https://urgentcomm.com/wp-content/themes/ucm_child/assets/images/logo/footer-new-logo.png
  • Home
  • News
  • Multimedia
    • Back
    • Multimedia
    • Video
    • Podcasts
    • Galleries
    • IWCE’s Video Showcase
    • IWCE 2022 Winter Showcase
    • IWCE 2023 Pre-event Guide
  • Commentary
    • Back
    • Commentary
    • Urgent Matters
    • View From The Top
    • All Things IWCE
    • Legal Matters
  • Resources
    • Back
    • Resources
    • Webinars
    • White Papers
    • Reprints & Reuse
  • IWCE
    • Back
    • IWCE
    • Conference
    • Special Events
    • Exhibitor Listings
    • Premier Partners
    • Floor Plan
    • Exhibiting Information
    • Register for IWCE
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Terms of Service
    • Privacy Statement
    • Cookie Policy
  • Related Sites
    • Back
    • American City & County
    • IWCE
    • Light Reading
    • IOT World Today
    • Mission Critical Technologies
    • TU-Auto
  • In the field
    • Back
    • In the field
    • Broadband Push-to-X
    • Internet of Things
    • Project 25
    • Public-Safety Broadband/FirstNet
    • Virtual/Augmented Reality
    • Land Mobile Radio
    • Long Term Evolution (LTE)
    • Applications
    • Drones/Robots
    • IoT/Smart X
    • Software
    • Subscriber Devices
    • Video
  • Call Center/Command
    • Back
    • Call Center/Command
    • Artificial Intelligence
    • NG911
    • Alerting Systems
    • Analytics
    • Dispatch/Call-taking
    • Incident Command/Situational Awareness
    • Tracking, Monitoring & Control
  • Network Tech
    • Back
    • Network Tech
    • Interoperability
    • LMR 100
    • LMR 200
    • Backhaul
    • Deployables
    • Power
    • Tower & Site
    • Wireless Networks
    • Coverage/Interference
    • Security
    • System Design
    • System Installation
    • System Operation
    • Test & Measurement
  • Operations
    • Back
    • Operations
    • Critical Infrastructure
    • Enterprise
    • Federal Government/Military
    • Public Safety
    • State & Local Government
    • Training
  • Regulations
    • Back
    • Regulations
    • Narrowbanding
    • T-Band
    • Rebanding
    • TV White Spaces
    • None
    • Funding
    • Policy
    • Regional Coordination
    • Standards
  • Organizations
    • Back
    • Organizations
    • AASHTO
    • APCO
    • DHS
    • DMR Association
    • ETA
    • EWA
    • FCC
    • IWCE
    • NASEMSO
    • NATE
    • NXDN Forum
    • NENA
    • NIST/PSCR
    • NPSTC
    • NTIA/FirstNet
    • P25 TIG
    • TETRA + CCA
    • UTC
Urgent Communications
  • NEWSLETTER
  • Home
  • News
  • Multimedia
    • Back
    • Video
    • Podcasts
    • Omdia Crit Comms Circle Podcast
    • Galleries
    • IWCE’s Video Showcase
    • IWCE 2023 Pre-event Guide
    • IWCE 2022 Winter Showcase
  • Commentary
    • Back
    • All Things IWCE
    • Urgent Matters
    • View From The Top
    • Legal Matters
  • Resources
    • Back
    • Webinars
    • White Papers
    • Reprints & Reuse
    • UC eZines
    • Sponsored content
  • IWCE
    • Back
    • Conference
    • Why Attend
    • Exhibitor Listing
    • Floor Plan
    • Exhibiting Information
    • Join the Event Mailing List
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Cookie Policy
    • Terms of Service
    • Privacy Statement
  • Related Sites
    • Back
    • American City & County
    • IWCE
    • Light Reading
    • IOT World Today
    • TU-Auto
  • newsletter
  • In the field
    • Back
    • Internet of Things
    • Broadband Push-to-X
    • Project 25
    • Public-Safety Broadband/FirstNet
    • Virtual/Augmented Reality
    • Land Mobile Radio
    • Long Term Evolution (LTE)
    • Applications
    • Drones/Robots
    • IoT/Smart X
    • Software
    • Subscriber Devices
    • Video
  • Call Center/Command
    • Back
    • Artificial Intelligence
    • NG911
    • Alerting Systems
    • Analytics
    • Dispatch/Call-taking
    • Incident Command/Situational Awareness
    • Tracking, Monitoring & Control
  • Network Tech
    • Back
    • Cybersecurity
    • Interoperability
    • LMR 100
    • LMR 200
    • Backhaul
    • Deployables
    • Power
    • Tower & Site
    • Wireless Networks
    • Coverage/Interference
    • Security
    • System Design
    • System Installation
    • System Operation
    • Test & Measurement
  • Operations
    • Back
    • Critical Infrastructure
    • Enterprise
    • Federal Government/Military
    • Public Safety
    • State & Local Government
    • Training
  • Regulations
    • Back
    • Narrowbanding
    • T-Band
    • Rebanding
    • TV White Spaces
    • None
    • Funding
    • Policy
    • Regional Coordination
    • Standards
  • Organizations
    • Back
    • AASHTO
    • APCO
    • DHS
    • DMR Association
    • ETA
    • EWA
    • FCC
    • IWCE
    • NASEMSO
    • NATE
    • NXDN Forum
    • NENA
    • NIST/PSCR
    • NPSTC
    • NTIA/FirstNet
    • P25 TIG
    • TETRA + CCA
    • UTC
acc.com

