ROADS LESS TRAVELED
The land mobile radio industry is healthy, vibrant and ready to enter a data-centric world driven by IP technologies. So say, in the following pages, senior executives at major vendors to the public-safety and government sectors. Adding to the optimism is the anticipation of increased federal spending in the name of homeland security and advanced applications for first responders. But to leverage the myriad opportunities in front of them, vendors — and their customers — will need to change the way they think and move down paths that once seemed foreign.
IP will make cell phone-like features possible
BY JOHN VAUGHAN, VICE PRESIDENT AND GENERAL MANAGER OF WIRELESS SYSTEMS, M/A-COM
There definitely is movement on all fronts, as many companies are attempting to introduce more IP into their products. From our point of view, that’s a very healthy thing. Just as commercial enterprises have been able to leverage IP technology, so can public safety. And we believe they can leverage it at all levels — from the network level all the way down to the individual end user on the street and in the vehicle.
Productivity has increased as a result of the adoption of IP. The country finds itself in the unusual position where we have unemployment issues, yet growth and productivity continues to increase. And it’s all related because we have fewer workers doing more stuff.
As we go forward in mission-critical applications, we can see that IP technology will bring that same kind of efficiency and increase in productivity. But it’s different in public safety — and even more important. Our systems are the systems that have to work when nothing else works.
We’re also enabling public safety to talk with the rest of the enterprise, and that’s going to be a good thing. We very much think about the public-safety organization as an IP enterprise. So, there’s a lot of technology that we’re looking to leverage, and there’s new technologies coming down the pipe.
A present-day example is Wi-Fi. That’s a standard that developed outside of our industry, but we’re using it. That kind of change not only is good for public safety, but we see it as one of the key benefits of IP technology. Similarly, WiMAX is going to find its way into public safety. We’re working very closely with a couple of WiMAX partners that are important in that industry — and in industry in general.
When you’re dealing with a standards-based environment, the differentiation occurs at a higher level. It’s a little bit like a car: I can put the same exact tires on a Porsche as a Chevy, but I’m not going to get the same exact result when I drive that car.
For example, some agencies employ a traditional circuit-switched network, plug IP extension cords into it and call it an IP system. However, a truly packet-based network provides tremendous benefits compared to the aforementioned approach. Voice and data can be mixed and voice over IP can be implemented. More important, analog signals from a legacy system can be converted into VoIP packets, which, in turn, can be used to talk to advanced digital radio networks.
One of the powers of a true IP-based system is that we no longer have to say one size fits all. We no longer have to say there’s only one answer, and it has to be “this.” We can change frequency and change protocol because the packet switch doesn’t care about that stuff.
Some of the things we see coming in the future are things like power management of the user’s battery and features that mimic some of the things happening elsewhere in communications. For example, a user might want to deliver an administrative message that isn’t urgent. So, instead of thinking about it as a push-to-talk call, he might think about it as a voice message that would be delivered to the radio as if it were being placed in a voice mail box.
Think of the kinds of services you see from a cell phone. As we move public safety into IP, those kinds of services will be available to them.
— As told to Donny Jackson
COMPANY: M/A-COM (DIVISION OF TYCO ELECTRONICS)
HEADQUARTERS: LOWELL, MASS.
PRESIDENT: DAVID COUGHLAN
2004 SALES: NOT DISCLOSED*
2004 EARNINGS: NOT DISCLOSED*
* TYCO DOES NOT BREAK OUT DIVISIONAL RESULTS
Long live IP, data and open architectures
BY GREG BROWN, PRESIDENT OF GOVERNMENT AND ENTERPRISE MOBILITY SOLUTIONS, MOTOROLA
There’s no doubt that government and public safety was a core business and — and I couldn’t say this more emphatically — is a core business of Motorola going forward. It is our desire to expand our mission-critical voice public-safety footprint into mission-critical data public safety, both in wireless pipes and content
Obviously, the world is going IP. The question is at what speed, and that’s a big question. Because, depending upon the technology or the customer or the industry, things are moving at different speeds. Some of these active public-safety systems and private radio networks were installed 10 to 15 years ago.
We aren’t being met with resistance in moving to IP, because we interact with our customers and provide them with a thoughtful migration plan that’s different by customer. Some may move at different speeds based on funding, or skills or capacity of networks, but I don’t think we’re being met with resistance at all.
