A keyboard with a one-line display designed to send messages to pagers sits idle at Wireless Services in Bellevue, an homage to how the...
A keyboard with a one-line display designed to send messages to pagers sits idle at Wireless Services in Bellevue, an homage to how the paging business sustained the company for so many years.
The ancient-looking device has since been abandoned for something new: an operations center with wall-mounted flat-panel TVs that track cellular-network patterns and which are monitored by staffers around the clock.
The change is part of a broader evolution of how wireless data has spilled into American lives. In the past decade, Wireless Services has witnessed how customers have adopted text messaging and other data applications, leading the company to think its biggest opportunity still lies ahead.
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But it comes at a time when the company’s largest customers, cellphone carriers, are undergoing sweeping changes, throwing up yet another new challenge. For a company that has been ahead of its time, Wireless Services faces what many wireless companies confront as they attempt to figure out how they fit into the industry’s new landscape.
Wireless Services started more than a decade ago when it was spun out in 1994 from McCaw Cellular Communications — before the latter was acquired by AT&T and became AT&T Wireless. Its vision was to provide the back-end technology for delivering and managing text messages and other data services for wireless carriers.
“What ended up happening was that the market developed slowly and differently than we had expected,” said Steve Wood, Wireless Services chairman and one of the founding executive team members.
Provides data services, including text messaging, to wireless carriers
History: Spun off from McCaw Cellular Communications in 1994.
Venture capital: Raised $15 million in two rounds of funding from Madrona Venture Group, Northwest Venture Associates, SeaPoint Ventures, Ignition Partners, Intel Communications Fund.
Executives: Rich Begert, president and CEO; Mark Thomas, chief financial officer; Gowri Shankar, senior vice president of sales and business development; Curt Miller, co-founder and chief technical officer.
Customers: 30 wireless carriers, including Nextel Communications (now Sprint Nextel), Western Wireless (now Alltel) and Rural Cellular.
For five years, the company survived by serving the paging industry. Today, it manages a host of data services, including Internet browsing, anti-spam software, news and weather alerts and messaging technology that handles notices to a group of employees. It provides these services to more than 30 wireless carriers and 17 million data subscribers.
“We doubled revenue in the past year and expect to do the same this year,” said Rich Begert, president and chief executive of the privately held company.
His mouth waters just knowing that 4.6 billion text messages were sent in the U.S. in December, or twice as many during the same month a year earlier.
A text message typically limits notes to 160 characters and is delivered to a cellphone number. Teenagers were largely the first to adopt them on a wide scale, passing them around like notes in class, but now even large corporations use them.
Seamus McAteer, senior analyst at Seattle-based M:Metrics, said 67 million users sent a message in July. That’s about 40 percent of the 180 million U.S. cellphone subscribers.
However, just as the company’s forward thinking has started to reach fruition, the wireless landscape is changing dramatically. Two of Wireless Services’ largest customers have been acquired, possibly putting some of its most lucrative contracts in jeopardy.
Its largest customer, Nextel Communications, completed its merger with Sprint last month, and Bellevue-based Western Wireless was acquired by Alltel.
Although nothing is likely to happen in the short term, the company will probably have to prove itself to the acquiring companies to maintain their business in the future.
Begert isn’t taking any chances.
Less than 24 hours after the Little Rock, Ark.-based Alltel and Western Wireless closed their merger, he was on the phone with Alltel at 9:30 a.m. “They said you win as the first vendor to call,” he said.
Wireless Services had recently won a contract with Western Wireless to provide Internet-related features for the cellphone, including a weather and news home page that can be customized.
But the contract is on hold as Alltel expends its energy on melding the two companies.
At Nextel even less has changed. Because Sprint and Nextel have two completely different underlying technology platforms, the new company, called Sprint Nextel, will have to keep up both, leaving Wireless Services firmly in place, at least for now.
Winning the business
When might there be a shift?
“I wouldn’t have an answer for anyone out there,” said John Styers, Sprint Nextel’s director of data-communications services. “Every third-party vendor is asking, but everyone does what they did yesterday and will keep doing it until you hear otherwise.”
McAteer questioned whether it would be easy for Wireless Services to keep the business. Typically, he said, the acquiring company does not adopt the practices of the company it acquires.
“They’ve got to be concerned,” he said. “They are going to have to go in and win that business.”
Begert is realistic. “Alltel is 6 ½ times larger than Western. It is very clear who is running things and it’s from Little Rock,” he said. “We could get displaced if they decide they don’t like us.”
Although finding out if he keeps the business is probably still far off, Begert has the confidence of Ignition Partners, the Bellevue venture-capital firm that invested in Wireless Services last year.
Begert was hired about a year ago to replace Wood, who had been there from the start.
Since his arrival, the headcount has tripled to 65 employees and a number of executive-level positions have been filled.
“Rich has done a wonderful job of creating an amazing culture,” said Steve Hooper, general partner at Ignition. “He’s very good with people and has made some strong hires to augment the team.”
Begert’s background is mostly in wireless, except for a five-year hiatus working in the Internet industry. He joined AT&T Wireless in 1996 and left two years later to become the president and chief executive of ImageX.
He led ImageX to its initial public offering in 1999 and to its sale to Kinko’s in 2003.
Begert said the opportunity before Wireless Services is huge. As wireless carriers become more competitive, they’ll have to look to adding more features.
Wireless Services could be attractive because it can host a new service, and a carrier wouldn’t have to invest in infrastructure to support it while not knowing how popular it would become.
Likewise, if the service takes off and millions of people start using it, Wireless Services would handle the spike in demand. In turn, Wireless Services could afford the equipment by spreading the cost over several carriers.
Of course, a number of companies provide some of the same services, including Mobile 365, WiderThan and VeriSign. WiderThan provides some of Sprint’s messaging capabilities today.
Wood said Wireless Service has a shot.
“Wireless Services is a company that’s been around 10 to 12 years with great reputation for operations and maintaining service levels,” he said. “That puts us in a good position.”
Tricia Duryee: 206-464-3283 or email@example.com