There is a recent television ad for Nextel that seems to have more in common with George and Ira Gershwin than Alexander Graham Bell. It’s a sensationalized version of an impossibly busy construction site near the swank Borgata hotel in Atlantic City, with seemingly hundreds of workers flitting about, effortlessly dodging I-beams while talking into their cell phones. It’s a ballet-like anthill of activity, with the ubiquitous handheld devices serving as director, choreographer and queen.
Suzanne Barnes can appreciate the portrait; as the
VP of IT for Boston-based Suffolk Construction, she is responsible for maintaining service to one of the busiest on-the-move construction companies in the country—a job made much easier by the fact that each of Suffolk’s 500 employees carries a Motorola BlackBerry featuring Nextel’s push-to-talk capability.
“The key is communication,” Barnes says. “We were looking for a device that could handle multiple forms of communication and perform multiple functions. In some cases, there aren’t phone lines running to a site that we’re working on. In the case of the Nextel BlackBerrys, we have push-to-talk, cell phone and e-mail all in one. We use it country-wide, because we have locations in Florida and California [in addition to Boston], and we can use Nextel with employees in all those locations.”
Push-to-talk (PTT) has its backers and its detractors. Phone users can instantly converse with each other—across the street, the country and, more recently, even to a handful of other countries—without dialing, waiting or using up minutes. Immediate walkie-talkie access may be of minimal use, at best, to the majority of individual consumers, and, at worst, it can be annoying—instead of being subject to one side of a bystander’s phone conversation, you’re forced to hear both. Now picture yourself standing on a beam of a half-finished building, 60 feet in the air, with a slight crosswind at your back and a blowtorch in one hand. It’s no surprise, then, that construction workers aren’t worried about eavesdroppers.
Like many in the industry, it was the PTT expertise that convinced Suffolk to choose Nextel, according to Barnes. “When we looked at how to upgrade and integrate, we considered Nextel an obvious choice,” Barnes says. “We also considered cost, coverage and a dedicated support team that has helped us quite a bit. Anything we need equipment-wise, we get it by the next day.”
Industry in Flux
For a wireless industry defined by rapid technological advances, PTT technology has had a remarkable run. Nextel, the pioneer of PTT more than a decade ago, has maintained a stranglehold on the construction sector despite attempts by venture capitalists to tap into what some industry experts estimate is potentially a multibillion-dollar market. Over the past two years, several of the main upstarts determined to compete with Nextel in the sector were swallowed by bigger players. For example, Dynamicsoft was acquired by computer giant Cisco Systems, and Winphoria was purchased by Motorola, a long-time Nextel partner. Such consolidation has left few major players in the space, despite positive industry buzz and funding for upstart challenger Sonim Technologies.
Now, of course, Nextel itself is poised to be involved in a seismic $35 billion to $40 billion merger with cellular giant Sprint PCS. The merger may be finalized and approved as early as the first half of this year. According to Nextel officials, beginning in 2006, the company’s wireless customers will be gradually moved over to Sprint PCS’s network—using the CDMA technology pioneered by Qualcomm—and away from Motorola’s iDEN technology.
Albert Lin, an analyst and wireless expert with American Technology Research, thinks the merger will be a positive for Sprint PCS, Nextel and the construction industry as a whole. “Nextel has historically been a great push-to-talk network using iDEN’s technology, but they’ve had a data rate that is very slow,” Lin says. “It’s the perfect combination with Sprint PCS, because they’re the data leader. Sprint PCS has been selling to these early-adopter consumer types, and they would like to get a much higher-revenue, higher-margin professional user to mix into their customer base. Most would argue that [Sprint PCS is] way too tied to the fickle trends of consumers.”
Nextel covets a partner of size with a technology roadmap that can take it to the next generation. “One of Nextel’s biggest problems has been its lack of size, which has left many people in construction or fleets or other verticals that like push-to-talk with plenty of examples where there is just no coverage,” says Lin.
Although Suffolk has had some minor concerns with Nextel’s BlackBerry, Barnes’ bigger concern is the network coverage. Obviously, much of Suffolk’s work takes place in areas without great network access. “There are still some issues with network coverage, especially in Florida. I think Nextel can play off the networks that both companies have, but they have to get everything integrated first, and then we are probably going to be changing out equipment. That would be a major project. We’re watching the news closely. There are obviously advantages as well as disadvantages, which happens with any companies merging.”
Competition Heating Up?
As is always the case with mega-mergers, one of the major hurdles to the merger is potential concern from antitrust officials and the Federal Communications Commission regarding whether or not it will inhibit choice. Lin says that one of the problems with being a smaller carrier is that it’s hard to have the kind of comprehensive coverage because of the amount of money it takes to build networks.
Nevertheless, Lin thinks other factors will combine to actually improve competition among carriers. “The one feature that Nextel has basically had a monopoly on is push-to-talk,” he says. “Today, if you’re in the construction industry, you pretty much have to go with Nextel, because all of your subcontractors are on Nextel, and that’s the only way you can push-to-talk. Within two to three years, push-to-talk will not only be available in some form on every carrier, but cross-carrier push-to-talk will exist.”
Just as you can make cell phone calls to people on any carrier today, PTT is going the same direction. “There will be ubiquity, and cross-carrier push-to-talk will be not only possible, it’ll be normal,” Lin says. “No one’s going to care what carrier you’re on. For the construction industry, for example, that actually means greater choice than they’ve ever had before.”
Ananth Rani, VP of products and services for wireless and GPS provider Xora, agrees. Xora’s GPS Time Track product uses Motorola phones on Nextel’s network, with Java-based applications to track locations and record time sheet
“Nextel is very solid in the blue-collar segment, and Sprint PCS is solid in the consumer sector,” says Rani. “At some point, there will be some intersection there. There will be some small and medium-size business customers in the Sprint PCS sector as well, and there will be some new opportunities. We see increased opportunity for Xora with Sprint [PCS].”
Blueprint for the Next Generation
Reliance on a 10-year-old technology is a clear indicator that the construction industry is not as dependent on avant-garde wireless solutions as, say, the financial or pharmaceutical industries. But that doesn’t mean that construction companies don’t want advances, or that advances aren’t coming.
“Push-to-talk is a great tool, and it’s very efficient,” says Lin. “But the future of what people want to do on their phones includes things that are graphically intensive and media-rich. Right now, if you push-to-talk and someone can’t hear you, you have to ask them to repeat it. In the near future, you’ll be able to save all your prior push-to-talk conversations, so you can replay them to hear exactly what instructions were given. Shortly after that, you’ll be able to push images. You could be working on a site and say, ‘Send me the exact schematics, show me exactly how you want it. Do you have an example of how something should look?’ All of these things will make everyone’s job easier.”
That functionality is not far off, depending on whose network you are on. “If you’re on Verizon’s network, you’re looking at these types of services coming within about a year,” says Lin. “For Sprint PCS, you’re looking at 18 months to two years. If you’re on Cingular or other majors on the GSM technology, you’re looking at 2007. That’s the rough timeframe where the networks will be fast enough to deliver this kind of content and other enhancement such as GPS and the ability to do location and mesh location information.” The enhancements on the horizon are part of the reason Lin is so convinced that competition is only beginning to heat up.
Barnes believes that, “Communication in general is the most important thing we do. The fact that we are able to communicate, and not stop what we’re doing to communicate, is excellent,” she says. “We travel a lot, to the different sites across the country, as well as to the different job sites, and you’ve got your office with you, and you can continue to work without any disruption. That’s very valuable.”