However, the IP migration requires us to speak more and more to the CIO and the IT community. They will ask questions about interoperability, standards, return on investment, life-cycle costs and the product road map for IP migration. This change is positive for Motorola because it will make our organization more effective and allow us to increase our skills because we must be able to handle those questions from our clients.
When we think about mission-critical data, we think of it from a coverage standpoint: urban, suburban and rural. We believe mesh networks are perfect for filling in high-speed mobile broadband in an urban, congested environment.
On the rural side, we are investing incremental money to fatten the wireless pipe on our Astro 6X radio infrastructure. So, in rural communities, we’ll increase 10-fold the data throughput — still not high bandwidth per se but an exponential improvement in mission-critical data delivery. We’ll be coming out relatively soon with that.
The suburban piece is what I would call wide-area data, and we are evaluating now whether mesh or radio infrastructure could be extended, whether we should organically develop something specific to this purpose or whether it makes sense to fill the gap via a partnership or third-party arrangement.
Regarding mission-critical, public-safety voice, I don’t know of any carrier or cellular-based solution that is a meaningful substitute for a private radio network. None. Zero. As push-to-talk evolves, I’m sure that more and more wireless carriers will have it. But extending that capability into a mission-critical public-safety implementation — where networks are designed completely differently — is a huge leap. So we maintain a high level of conviction that the private radio solution is the right one.
That said, in large part, the proprietary world is history. In Europe and in other parts of the world, we’re obviously selling TETRA; in the U.S., we’re selling P25.
I think there are 17 licensees of P25 and, at the end of the day, that’s good. It provides more choice from a customer’s standpoint, it provides better interoperability from a components standpoint, and it allows us to be a better competitor because we will have to continue to drive down our cost profile and continue to get better and differentiate ourselves.
How do you do that? we must migrate our customers from today’s environment to that open standard.
We also must differentiate ourselves around the content and services-solutions proposition.
Ultimately, it’s going to be the provider who uniquely configures, designs, optimizes and end-to-end serves the application of that technology that will win.
— As told to Donny Jackson
COMPANY NAME: MOTOROLA
HEADQUARTERS: SCHAUMBURG, ILL.
CEO: EDWARD ZANDER
2004 SALES: $4.6 BILLION *
2004 EARNINGS: $753 MILLION*
* FIGURES REFLECTS COMMERCIAL, GOVERNMENT AND INDUSTRIAL SOLUTIONS SEGMENT RESULTS ONLY.
Don’t bet the ranch on homeland security funding
BY MARK JASIN, SENIOR VICE PRESIDENT AND GENERAL MANAGER, KENWOOD USA
This industry is extremely healthy. It received a dose of adrenaline from the influx of homeland security money. However, homeland security grants are a fickle thing. It’s almost like budgeting for your mortgage based on your bonus — it’s not a good thing to do.
Plus, because homeland security grants are so new, you don’t know where they will be heading in the future (see story on page 28). When you look at homeland security budgets, they’ve gone up slightly over the past three years since the U.S. Department of Homeland Security was created. But in each of the first two years, the budget almost doubled. The question is whether the second doubling was a spike or something more permanent. We don’t know. Kenwood is coming off a pretty darn good year, but it was bolstered by some of that money.
Another factor to consider is that not all of those homeland security dollars are being earmarked for communications. That’s why we use the term fickle. You can’t rely on those monies.
Fortunately, there is growth in some markets that typically wouldn’t directly receive homeland-security funds, such as utilities, schools and public transportation. They’ve been very big. Also, general business has shown an increase. However, it has more to do with capital release than a certain market getting hot. Businesses really stopped spending after 9/11, but we’ve noticed that they’ve loosened up over the past year.
However, to adequately serve the commercial side, we manufacturers are going to have to provide more utility in that communications device. It has become evident over the past couple of years that voice is not the primary utility any longer — data is its equal. Plus, data is more spectrum-efficient. If you can squirt a message out as opposed to a conversation, you’re not occupying that channel for as long.
For the future, we have to take steps to maintain our presence on the commercial side of our business — otherwise Nextel will get it all. Others will be there, particularly Verizon Wireless, but it’s primarily Nextel because they are the most invasive on the two-way radio side of the business. To combat that, we are developing technologies that don’t just talk verbally, in order to makes those devices more valuable. Data is the generic term, but it includes technologies such as automatic vehicle location and text messaging. This is the biggest departure because we have for so long been a voice industry.
