the $82 million Indiana contract anyway--one of 24 states
including Illinois that have chosen Motorola to build statewide systems.

"They're the 800-pound gorilla," said George Epp, director of the County
Sheriffs of Colorado association. "They've been doing this a long time
and they pioneered a lot of the new developments."
Yet critics say the latest solutions are not the best choices.

Epp was sheriff of Boulder County in the mid-1990s when Colorado
lawmakers authorized a statewide system using Motorola's new digital
trunked technology. Digital trunked systems make more efficient use of
radio spectrum.
Epp and other sheriffs opposed the new technology, arguing it would
require many more towers to work in rural mountain areas. "It's
extremely expensive and it takes systems that are operating well and
just pitches them in the wastebasket," Epp said.
"Epp is old school and he has an opinion we don't share," said Paul
Nelson, Colorado's telecommunications manager.
Colorado's system, installed in phases over a decade, uses Project 25
communications standards, which allows the state to buy radios from
EFJohnson and Kenwood in addition to Motorola, Nelson said.

More than a dozen companies supply radio equipment. Yet when it comes to
supplying infrastructure for large systems, "you're really still looking
at two manufacturers," said Dominick Arcuri, of RCC Consultants Inc.
They are Motorola and M/A-Com, a former Ericsson subsidiary, now part of
Tyco International Ltd..
"There's a reason only a few companies can do these things," said
Richard Dale, chairman of consultant and integrator iXP Corp. "The
undertaking is massive and the expertise that's required is extreme."

A highly specialized area

"It's one of those spaces where very few people are willing to gamble,"
said Ron Huberman, executive director of the City of Chicago's office of
emergency management and communications. "People become very risk
averse. The barriers to entry become very high."

M/A-Com sales reps joke darkly about going up against the "Motorola
mafia"--contingents of lawyers and engineers who accompany sales
executives at bid conferences.

"It's as much to intimidate as anything else," said a M/A-Com salesman.
"It's psychological warfare."
Lobbying can be frenzied.

In a recent contest in New York, former Sen. Alphonse D'Amato
represented M/A-Com, while Motorola hired John O'Hara, former public
service commission chairman.

The huge project--a network of towers stretching from the Adirondacks to
the Hudson River--was a high-profile loss for

Motorola.

M/A-Com won the right to negotiate a contract with a proposal that
topped $1 billion. It was less than half the cost of Motorola's $3.4
billion proposal, which included many more towers.

Motorola has protested the bid process, saying the technology demanded
by New York's bid specifications is unproven and the project could
become a "taxpayer's nightmare." New York officials said they are
considering Motorola's protest but are confident the bid process was
fair.

Lobbying was unnecessary in Kernersville, where the power of the
company's national network of sales reps and service dealers is evident.

"I feel like I have all these experts at my disposal and they can give
me an answer, not just a salesman's answer but a professional answer,"
said Kernersville Police Chief Neal Stockton.

Stockton hasn't forgotten Motorola's response to a lightning strike in
1981 that destroyed the town's emergency radio system.
"They responded to our crisis just like it was their crisis," he said,
restoring service overnight. "They got us through a very difficult
time."

Salesman Russ Garmon, a 27-year Motorola veteran, is a familiar figure.
He chipped in when Kernersville police passed the hat to raise $15,000
for the Special Olympics.  And he contributed when the town raised
$20,000 to erect a bronze statue of a police officer holding a child's
hand.

"Russ has done things out of [the goodness of] his heart," Stockton
said. "He's always there."
Copyright © 2004, Chicago Tribune
http://www.chicagotribune.com/business/chi-0406270437jun27,1,2291168.story?coll==chi-business-hed

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