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content


PAGING’S NEW GAME

PAGING’S NEW GAME

This year's changes in the paging industry could take your breath away. Glenayre exited the paging infrastructure business, halting sales of transmitters
  • Written by Urgent Communications Administrator
  • 1st September 2001

This year’s changes in the paging industry could take your breath away.

Glenayre exited the paging infrastructure business, halting sales of transmitters and terminals. It reduced its employee count from 1,300 to 500 and relocated its headquarters to Atlanta, where it focuses on manufacturing “unified communications” products.

Unified communications integrates subscriber services to merge message types from wireless instant messaging to multimedia to legacy pager notification and faxing. It allows carriers to bridge various networks and protocols, and to deliver voice and data messages wherever and whenever subscribers want — to the home or office desktop, via the Internet, to a WAP phone, wireless PDA or virtually any other device.

Glenayre’s stock, which once traded as high as $66, fell to a price below $1 during the past year.

WebLink Wireless, a Dallas-based paging carrier with a nationwide frequency and two million subscribers, filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code on May 24 and said it planned to convert $470 million in high-yield debt to equity. On July 20, the company, once known as PageMart, received court approval to accept $15 million of debtor-in-possession financing from two of its current principal lenders.

WebLink told the court it plans to seek a stand-alone transaction with new financing or a merger or sale transaction, on which the company expects to base a plan to emerge from Chapter 11. The company’s stock, which sold for as much as $26 in February 2000, fell to as low as 3 cents per share during the past year.

Arch Wireless, based in Westborough, MA, uses more than 250 offices and company stores to cover 93% of the U.S. population and to serve millions of customers with wireless email, instant text messaging and mobile Internet access. The network uses Reflex 25 digital point-to-multipoint paging and boasts greater landmass and population coverage of cellular, PCS and wireless broadband combined.

Yet its customers are leaving fast. On July 23, a statement from the company said that it expected to report a decline of nearly one million one-way paging customers during the second quarter this year. This reversal trampled Arch’s plans to convert debt to equity. The company’s financial results and the lack of additional sources of liquidity indicate that it may not be able to continue as a going concern.

On Aug. 2, Arch said that one of its operating units had defaulted on a $1.3 billion bank credit line, and another had defaulted on about $350 million of senior notes. The company’s stock, which traded as high as $6.76 per share during the past year, had fallen to as low as 1 cent during the period.

Where, then, is the good news? It is with small paging systems and small infrastructure manufacturers.

Larry MacKnight, the product sales manager for Zetron Paging Systems, is a 16-year veteran of Zetron. He said the company’s migration to its current form has taken years, but “we knew where we were going.” Zetron focuses on switching and telephony, as well as paging controllers and infrastructure.

MacKnight said Zetron’s foremost business is public safety consoles, but paging infrastructure is a good business to be in “because paging is not dead. We believe that many people got sucked into the wrong technology for paging and spent too much money. Some got discouraged and went broke. Their business plans didn’t come together and they abandoned it, ran out of money or their parent companies shut down their divisions.”

He said that Glenayre’s exit from the paging infrastructure business is a two-edged sword.

“I enjoyed the Glenayre ‘marketing and pricing umbrella,’” McKnight said. “The company never really disturbed Zetron’s market that much. Glenayre sold high-end commercial systems where a lot of pagers were required and where PCS and other channels used by their customers were saturated,” he said.

Meanwhile, Zetron has been selling smaller paging terminals, particularly into the privately owned paging sector that includes hospitals, utility companies, universities and other entities that commercial service isn’t suitable because carriers couldn’t guarantee delivery quickly enough. Coverage has not been the problem. The problem has been the time required to process a page within a commercial system: “sometimes 10 minutes to an hour. Many minutes, not a few minutes,” MacKnight said.

“It’s important for hospitals and nuclear plants to have their own paging systems. For those and other private users, it’s the efficiency of the communications system that makes sense, not the fancier PCS devices. That’s why I don’t think paging will die for a long, long time.