content


Playing on the market slide

Playing on the market slide

The industry is in a growth spurt. Just like raising a teenager, the cost of managing growth spurts is awfully high. I looked at my stock ticker this
  • Written by Urgent Communications Administrator
  • 1st May 2001

The industry is in a growth spurt. Just like raising a teenager, the cost of managing growth spurts is awfully high.

I looked at my stock ticker this morning. When the indexes are up, the numbers are a lovely shade of green. And when they’re down, the numbers are bright red. For the last week, [mid-March], the numbers have been flashing more red than a 12-alarm fire. In the first hour of trading, the Dow fell farther than spit over the edge of the Grand Canyon.

Should we be worried? Sure. After all, the business reporters tell us that it’s a “bear market,” as though likening it to a woodland creature makes it better. I’ve got money in mutual funds (or at least I had some before this morning). The way things are going, the Standard & Poor’s Index is going to live up to its name.

As for wireless stocks, they’re leading the charge — to the rear. The question is, how come? Why is it that the most dynamic industry in the country is in the doldrums, dragging down equipment manufacturer performance, tower company stocks and technology houses’ hopes? Well, one theory is that:

The global marketplace dynamic of earnings/price flow margins when compared to the PE of other segments and taking into account the sell-off of lower Kosovo bond issues to leverage the buy-but-not-build of 3G technology, when applied to the influx of profit takers during a time of economic uncertainty, caused a guy named Murray to laugh so hard that soda came out his nose and shorted out the green button on the stock ticker thing for everyone’s computer.

I’ve got a different idea. It’s called “stupidity.” You see, when a bunch of companies do stupid stuff and cover it up using shareholder money, then earnings go down and the stocks go down. If enough companies in a given market segment do enough stupid stuff (and they do imitate one another) so that everyone’s earnings start to suffer, then the entire segment takes a tumble.

So, what stupid things did the publically traded wireless companies do that might have let the bear loose in the market? Here’s my top five, but I’m sure there’s more:

  1. They weren’t sufficiently forthcoming with analysts regarding the cost and time required for systems build-outs vs. the revenue expectations.
  2. They didn’t take into consideration how increasing competition would affect revenue-per-customer numbers.
  3. They let themselves believe that there is a one-to-one ratio between emerging technology and market share (or revenues).
  4. They booked spectrum as an intangible asset with values that reflect long-term potential rather than short-term cost.
  5. They forgot about profit.

Between 1995 and 2000 you could have raised a zillion dollars in the public market to build-out any wireless system that had even a remote potential of delivering wireless Internet access (the “killer app”). These broadband ideas (and we’re not talking the Dixie Chicks) fueled FCC auctions. They also ran spectrum prices up until profitability was so far in the future you couldn’t see it with a dozen crystal balls.

The game was changed so severely that companies no longer announced the time period to profitability. Instead, they announced the expected time period until they could pay operations costs and debt service with other-than additionally borrowed money. If you did the math, most of these companies didn’t expect to reach profitability until they had borrowed an amount roughly equivalent to the French treasury.

Underlying these activities was the One Big Stupid Idea: The American economy would see continuing growth (of previous rates) in the percentage of disposal income used to purchase wireless telecom products. Or, more simply, if you build it, people will buy it. Tell that to Teligent, PSINet and Metrocall.

So, what’s the solution? Reality. Let’s be realistic about where the industry is and where it’s going. The industry is in a growth spurt. Just like raising a teenager, the cost of managing growth spurts is awfully high. Try to make a profit on feeding and clothing your high-school kids. Forget it.

During the past few years, the wireless industry has been footing the bill to construct and operate systems that are not presently profitable but have a rosy future (just like that high-school kid). But its capital expenditures are exceeding expectations, and profitability appears to be moving farther away, not closer. Meanwhile, the industry threw itself lavish parties on the deck of the Titanic, and now some people cannot understand why the food is soggy.