One of the big challenges to serving the commercial side is in creating value-packages because the technology today is expensive for those users who are used to a certain dollar plateau. All of a sudden, it’s two to three times what they’re prepared to pay. We can charge more for additional capabilities — but not as much as we need to charge to be profitable. However, this should correct itself as the technologies further develop and mature.
We also see a more open attitude toward alliances. Competitors are now talking; the era of self-sufficiency is over. That’s because of the technology leaps that have to happen in a short period of time. There isn’t a company in this industry resourced well enough to make the leap on its own. To provide customers with the best value solution for voice and data, we have to get together.
This isn’t about company consolidation. Rather, it’s about homogenizing some of the technologies so there’s more support. We can’t operate in a vacuum. No one company today — not even Motorola — can take an exclusive piece of technology and expect to carry it forward. We’re talking about open architectures. — As told to Glenn Bischoff
Healthy industry will get a little smaller
BY BRENDA JACKSON, SENIOR VICE PRESIDENT, EFJOHNSON
Land mobile radio definitely is seeing a revival. It had reached a plateau in the ’90s, but what we’re seeing now is a revitalization of the industry. The plateau was created largely by a stagnation of our core technologies. We had been using analog and the P16 trunking standard for a period of years. Also, funding was pretty much limited to the state and local level, to whatever the cities and counties could scratch out of their budgets. Even then, there was a lot of infrastructure in the field that not only was still fully functional but also, in many cases, hadn’t been paid for yet.
But now, with the new focus on homeland security and domestic preparedness, money is starting to become more available. There’s the homeland-security effort and the federal funding that comes with it, along with the rebanding effort that’s going to take place over the next three years (see stories on pages 6 and 22).
There’s been some talk about the promise of federal funding being a false promise, but I don’t think that’s the case. I think the problem is in the way the money gets to the end user. It’s difficult. It seems they make it a tough road (see story on page 28). The money goes to the state in a lump sum, and then the state has to decide how to fairly divide it. It’s a slow process, and there doesn’t seem to be any consistency among the states in terms of how they allocate the funds.
Generally, the health of our industry is good, but we’re going to see some consolidation. There are a lot of small companies out there after 9/11 that thought there would be money flowing into the industry, and they jumped in. Some of those companies aren’t going to be here in two years.
For those companies that survive, the LMR industry’s revitalization will be further driven by the FCC’s mandate that requires licensees to transition to narrowband by 2013 and the quest for interoperable communications. It’s almost like the perfect storm, but in a positive way.
Also contributing to the excitement is the increased attention to data and data services for mission-critical applications. We have been talking about data forever, but the applications — such as video — now are becoming much more compelling for first responders. The driver is the users’ desire for better information. In the current environment, information is key, and it is vital that first responders have access to it. If you can’t pull up detailed information on the spot for a suspicious person, you may miss the opportunity to stop the next 9/11.
Looking to the future, P25 adoption is beginning to take hold (see story on page 16), and that is giving us the ability to recreate ourselves. While we will continue to support our legacy customers by providing them with a migration path, our development funding will go into creating P25 products and networks.
Standardization is the key. And we’re not just talking about LMR standards; we’re talking about things that go beyond that, such as IP standards and networking and computer standards. Our customers have learned an important lesson: Added functionality is nice, but it might not be worth the price of being locked into a proprietary vendor. At the end of the day, end users are capable of changing vendor behavior; and at the federal state and local level, they seem to want more and more off-the-shelf solutions and open architectures. They will drive all of us in that direction.
— As told to Glenn Bischoff
COMPANY NAME: EFJOHNSON
HEADQUARTERS: IRVING, TEXAS
PRESIDENT: ELLEN O’HARA
2004 SALES: $60.7 MILLION
2004 EARNINGS: ($4.28 MILLION)
To achieve the proper fit, get rid of the shoehorn
BY CHUCK SAFFELL, PRESIDENT OF FEDERAL NETWORKS SOLUTIONS, NORTEL NETWORKS
In the past, we’ve thought, “OK, government wireless is just land mobile radio,” but it’s going to be much, much more than that. One of the things government is concerned about is that they’re not going to get the bandwidth they need out of the land-mobile-radio waveform; they’re not going to get the growth.
