Subject: [NEXTEL-1] Utilities fail to fulfill SMR promise

From: NEXTEL-1
Date: Wed, 23 Jun 2004 03:46:09 -0400

Utilities fail to fulfill SMR promise

BY JIM BARTHOLD

Mobile Radio Technology

June 1, 2004 

In this deregulated, hyper-competitive age, public utilities
increasingly find themselves starving for new revenue streams. So it
might appear a bit surprising that they haven't attacked a seemingly
sumptuous smorgasbord that's been sitting right in front of them for
more than two decades.

Specialized mobile radio (SMR) service was established in 1979 by the
Federal Communications Commission to enable public entities to provide
land mobile radio communications on a commercial basis. These networks
pre-date most commercial cellular operations, and their handsets
typically are more robust and reliable than ordinary cell phones,
because they were designed for use under extreme conditions.

Nevertheless, most utilities use SMR service today for their field work
force, operating networks in the licensed 800 MHz spectrum band.

Given the current overcapacity of these networks, it would seem SMR
service presents an opportunity for utilities to step forward and gorge
themselves on the profit trough by offering LMR service to government
and public-safety organizations, enterprises — even consumers. However,
for many reasons — government regulation, the inability to develop a
commercial business model, and an unwillingness to overextend the
networks beyond internal use — most utilities abstain.

“Utilities, quite frankly, are not interested in entering into a
commercial wireless model,” said Jill Lyon, vice president and general
counsel of the United Telecom Council. “For one thing, they have a hard
enough time getting enough spectrum to serve their own needs.”

There's always an exception to the rule. The Southern Co., a large
Southeastern U.S.-based utility has a for-profit division called
Southern LINC (Long-range Integrated Network Communications), which
delivers commercial wireless service across 127,000 square miles in
Alabama, Georgia, Southeastern Mississippi and Northwest Florida.
Southern LINC is on target to achieve its fifth income-positive year,
allowing it to repay its only shareholder, the Southern Company, and
continue to invest in infrastructure and cell site upgrades.

Making money is especially important in keeping up with technology
advances, said Bob Dawson, Southern LINC's president and CEO.

“When the system was designed in the early '90s it had three-watt
mobiles as the primary radio and one-watt portables. As the handsets
became smaller and lighter and cuter, they became six-tenths of a watt,”
he explained.

Suddenly, customers hit dead zones.

“One of our ongoing challenges has been to go back and add, even in
rural areas, more coverage to fill in some of those holes,” Dawson said.

Meeting that challenge is crucial given the reliance placed upon the
system by first responders. “A lot of the emergency management response
people use us because it gives them a statewide coverage they did not
have before and cannot afford to build,” Dawson said.

Southern LINC pretty much stands alone. While Dawson described the
wireless communications provider as “a family-owned and run business
that's owned by a large corporation,” it's not a business model that is
likely to occur elsewhere.

“A utility is not used to being a small business. They're run in
different ways,” said Alan Tilles, a partner in the law firm Shulman
Rogers Gandal Pordy and Ecker in Washington, D.C., which represents
several utilities.

More commonly, municipal utilities take advantage of their SMR
capabilities by entering into shared arrangements with city, county,
regional and statewide public-safety and government entities. It's
worthwhile for both sides because the networks are very reliable and
have good signal strength, and the utilities have the capacity to hand
off.

“We build infrastructure better than anyone; our radio systems always
have to work, especially when the power goes out,” said Lyon.

Gainesville Regional Utilities in Florida shares its infrastructure with
myriad entities across the 965-square-mile Alachua County, which
includes the City of Gainesville and the University of Florida. The
utility charges a monthly fee for voice and data radio service used by
the county sheriff, Gainesville fire department and myriad government
agencies, as well as the University of Florida police department. Built
on Motorola's Smartzone technology, the network is still underused.

“We have switching gear that could be utilized by others but they would
have to pay us monthly fees and have some of their own investment,” said
Ed Hoffman, GRUCom director. “Finding other counties that would want to
invest those kinds of money or pay those kinds of fees is not going to
be easy.”

It would be easier to market to non-government users, but that's not
likely to happen either.

“While we'd like to increase our profit potential and generate money to
provide back to the general fund to the city, we probably never will be
able to do that because of the licensing restrictions,” he said.

Specifically, GRUCom's current licenses are only for public safety.

“I don't think it's going to change, so it's a non-issue for us,” he
concluded.

Commercial sales are also a non-issue for Texas Utilities, which employs
an SMR system strictly for utility use, despite the fact that — like
other utility-developed SMR networks — it's probably more reliable than
any other wireless network in the Dallas area. There are some
exceptions, however. “In the case of emergency management, we can work
with partners to help in severe storm situations. We can work with
people that might need it,” said Texas Utilities spokesman John Walls.

TXU's model is pretty typical among utilities, said Tilles, who writes
the “Commentary” column that appears monthly in MRT.

“These folks have other things they should be worrying about — things in
their infrastructure,” Tilles said, pointing to last summer's Northeast
blackout as a hot button for every utility.

Still, he said, it wouldn't hurt utilities to look at the SMR potential
and consider sharing their networks with government and emergency
agencies.

“They ought to be thinking about it because they need to do
infrastructure and they need a way to lay off some of those costs,” he
said. “But they shouldn't think of themselves as a competitor to
Nextel.”

Don't tell that to Southern LINC, which is signing up commercial
customers as fast as possible and even investigating other ways to use
the utility infrastructure.

“We get a lot of consumers,” said Dawson. “My view is — and I'm sure
other carriers would disagree with this — you just jam them on there and
catch up with growth later. I'm trying to stay ahead of the growth with
the infrastructure so that people can complete the calls.”

He's also looking at broadband over power line (BPL), a new technology
that runs high-speed data over a utility's electrical wires.

“I've personally seen the BPL stuff. I know it works,” he said.

Consequently, Dawson — who also oversees a dark fiber business called
Southern Telecom for the Southern Company — has BPL in his research and
development labs, though he concedes “it would probably be in
competition with all the stuff we do” because it would spawn some form
of Wi-Fi service that could morph into wireless phones that compete with
Southern LINC's SMR service.

For now, though, he's happy with what's on his plate.

“[Commercial wireless providers] outside of Southern are looking to go
to that third- or fourth-generation phone, looking for higher speed and
more bandwidth,” he said. “I would like to do that stuff, too, but I
quickly come back to the fact that I'm owned by the electric utility
holding company and we are focused on pretty much a single kind of
product.”

© 2004, Primedia Business Magazines and Media, a PRIMEDIA company. 
All rights reserved.  
http://iwce-mrt.com/ar/radio_utilities_fail_fulfill/index.htm

------------------------ Yahoo! Groups Sponsor --------------------~--> 
Yahoo! Domains - Claim yours for only $14.70
http://us.click.yahoo.com/Z1wmxD/DREIAA/yQLSAA/61FxlB/TM
--------------------------------------------------------------------~-> 

-- 
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address 
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

Yahoo! Groups Links

<*> To visit your group on the web, go to:
     http://groups.yahoo.com/group/NEXTEL-1/

<*> To unsubscribe from this group, send an email to:
     [email-masked]

<*> Your use of Yahoo! Groups is subject to:
     http://docs.yahoo.com/info/terms/