This is transcribed from Bloomberg and should be considered copyrighted material. Any typos are my fault.
Bubba
LMNR NEWSMAKER INTERVIEW:
A CONVERSATION WITH SOUTHERN COMMUNICATIONS' BOB DAWSON
Since February of 1996, Southern Communications Services, Inc. has emerged as a major player in the specialized mobile radio (SMR) dispatch service with its system that incorporates Motorola, Inc.'s (MOT) iDEN handset across 120,000 square miles of Georgia, 80 percent of Alabama, 23 countries in Mississippi and the Florida panhandle. While other companies are using iDEN's combination two-way radio, cellular phone and paging features, most notably Nextel Communications, Inc. (NXTL), Southern Communications-a wholly owned subsidiary of Southern Company, the electric utility--is the first to offer a large rural footprint. Bob Dawson has served as president of Southern Communications since 1995 and has been with Southern Co. since 1964.
LMNR: Why has Southern chosen such a large rural offering when most other carriers concentrate their efforts in large metropolitan areas?
Bob Dawson Originally the system was built to meet the needs of the five operating companies: Georgia Power, Alabama Power, Gulf Power, Mississippi Power and Savannah Electric and Power Co. They operate both in the urban and rural areas (of their respective) states, and in order to have a system to meet the needs of the operating companies we had to build out that whole 120,000 square miles of coverage.
LMNR: What lead to the commercial offering?
Bob Dawson: The people who originated the company recognized that the technology had the spectrum efficiency that it has, so that you could have six conversations per frequency at any one time. Once you built out the system and the coverage for the operating companies you had an inherent amount of capacity that would then be available for ale in the commercial market. Because it's an expensive technology to build out, both in urban and in rural areas, the business case, in order to provide a return to Southern Co. and help reduce rates and make it economical for the operating companies to provide that kind of service to their ultimate electric customers, decided to make it a commercial company as well. (We also decided to) sell to both internal and external customers.
LMNR: How have things been since the commercial rollout in February 1996?
Bob Dawson: They've been outstanding. We exceeded all of the goals that we set for the company in 1996 for net income, customer sales, and customer satisfaction. In 1997, we're seeing something on order of a 130 percent increase in subscribers over 1996. We're still exceeding our objectives on sales. We're meeting our targets on net income, and the business has been doing real well. We've found lots of people who really like what we have to offer.
LMNR: Who is your target customer?
Bob Dawson: The major target is businesses in the Southeast that have mobile workforces that use two or ore communications devices.(Our research has) demonstrated that people who use two-way radios in their businesses also use at least one other device, either a pager of a cell phone. Something like 60 percent or greater, more than 70 percent use all three, a to-way radio, a cell phone, and a pager. And exactly what the iDEN technology has in it is a two-way radio, a cell phone and a pager. You can have one bill from one provider, and we can offer a highly reliable system in terms of its up-time. We offered extensive coverage, there's no one place in the world where you can find 120,000 square miles off of one switch so that you can talk to Biloxi, (Miss), to Savannah, (Ga), from Birmingham (Al) to Pensacola (Fl) and all kinds of parts on the Southeast in that 120,000 square miles. It's a very survivable system. It was built to withstand ice storms, hurricanes, tornadoes. We don't (claim) that it's going to be there 100 percent of the time, but it withstood Oakland and Aaron, the hurricanes in late 1995 before the system was in fact commercial, withstood the ice storm in early 1996. It also helped the operating companies replace the electric service quicker than they had been able to do in the past, and it withstood Hurricane Danny, that sat out in the Mobil Bay earlier this year, The Alabama department of emergency management was using the system for some time, and we got favorable reports back from them on the way the system operated during the storm. It allowed them to coordinate emergency management activities to help people who were damaged and hurt during Hurricane Danny.
LMNR: The trend in wireless these days is toward consolidation of services. Do you see offering more services, i.e. two-way paging?
Bob Dawson: I haven't really thought about two-way paging. You can do a lot of two-way paging with the device as it's currently configured. Probably the next big offering we'll make will be in the area of data. Motorola is currently working on packet data to go along with the iDEN system. We're evaluating that, and I believe it will be something we'll offer to both the operating companies and to the commercial markets.
LMNR: What do you expect to be the biggest challenge for the SMR industry in the next year?
Bob Dawson: I don't think there will be as many players in the SMR market in 1998. Most of the SMR companies have been gobbled up by one company in the United States. I would think particularly in the 800 MHz (band) there will be one winner who'll have all the frequency or just about all the frequency.
LMNR: What kind of an impact do you think the FCC's auction rules regarding small businesses will have on the future of the industry, particularly the click box bidding and upfront payments?
Bob Dawson: I guess the short answer is I really don't know. If I just step back and look at what (has) happened (with the 800MHz auction so far), you had 62 bidders that started off out of 96 that made applications, and you're down to 15 bidders today. The best case (scenario) is that 15 different companies will have some spectrum. I think there's no real surprises in the auction because it was an incumbent auction, so it may have had a chilling effect on small businesses and their ability to be a viable SMR player.
LMRN: We have broken the system up and will allow you to choose the part of the system that you want to use and pay for. If you and your work groups stay in a smaller portion of that 120,000 square miles, we charge you a lower rate and allow you just to talk in that area. We also provide that the radio will work anywhere you are in that 120,000 square miles, and we would charge you an increment above the smaller area that you're using. |