“Another reason is because now that the larger paging companies are getting out of the business, the equipment providers for those larger carriers are having trouble and dropping right and left. This will spawn a new era of mom-and-pop and regional carriers. I’ve talked with regional carriers who have already been building in areas abandoned by larger carriers,” MacKnight said.

‘Right-sizing’ for paging

“We’re right for the size of the companies who are continuing to grow in the paging business. We don’t have the mega-terminals. Ours serve as many as 40,000 to 50,000 pagers per terminal for coding and voice messaging, all the way down to small paging terminals, such as the discontinued Motorola People-Finder, a terminal with a built-in transmitter and a rubber-ducky antenna. We have a replacement unit for that,” MacKnight said.

Randy Murray, president of Redi-Call Communications in Georgetown, DE, has had success in recent years supplying private systems to hospitals. He said the hospitals use as many as several hundred pagers. He added that many of the hospitals later converted to using his wide-area paging system for greater flexibility when hospital staff needed to travel beyond the confines of the hospital.

“Our biggest concern is that the whole paging industry will get a black eye because of what the large carriers are experiencing. We have a stable market. But news about the big companies has the potential to affect us,” Murray said.

Redi-Call has an estimated 10,000 to 25,000 paging customers and also operates a two-way radio communications dealership.

MacKnight said that his company provides controllers, terminals and the remote control infrastructure to extend the signal from the terminal to the transmitter, which normally are not collocated. Zetron does not provide transmitters, antennas or pagers. A list of terminal and transmitter manufacturers appears on MRT‘s Web site.

Where would someone go to engineer a new system?

Local resellers offer that assistance. MacKnight explained that Zetron’s resellers, for example, should be able to help a company find a license, purchase ancillary equipment, install it and help the company learn how to run it.

“We have in-house technical support for after-sale support and training programs for our equipment, but we don’t support an end-user in securing a license or installing transmitters.”

MacKnight said that his message about the paging industry is that paging is a new opportunity, not one that is dying.

“Smaller regional commercial carriers are realizing an opportunity to build-out. The customer-owned paging industry is alive and well, particularly in mission critical paging where it is not only a medium of choice, but one of necessity. It probably will be that way for years to come until something comes along with better coverage, range and timely delivery,” MacKnight said.


Equipment list

A paging system consists of several pieces of equipment. Distilled to its most basic, here is a list of what’s required:

  • Telephone system or a means to generate automated pages, such as CAD system.

  • Paging terminal that may or may not include an encoder to control flow of pages from a database.

  • Transmitter.

  • Antenna.

  • Pagers.

Although the information is somewhat dated, an overview of paging system requirements can be found in “An Introduction To Paging – What It Is And How It Works” by A.S. Hon at www.motorola.com/MIMS/MSPG/Special/explain_paging/ptoc.html.

For a list of paging equipment vendors, see MRT’s Supplier Directory.


Bishop is editorial director. His email address is [email protected].


Frequencies for sale

According to its latest schedule, the FCC will auction 15,000 paging frequencies on Oct. 30. There is still time to apply. Sept. 17 is the deadline for the short-form application. Details are available at www.fcc.gov/wtb/auctions.

Kathleen Kaercher, an attorney with the Washington law firm of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, said that prices should be low enough to satisfy smaller paging system operators.

Some 15,000 licenses are up for sale, including licenses that weren’t sold in previous auctions or that for various reasons were returned to the FCC.

“With 15,000 licenses, almost everyone ought to be able to find something in their market. Whether it’s affordable or not, that’s up to each bidder. Any potential bidder should check to see who is already operating in their area of interest and make an informed decision regarding what price to offer,” Kaercher said.

“The licenses are for Major Trading Areas and Basic Trading Areas for what used to be considered radio common carrier and private carrier frequencies. About 14,000 lower-band paging licenses will be offered in 175 Economic Areas. Also offered are 1,514 upper-band paging licenses in 51 Major Economic Areas that went unsold in Auction 26,” she said.

Kaercher’s firm prepares and files auction applications and handles post-auction work, among other legal services.

In view of this issue’s expected publication date of Sept. 1, Kaercher added, “There’s time to get the application prepared and filed.”

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