Thomas Lynch: We estimate there are around 41 million radio units in use and the market grows at 2% per annum – this is really new users adopting technologies. Digital transition is evident, but there are still some strong developments in analogue that are region specific.
What’s really driving our market? The transition to digital is a key factor, the advent of DMR/dPMR. The development of the TETRA market continues into new regions and P25 continues to develop. A word we hear more and more is convergence. We estimate the market for digital is currently about 20% and that leaves about 80% for analogue. We predict this market will expand and estimate that about 45% will be digital in 2016. This is significant because it has taken 20 years for the market to even reach 20%, but now the advent of DMR and other digital technologies is really driving growth.
What do you think the state of the market is, and what, in your view, are the key challenges in persuading more of the market to move to digital?
Jonathan Bunce: The two drivers of market change are technological advances and the commercial drivers for users to invest in technology migration. In the PMR market we have everyone from small single site users through to big trunking system users, and the migration rate will look different for those different types of customers. The market for DMR is much more diverse than it was for TETRA in the early days due to the scalability of DMR in terms of cost and complexity.
We see different sizes of organisation and those with different levels of reliance on PMR migrating at different rates and for different reasons. We see DMR as the enabler of what will effectively become tailored systems to support users’ operational needs, all built around a strong, open standard.
Kevan Scott: When we upgraded our analogue trunking system [for Western Power Distribution] in the South West and Wales about five years ago the only realistic digital option was TETRA. This time round, we’re just about to get some more analogue networks up and running in the Midlands, as even a few months ago we didn’t think that digital was ready for us yet.
Andy Grimmett: Digital to date has been very expensive [for trunking solutions] and adoption has been slow because TETRA, Tetropol and P25 have been very expensive options. I think now we need to look at low-cost digital; the digital low-cost options that have been available up until now are non-trunked variants and therefore more suited for smaller systems.
Then there are also the buying cycles – with those large systems, people are buying technology every 10 to 15 years, sometimes longer. Just because the technology is available, the market and the customer base isn’t necessarily going to be making those purchases.
Chris Pateman: Markets develop because either there is a customer need or there is a new technology that reduces cost and drives innovation. I’m not convinced from what I’ve seen so far that there are any huge motivators for customers to suddenly ditch existing analogue and rush to digital. I don’t see that spare spectrum is utilised efficiently as a result of using a different technology; I don’t see that the price is any different.
When people come out of a recession, when people start to feel more comfortable, that is the time to think about changing their kit. They will change their kit because you are showing them something that is compelling and attractive, and it encourages them to make a move.
Richard Drabble: I think it’s important to try to look from the end user’s point of view, particularly the purchasing manager’s point of view. In the early days when digital technologies arrived and purchasing managers were offered the choice, there really wasn’t a very great deal to make them choose digital over analogue. It appeared that it would cost somewhat more and do somewhat less for them. That has been compounded by what, from a customer’s point of view, might be a bewildering selection of digital technologies. Worse than that even, within those technologies, DMR radios weren’t interoperable with each other. I think that is beginning to change a little with availability of APIs for third-party software applications. Some of those extra functions are maybe giving some enticement to move to digital and finally, manufacturers are doing interoperability testing, which gives the purchasing managers some comfort knowing that it won’t be tied to one particular manufacturer.
Simon Parsons: Like Chris, I am more a cynic of digital radio systems than I am a cheerleader for them. With digital, often there isn’t so much background noise but the quality is not as good and it’s down to the Vocoder used. I still think the quality of digital speech to some extent will be a limiting factor. At the moment, the only people picking up digital technologies are those who have decided they want to be digital.
David Hosie: Like Year-on-year we have increased our sales digitally, so much so that the only analogue we sell is for legacy systems – and we are now a digital sales company. That is driven by the market, that is what people want and that’s what we sell. Our business certainly has benefited hugely from digital – DMR has increased beyond recognition from when this first started. It works and from the customer’s perspective we’ve probably had about half a percent of negative feedback from our clients when we’ve migrated analogue to digital.
Tim Cull: I am extremely interested in the customer base as it moves from service to service. Despite the fact that digital radio systems have been around for many years it is very much in its infancy – and this is because there are still a lot of applications to come. It is easier to host applications on a digital system because you don’t have to convert to important things such as encryption, meeting bank security requirements – all of which will be vital to the users.
To me, we have a long way to go – and it’s all about applications. If you want an analogy I would say there will be an SMS moment for digital radio in the PMR world just as there was in the GSM world. At that point it will be really hard to stop it.