Wireless also is about cellular, Wi-Fi and wireless mesh — the entire spectrum of wireless activities that provide enhanced mobility, increased bandwidth and the information transport needed to do the things that a modern government needs to do. Our perspective of the U.S. government has been that it is a bit slow to move into the wireless arena — not because they are not innovative people, but because they are concerned about security.
Wireless puts the signal in the air, so there’s always the possibility that it could go to an unintended place. Not only are many government networks mission-critical — many also are classified. Moreover, the government is required by law to protect private citizens’ data and information.
We have developed a capability where we can create a wireless mesh network using our access points. The access points talk with each other on our VPN, which is a very strong, triple DES (data encryption standard) VPN.
The devices have essentially no encryption or smarts. So, if a device was stolen or taken off line, the system would sense that and immediately adjust for it. There would be nothing that the person or organization that stole it could do with it.
We also are looking at the military sector, particularly in terms of connectivity and the ability to communicate in the battle space. The concept behind network-centric warfare is that you build sensor grids, and you connect them with an information backplane. We’ve pushed off on that endeavor.
There’s also going to be lots of activity in radio frequency identification tags. We’re starting to think about it from the point of view of unmanned sensors that are connected to a wireless network — either a mesh network or a cellular network. Those sensors’ information is relayed wirelessly back to a central switch, and that switch can be deterministic. In other words, there can be a set of rules in that switch that say, if certain things are detected by the sensor, then it creates a digital bit stream to the switch, which is smart enough to call the right agency to deal with it.
For example, an electro-optical device could be deployed at the Texas and Mexico border. If people come across the border carrying guns, you might want to send that call to the FBI. But if they are just a bunch of migrants sneaking across the border without weapons, then maybe the call gets sent to the border patrol. The switch can have those smarts.
We’re also working on wireless preemption and priority service, which we’ve had for years on the wireline side. Part of the problem on 9/11 was that people picked up their cell phone and tried to call, and they couldn’t — the cell sites were flooded with users. There was no priority. There was no way to override and give priority service to the people who had to make the decisions.
We’re working with the U.S. Department of Homeland Security on this. We’re just finishing up priority wireless service for GSM, and we’re working on it for CDMA.
It’s a fascinating time to be in this business, and the horizons are great. We’re going to put things together in different ways than we have in the past. Customers are going to have more options to match capabilities to their requirements, instead of trying to shoehorn their requirements into an existing system without the right bandwidth.
— As told to Donny Jackson
Understanding value is the secret to creating it
BY DAVE STOREY, PRESIDENT AND CEO, RELM WIRELESS
When I came to this industry in 1998, I looked at it as a sleepy, non-growing industry, even though it was — and still is at about $7 billion globally — a large industry. There just wasn’t a whole lot going on.
One of the reasons the industry was so sleepy is that it was still analog-based and was slow to make the digital transition. The move to digital communications, which opened the doors to interoperability and spectrum efficiency, really infused a lot of excitement into the industry. More important, it is stimulating the future.
Things really changed after Oklahoma City and Sept. 11 occurred. After 9/11 especially, easy-to-use interoperable communications products for public-safety became paramount, and this is going to continue for the rest of our lives. Now this sleepy, non-growing industry was presented with a great many opportunities.
The easy-to-use aspect is vital. It’s like anything else in life — if you’re not using a technology or product every day, you tend to forget how to use it. For example, the forest service uses our products. When a wildfire is taking place, not everybody is used to that radio; they bring out caches of radios and deploy them to a lot of people. They get trained very quickly, and then they dash into the fire. In such situations, you have to stress simplicity of use. Remember, they’re in a high-stress environment, and they need to be able to communicate. Looking ahead, we’re going to focus on ways of leaving interactive training devices with our customers so they can easily refresh themselves.
To leverage the opportunities in front of us, we have to bring more value to the marketplace. When I first reviewed the requirements of some of our customers — which are primarily public-safety and government entities — they bemoaned the fact that they could not afford the very expensive product that then was being offered in the marketplace. They were looking for interoperable digital devices under $1000, and we put together an equation that drives prices in that direction. But by value, I don’t just mean low prices. It’s also about services and responsiveness.
