Flarion: 'Europe's Ready for Us'
You couldn't accuse Flarion Technologies of lacking confidence. Only months after beating a trail to the doors of Western Europe's leading mobile carriers, the alternative wireless vendor believes its proposition of a cheaper, more efficient route to data mobility has some operators revisiting their next-generation drawing boards.
That belief has led Flarion, currently at the top of Unstrung's startup chart (see Top 25 Privates: Flarion at #1), to set up a business division in the U.K. to be closer to its new target market (see Flarion Launches In London). It is already making inroads in North America (see Flarion Seeks Defense Contract, Flarion Gets Flashy for the FCC, and Nextel Trials Flarion's Flash). The company also claims it has an impending trial with an unnamed Korean operator.
Flarion's claim is that its Flash-OFDM (Orthogonal Frequency Division Multiplexing) kit can help mobile operators deliver secure IP services to business customers at between 10 percent and 20 percent of the cost of the more traditional CDMA and TDMA systems, and this is hitting carriers' eardrums just as they are struggling with industry and investor confidence in 3G. "Europe wasn't ready for us last year," is the soundbite used by Ronny Haraldsvik, the company's senior director of marketing strategy, to describe the timing of its marketing offensive.
The company's pitch to Europe's operators (major carriers, but no names), says Andrew Gilbert, managing director for EMEA, is this: If you deploy our equipment, which will work across the spectrum you already have, at the sites and up the masts you already have or are leasing for 3G, you could save billions of euros on buildout costs and, by passing on those savings, deliver affordable data services to your most profitable customers, the enterprise users. Furthermore, our purely packet-switched system will allow business users with laptops and PDAs to work in exactly the same way as they do when they are wired up to their office LANs without the need for new hardware, except network interface cards. Applications do not have to be reengineered, and workers do not have to be retrained.
As concepts go, you would have to classify that one under "appealing."
Without drawing a breath, Gilbert says Flarion has challenged the operators to recognize some of the limitations of 3G. "It's good for voice expansion and dialup data, but not good for enterprise data. UMTS has latency issues that TCP/IP can't handle. That's 3G's dirty little secret. Ours is a standard IP network system that takes the office into a wireless setting, and the operators have responded positively to this proposition."
Yet, while Europe's mobile operators sweat over their wireless data plans as capex dwindles and regulatory deadlines loom large, so Flarion recognizes that the leap from thought-provoking presentation to service trial and then signed order is a big one.
After all, 3G license-holders would be allowed to deploy Flarion's equipment instead of the W-CDMA kit they are sourcing from the more traditional infrastructure suppliers -- Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Ericsson AB (Nasdaq: ERICY), Lucent Technologies Inc. (NYSE: LU), NEC Corp. (Nasdaq: NIPNY), Nokia Corp. (NYSE: NOK), Nortel Networks Corp. (NYSE/Toronto: NT), Siemens AG (NYSE: SI; Frankfurt: SIE), and so on -- only if the regulators are prepared to alter the license conditions. Imagine the lobbying frenzy that would start!
That would depend on the carriers breaking rank from their traditional suppliers and demanding alternative infrastructure from other suppliers. Another tough call. But Haraldsvik is adamant that the market has changed, and that "the operators are in the driving seat now." He claims the incumbent equipment suppliers are not in a position to limit operators to prescribed options, and that if a carrier demanded a Flarion solution, then that's what it would get. "Meeting those demands would not be an issue," says Gilbert.
Carrier timescales preclude any Flarion-based services coming to market in Europe until at least mid-2004, given the time it takes for decisions to be made, trials to be concluded, and networks to be built. This is not an out-of-the-box system that may be deployed on a whim.
At the other end of the food chain is the enterprise. Although there are early adopters and progressive companies keen to deploy new ways of working, aren't corporations generally very conservative and slow to migrate to new ways of working? It's true that many large organizations like to do things themselves, says Haraldsvik, but much of the reluctance to innovate within the enterprise sector has to do with price: "It's the financial directors that make these decisions."
Being able to dramatically lower the price at which an all-the-wireless-data-access-you-can-eat offer could be delivered would lead to a surge of interest from small and medium enterprises, says Gilbert, just as lower prices have boosted the uptake of DSL in Europe. "Companies already have their applications. It's [access] pipes they want to buy," he adds.
Flarion wouldn't be in Europe and setting up test facilities if it didn't think there was at least a chance of winning a slice of the ever decreasing capex action. And they are supremely confident. As Gilbert puts it: "2003 is going to be a good year for us. We must be the happiest guys in telecoms just now."
— Ray Le Maistre, European Editor, Unstrung