Tom Mockridge: I’d like to emphasise the importance of splitting up the market. The mid tier, especially at the top of the mid end, has been very well served, but there has been less digital activity in the high end. Meanwhile, a huge amount of the market is the seven million radios sold every year at very low price points. That needs emphasis. Something that hasn’t come out are the regulatory drivers, which, whether we like it or not, are going to drive things to digital.
Thomas Lynch: With DMR, our question is always: why now? Why is this technology so successful for you and why have you opted to go for it? The answer I often get back is: ‘We get it, we understand it, it’s an easy transition’, and that’s interesting because that’s in the markets where DMR has been successful. Then when you go to some of these other markets where there is a significant opportunity for technology such as DMR, they are not getting the education that is needed.
What do people think the drivers are and what needs to happen bearing in mind that analogue is going to slowly disappear? Is it to some extent education, or is it a marketing issue? What as an industry do we need to do?
Jonathan Bunce: At Simoco we have invested very heavily in our digital roadmap. I think there is a supplier push element, but I think because digital technology is so cost effective and scalable, particularly with a switchless, all-IP architecture, there is potentially far more of a customer pull. The conversation for me is, what is it that will make customers go digital and with what standard? If you look at Eastern Europe and some of the developing markets, if they are looking at a new radio system now, what would they look at?
We talked about the price of DMR, it is obviously a different technology – you’ve got a lot of developed applications on the TETRA system but it’s more expensive to run. Are they going to trade off functionality against cost and ease of use? And at what point? Because we’ve gone digital with DMR, we get the benefits of the increased functionality in the system. For me, it is how does that pull happen, what’s the tipping point, what’s the critical bit that says this really does something for you?
Simon, with your utilities, is the telemetry side and data going to become more important?
Simon Parsons:Telemetry is already digital. If you look at dPMR, it is essentially an analogue system with a digital modem doing the air interface thing, which is why I am always quite surprised that they haven’t developed it as well as they could. But there is virtually no TETRA spectrum available in the UK for civil type applications.
Andy Grimmett: Does that come back to customer education?
Simon Parsons: Yes, historically the UK has a problem in that it has an awful lot of radio usage and not a lot of radio spectrum. All the available TETRA spectrum has been snapped up by public safety people and if they gave it back we’d have double the amount of available spectrum in Europe as we have now. But TETRA is limited in the UK – in the rest of Europe they have oodles of it. DMR Tier III is where I’d see the utilities drifting towards. It has the ability to do all the things you’d like it to do.
Kevan Scott: The coverage we get from the system we’ve got isn’t perfect, but the TETRA solution would have been about five times more expensive. We made the decision in our business that we must be self-sufficient, we’ve still got to be there when the lights go off – literally. For us digital wasn’t an option – we couldn’t wait for it and we had to stay with analogue because digital wasn’t there.
Tim, is it a technology issue that hasn’t hit the market yet? What needs to happen to move things on?
Tim Cull: Well, as an ex-technological person I don’t think it is technological. To me, it’s all about the SMS moment and that’s to do with applications in the widest possible sense. In hospitals, virtually all the staff are actually functioning on an entirely paperwork system as this is what they trust.
So you could have a system where the doctor puts in some information once and the doctor and medical team can use a simple key read system to search on their terminals. There may be 5,000 people that need a terminal in each major hospital. That would basically be the start of your SMS moment. This kind of thing already exists, but not in DMR.
Tom, how important do you think that’s going to be in driving the market?
Tom Mockridge: I think it has been really quite significant. There are many applications out there for DMR. The DMR Association has got an active and growing community of application providers, doing all sorts of things in hospitals. I have heard figures that 30% of DMR installs have got some sort of application, particularly where DMR has been sold very successfully in the mid-tier, which is the benchmark. In that segment it is very significant.
How important is it that the industry develops a £20 DMR radio?
David Hosie:Absolutely vital. Most of the analogue radios are in that price range. We need to target that bottom market because it’s huge.
When will that happen?
Andy Grimmett: I think technology-wise not long at all. We, as an industry and as manufacturers, try to position DMR as better than analogue but we have ignored that low end. That’s really a factor in why analogue still has 80% of the market – we as an industry have ignored it. It is about education.
There is still a huge amount of confusion in the digital market, because people to an extent understand TETRA and P25, as they are well established technologies. But with DMR, people don’t have a clue.
We are presenting too much confusion as an industry even about DMR. In this room we’ve got differing people who are pro this and against that. So what’s the customer meant to think?
Thomas Lynch: I would argue there’s a significant opportunity but with the lower end of the market, be that price points or anything else, that market is waiting.
Simon Parsons: The big driver in digital in the utilities industry is for the onsite systems, and the biggest driver is actually hand portables.
Jonathan Bunce: In the onsite systems, how important is ease of deployment and set up?
