Tapping into the telecommunications industry: one of the nation's hottest industries looks like a gold mine for small businesses seeking procurement opportunities

One of the nation's hottest industries looks like a gold mine for small businesses seeking procurement opportunities

HOW WOULD YOU LIKE TO HELP build the information superhighway? Sound like an opportunity too good to be true? Well, it is within your reach, especially if you own the kind of small business that can adapt to the continual shifts of our technologically driven society. Indeed, the information superhighway could be an expressway to riches for entrepreneurs--if they can strategically position themselves to service the burgeoning needs of the $600 billion telecommunications industry.

The key to linking up with the billions of dollars in procurement contracts that will potentially become available over the next decade is to remember that the information superhighway is still under construction. Competition to develop systems that will bring a new generation of high-tech interactive services to consumers has spurred a recent flurry of partnerships between phone-service providers, cable companies and computer giants. Since there is no master blueprint for these corporations to follow, being the first to enter into emerging billion-dollar markets is a top priority.

Over the next decade, these high-tech telecommunications firms will spend billions of dollars to develop the new technologies and information transmission systems that will make up the infrastructure of the information superhighway. So, considering the type of small business you own, if you can help the telecommunications giants build these new systems quickly, and in a cost-efficient manner, you can benefit from the coming golden age of telecommunications (just like the companies profiled in this article).

Right now, the telecommunications industry is made up of several different components: telephone services (wired, wireless and cellular); broadcast (including cable and satellite); and computers (hardware and software). On each front, new technologies and uses are emerging every day. All of these areas are expanding. Just consider: Miniature satellite dishes are being sold for home use; cable systems will soon have the capacity for 500 channels; and you can now make cellular phone calls from coast to coast or send faxes via wireless transmissions. Many more mind-boggling advances are on the horizon. If small businesses(those with annual revenues of less than $10 million) devise strategies to serve the needs of companies developing these advances, they'll have the potential to get rich twice: during the development stage, and after the new technology becomes popular.

What kinds of small businesses stand the best chance of aligning themselves with the telecommunications giants? The winners will be efficient companies with a strong understanding of new technologies, the financial resources to provide quality service, a solid track record of success with major prime contractors and the responsiveness to give their clients what they want on time. As D. Linda Garcia, project director and senior associate at the U.S. Congress Office of Technology Assessment in Washington, D.C., points out: "You don't need a big company to make good these days. In the telecommunications industry's competitive environment, small is good, smart is good and being able to react quickly is good."

But why would a large company want to cut a small firm in on potential billions?

"Telecommunications companies are eliminating the role of middle managers. These firms are focusing on what they do best--developing technology and systems--and outsourcing other things to reduce their overhead," says Garcia. "If you can supply a very specific service to a larger business, it could be a bonanza for your company.

FINDING OPPORTUNITIES

Wireless and cellular services provide a good example of how opportunities are created within the telecommunications industry. Today, the cellular telephone industry has more than 9 million cellular service subscribers and accounted for $12.6 billion in revenues for the 12-month period ending in June 1994. Because of their foresight and creativity, manufacturers of spinoff products, such as pagers and beepers, have benefited greatly as portable phones are no longer considered a luxury, but a business necessity.

As the industry continues to expand, the demand for products and services to aid that expansion will increase. For example, licenses for the next major platforms for wireless information transmissions were auctioned off last year, and auctioning will continue through this year. Industry experts project that Personal Communications Services (PCS) and Interactive Video and Data Services (IVDS) will experience growth similar to the cellular phone industry. These new platforms provide the foundation for everything from sending wireless faxes to allowing opponents thousands of miles apart to play interactive video games against each other.

Maceo Sloan, CEO of Sloan Financial Group, a Durham, N.C., black-owned investment firm with over $3 billion in assets, recently led a group of investors in a successful bid for five PCS licenses that will provide national coverage. Under the name PCS Development Corp., the group is expected to use its license to provide wireless communications that could link fax machines, pagers, portable computers and cellular phones. Don't expect to purchase a license; however, the development of such systems offers the greatest opportunities for small businesses.