The fact of our industry is that it takes a lot of money and time to make a lot more money over time. It requires industry cooperation, standardization and interoperability to reduce the ravages of technological competition that make products and balance sheets obsolete. It also requires honesty.

An honest person would affirm that many more new services will be delivered in a wireless environment. Those services will add mobility and efficiencies to business and personal activities. That same honest person would also have to admit that a fully integrated, reliable delivery system is still in the future. An honest person would also recognize that although there is healthy demand for high-end, broadband services; the wireless market does not begin and end there. Many consumers are looking for lower-cost solutions.

Before the market rights itself (it’s rather depressed now), wireless carriers will be scrambling for creative ways to meet their capital-expenditure needs. Systems build-outs must and will continue — possibly at a more rational pace. If this means that financial analysts must adjust their expectations to fit a more logical scenario of long-term growth, rather than short-term stock price spikes, OK.

In the meantime, look for bargains on Wall Street (they’re there), and be patient. Remember, although publicly traded wireless companies have enjoyed the salad days of mass stupidity, they’re coming around. Oddly enough, they are starting to run their businesses just like yours.


Schwaninger, MRT’s regulatory consultant, is the principal in the law firm of Schwaninger & Associates, Washington, which is counsel to Small Business in Telecommunications. Schwaninger is also a member of the Radio Club of America.

Tags: content

Most Recent


  • Playing on the market slide
    Newscan: Securing the Internet of Things is quite a challenge
    Also: EWA requests dismissal of 900 MHz applications; TIA names tech and policy priorities for 2014; IJIS Institute names Shumate Award winner; App makes bus waits more tolerable; a Blackberry comeback may be in the offing.
  • Playing on the market slide
    Newscan: FCC certifies Carlson Wireless's white-space radio
    Also: Congress looks to revamp telecom law; Obama to place some restraints on surveillance; IEEE to study spectrum-occupancy sensing for white-spaces broadband; Major Swedish transport operator opts for Sepura TETRA radios; RFMD to partner on $70 million next-generation power grid project; NENA opens registratiuon for "911 Goes to Washington."
  • Playing on the market slide
    Newscan: A look at the critical job of 911 dispatchers
    Also: NYC launches website for tracking 911 response times; Oregon implements 911 on pre-paid cell phones; LightSquared wants to keep spectrum assets; Harris receives multiple government orders; FCC extends rebanding financial reconciliation deadline; Zetron gear at core of communications system upgrade; Ritron debuts wireless access control system; EWA seeks policy review of VHF vehicular repeater system deployments.
  • Playing on the market slide
    Newscan: Average peak data rates of 144 MB/s average realized in tests with CAT 4 LTE device
    Also: Verizon, T-Mobile to swap unused spectrum to improve coverage; Internet giants oppose surveillance--but only when the government does it; FCC Chairman says incentive auction will be delayed until middle of 2015; FCC chair announces staff appointments; Alcatel-Lucent names Tim Krause as chief marketing officer; New Jersey county deploys TriTech CAD system; Toronto airport deploys 26-position Zetron console system;

Leave a comment Cancel reply

To leave a comment login with your Urgent Comms account:

Log in with your Urgent Comms account

Or alternatively provide your name, email address below:

Your email address will not be published. Required fields are marked *

Related Content

  • RugGear: Contributing to the future of mission-critical broadband communication review and market vision
  • Photo gallery: 2014 Communications Marketing Conference (CMC) in Tucson
  • Playing on the market slide
    Top 5 Stories - Week of Sept. 22
  • Playing on the market slide
    RCA plans to expand this year's Technical Symposium

Commentary


Things to know about IWCE 2024: The basics 

5th December 2023

Land mobile radio (LMR) systems are just as vulnerable to cyberattacks as any other networks used in the public-safety sector. Here’s what to do about it.

  • 2
7th November 2023

September 3GPP Plenary meetings feature Release 18 progress, Release 19 beginnings

13th October 2023
view all

Events


UC Ezines


IWCE 2019 Wrap Up

13th May 2019
view all

Twitter


Newsletter

Sign up for UrgentComm’s newsletters to receive regular news and information updates about Communications and Technology.

Expert Commentary

Learn from experts about the latest technology in automation, machine-learning, big data and cybersecurity.

Business Media

Find the latest videos and media from the market leaders.

Media Kit and Advertising

Want to reach our digital and print audiences? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • American City & County
  • IWCE
  • Light Reading
  • IOT World Today
  • Mission Critical Technologies
  • TU-Auto

WORKING WITH US

  • About Us
  • Contact Us
  • Events
  • Careers

FOLLOW Urgent Comms ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2023 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.