David Hosie: It’s paramount. DMR as a push-to-talk tool that has applications bolted onto it makes it a very powerful ecosystem. That’s where as a dealer we see it – rolling out these additional income streams – that is what the clients are asking for.
Jonathan Bunce: Who are they selling to?
David Hosie: Right across the board. To us, the whole radio thing has flipped on its head. It’s the solutions – the bolt-on goodies that we are getting new revenue from.
Is this crossing over to the mobile world, where form factor is very important?
Simon Parsons: To some extent, that’s where digital radio is taking PMR. Form factor is everything. Generally speaking, yes, maybe the days of a fat PMR terminal that looks like a half brick are over.
Richard Drabble: But before you start selling applications it’s important that you’ve got good radio coverage of the area.
David Hosie: Absolutely. We have talked to Ofcom about the ability to reuse spectrum more efficiently. We’ve been talking to the DMR manufacturers about the radio. But if you’re going to make a colour display make it do something – if it’s an emergency call, for instance, make the screen flash red.
It seems to me there is a big issue with education. What is the most important thing that can be done to move along the market on that score?
Thomas Lynch: I am coming from a global perspective, but it seems that now people like Simoco are starting to shout a little bit louder in the industry that gives the end user more of an idea about what is happening in the future. I think next year will give a strong indication of where they are positioned and I think the education part is important – just getting out there is key.
Tom Mockridge: I think that it will settle down and DMR will establish itself, leading the charge that will continue based on an increasing number of manufacturers who are backing it – and that will sort out some of the confusion. There will be niches of the technologies and that will sort itself out with time.
Tim Cull: I think the basic technology is present either in this industry or another industry, and is capable of being picked up. I think the time is right for someone thinking out of the box to generate the SMS moment, and when they do, if they handle it correctly, they will win.
David Hosie: I think there is a huge market at the lower price point. If a manufacturer brings out a radio that fits – a small and light ruggedised radio that is just a push-to-talk device – that could be a killer app.
Simon Parsons: I am leaning towards functionality and form factor from the usability side for the end user. That will sell a lot of radios.
Richard Drabble: I think it’s important not to get too carried away with technology and give end users tools that do what they want to do. That’s going to be a killer combination and once they are convinced, then we can begin to stick in the extra things such as security panels.
Chris Pateman: Who creates the SMS moment? If there is a caution, it is that if the PMR industry doesn’t make this their SMS moment someone else will. It might be mobile phone operators. Comms is comms and if we just think comms is business radio we are in danger of not only shooting ourselves in the foot, but actually in the back of the head.
Andy Grimmett: We’ve been speaking to a lot of people who are holding off and are running analogue systems as the digital isn’t there for them. I think once those DMR Tier III systems are available there will be a big surge of people taking those up.
Kevan Scott: If I was in your shoes as manufacturers or dealers, I’d be trying to push the private nature of the technology. For us as a business, if it looks like a brick it doesn’t matter. It is private and will be there when a lot of other stuff is on its knees. That for me is how you should sell digital.
Jonathan Bunce: The fundamental thing about PMR is: is it able to manage a reliable discreet network? That is what PMR is and that’s what it does. I think that the point somebody made that if we don’t change we are doomed to die is absolutely true. Voice and data and the ability to integrate these networks gives us a reflection of the market and we have to do that, and we have to do that quickly.
But increasingly, there are two divergent areas. That 80% analogue installed base will go down to 50%. There’s going to be a migration and people will gradually start to see the benefits of some of the mid market stuff. It doesn’t matter if it’s a radio system, or a mobile phone system. If it supports what you do as a business, that is what we are looking for; the radio system has to be part of that.
James Atkinson: There is obviously a two-way process – we need to listen to the end users, but those end users are very fragmented, so there’s a lot of listening to be done. Then we need to educate those people about what is actually available and what it can do.
There are many applications that can provide other advantages. Convergence with data centric standards such as LTE, form factor, all sound interesting. If current radio end users want all that, then those factors mean the PMR market will have to adapt or risk the possibility of becoming redundant.
Chair – James Atkinson, editor, Wireless magazine
Tom Mockridge, chair of the technical working group, DMR Association
Thomas Lynch, associate director, IMS Research
Kevan Scott, telecoms manager, Surf Telecoms (Western Power Distribution)
Chris Pateman, CEO, Federation of Communication Services
Tim Cull, business radio coordinator, Federation of Communication Services
Simon Parsons, spectrum manager – ICT & radio regulatory, The Joint Radio
Richard Drabble, director of engineering, Zycomm
David Hosie, technical director, Audiolink
Jonathan Bunce, group marketing director, Simoco
Andy Grimmett, chief technologist, Simoco