We see one of the next big opportunities as being Project 25 digital trunking. RELM has never been a trunking provider, only because trunking usually is proprietary to the bigger players that own their technology. But P25 trunking is an open protocol (see story on page 16), so we’ll be able to sell our products into environments in which we never were able to sell before.
However, the biggest opportunity coming up is something called the Integrated Wireless Network, or IWN, which breaks the country up into 19 zones over six phases. Over a five to 10 year period, IWN will overlay the country with a VHF trunked system. We could be talking upwards of 250,000 radios being deployed in that environment. This is going to be a big thrust for us.
With the development schedule that we have, we plan to come out with another 13 digital products and more analog products over the next three years, but we also would like to partner with or even acquire other parts of the solution, such as infrastructure or VoIP.
There are some who believe that analog, given the ongoing digital migration, is a dying business. But I think analog is going to be around for another 15 to 20 years, and it will be slowly harvested over that time. So why not take a harvest mentality during that time and deliver really affordable solutions that can be upgraded to digital? Ultimately, analog will die, but it’s not going to happen tomorrow.
Creating a migration path for the customer is crucial. We do that in part with our trade-in policy. Someone who buys our low-end will get almost 100% of their value when they trade for a digital product. We try to make it painless for the end user to upgrade. That circles back to our philosophies regarding value creation. It’s not only about price.
— As told to Glenn Bischoff
COMPANY NAME: RELM WIRELESS
HEADQUARTERS: WEST MELBOURNE, FLA.
PRESIDENT AND CEO: DAVE STOREY
2004 SALES: $20.7 MILLION
2004 EARNINGS: $7.9 MILLION
Don’t waste grant opportunities
BY TOM WINELAND, EXECUTIVE VICE PRESIDENT, VERTEX STANDARD
Obviously, the industry is moving pretty rapidly into digital. It has been a buzzword for several years, but now it is a reality being driven by Project 25 implementations. On the state and local level, agencies that are deploying statewide and countywide systems are leaning toward P25 because of its open architecture that makes it possible for multiple vendors to participate in the bidding process.
That’s vital, as middle-tier vendors in the past have been locked out of certain markets by large competitors that employed proprietary solutions or were beaten to the punch by smaller companies that were able to develop specialty products and leverage niche opportunities. One of the main principles behind P25 was the idea that multiple vendors would compete, which in turn would drive down costs for end users. This is especially important for public-safety agencies. While there are still many agencies that aren’t looking to migrate to digital for funding and other reasons, P25 will make the digital transition more affordable for everyone.
From our point of view, digital — particularly P25 — is the biggest thing currently happening in the land mobile radio industry. We recently introduced our first P25 products. The majority of the requests for proposals we receive today call for P25 systems or P25-compatible systems that can be upgraded later. Such systems are more spectrally efficient, which is a critical consideration because we don’t have enough spectrum and have to use what we have as efficiently as possible. Also, security in a P25 system is much better than in an analog system, a major consideration for a public-safety or government entity. While an analog transmission can be encrypted, it’s much easier to break the code compared with a P25 system.
Of course, the digital migration will depend in large part on funding, which is a concern for all of us. There appears to be a lot of homeland security funding available to first responders, but the trickle down hasn’t happened yet (see story on page 28). Part of the problem is that public-safety agencies and mobile radio dealers are unsure of the grant application process. We’re trying to educate them. We regularly monitor Web sites and try to pass information along to our dealers and our customers regarding how and when to file their applications. We’re helping them get into line so they’re not passed over. It’s incumbent upon every vendor to help in this regard.
We believe federal funding will begin to flow as people become more aware of how to get the money. As one city receives funding, the surrounding cities will take notice, and a domino effect will occur. The larger cities will be the first to get the money, but we believe funding eventually will reach the level of the nation’s smaller cities.
Business and industrial is one market that is declining — particularly as it concerns smaller fleets — primarily because Nextel dominates it. It’s not that contracting with a commercial carrier for push-to-talk service is less costly than maintaining and operating a two-way system as much as it is more convenient for users in the field. Combining the cellular and walkie-talkie functions eliminated the need to carry two devices.
However, two-way can compete with Nextel when it comes to dispatch because Nextel’s service is a one-to-one service that is incapable of one-to-many performance. This gives land mobile radio dealers the opportunity to compete for business from larger fleets.
— As told to Glenn Bischoff