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SkyLynx Communications, Inc. (SKYC) |
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CEOCFO
Interview Index |
This is a printer friendly page! SkyLynx
Communications is offering customers a reliable vehicle tracking and data communications
service at a lower cost than cellular or satellite based systems Company Profile: Mr. Brown: “Our vision was to find a new application for wireless data communications. It seems like the industry is going into higher frequencies that can carry a great amount of data for a short distance. What we envisioned was the ability to carry a small amount of data long distances. We have looked into acquiring a couple of companies that were in the AVL (Automated Vehicle Location) business, realizing there really wasn’t a good and true reliable network for locating vehicles or people. They all seem to be population centric, in that many of them are cellular based and a cell base has a range of 3-5 miles, and the more people that use it, that distance shrinks. They carry a lot of people but the distance is short and once you are out of the city, or even inside the city, it isn’t reliable; you get cut off or the service isn’t available. We decided to come up with tracking capability that will allow you to track your assets or employees and have relatively few dead spots. Today, the technology is probably 30 days from being deployed; we tested it on several times on an alpha basis. We are happy with what we are doing and we are just about at the point where we are going to start deploying and start marketing what we are doing.” CEOCFOinterviews: Who is the target for this and how are you going to market? Mr. Brown: “What we
are creating is a utility; we can refer to our business as a utility, very much like the
electric company. We don’t care if you use it to charge batteries or to light bulbs.
We will be creating a utility whereby it can be put in tower space, buildings or whatever.
The frequencies that we use are very inexpensive to get; they have been mostly vacated. We
have a normal terrestrial range of seventy miles, which means that we can put a tower
essentially 140 miles from one another because they get a 70-mile range. Once the vehicle
passes from one tower and picks up a signal strength that is stronger from another one,
that is part of the network and it goes on and on from there. We are designing for the
most difficult situation and that is the ambulance business. We have seen a system like
this work from a competitor in Seattle; it is a reliable system that many large ambulance
companies are using. Imagine a computer screen that shows the grid of a city including the
streets, rivers, etc. You have a dispatcher that is riddled with incoming calls from 911
in the city, and they need a certain response from an address and on the screen, you have
about six different areas, which shaded and within the area. There might be ambulances
visible, which all have an X on them. They are all identified by a color so you can see
the status of that particular vehicle whether it is idol, on a run, or parked at a
hospital, or being refueled; you can see exactly to the corner where your fleet is and
where you need to move them. If you have a zone that has six ambulances and you have two
of them on calls, you will see clearly that you need to move them around. CEOCFOinterviews: In what region are you looking to deploy your system? Mr. Brown: “Our
original plan was deployment in the western time zone; do one region at a time, however we
have made some inroads with some ambulance companies and the first contract we picked up
was in Denver, and that isn’t exactly the west coast. It looks like we have a
contract coming in from Orlando. We are offering the strategy where we are going to larger
cities where we can have at least forty radios and that will be profitable.” CEOCFOinterviews: Which will come first, the contract or the towers in a city? Mr. Brown: “It is like the old model of the fax; one fax machine is worthless because you can only send and receive, but two gives you a value. The more fax machines and computers out there, the more valuable each one becomes the more it is used. The same thing with a system like ours; we can put two towers, which we are in the process of installing in the metropolitan area; we can cover 120 or 130 miles up and down the front range and 60 or 70 miles east of Denver and 20 or 25 miles inside the mountains. It cost us very little to put those two towers up. We can take a space like that, which would cost us $30,000.00 dollars to set up that type of coverage. If you tried to do it with cellular, you are probably looking at 45 or 50 million dollars just to upgrade from a cellular system to a 3-G system that is being installed now, and that is already with the infrastructure in place. Ours is very inexpensive.” CEOCFOinterviews: Do your towers need to be inside of the city? Mr. Brown: “With your cellular system, if you have a range of three to five miles, you have to be relatively close to your optimal point. In other words, there may be one building or two or three blocks but because of the way it is designed, you have to be in a particular place, which means you may be downtown where the spaces are very expensive or the towers are very expensive. If we have a seventy-mile range, we could be outside of the city within fifteen miles.” CEOCFOinterviews: Is there proprietary technology involved here? Mr. Brown: “Yes, nobody can duplicate what we are doing. They can create their own system but ours has many applications that aren’t used and there is a lot of design work, which has taken some money to develop.” CEOCFOinterviews: Are the cities and ambulance companies looking for something better; how will you get through to the people you need to? Mr. Brown: “We have heard from manufacturers of over-the-road trucks, security services and burglar alarm services because we can use this radio in a home and not have to worry about telephone calls because if I were a crook, the first thing I would do is cut a telephone line. There are many states now, that won’t respond unless there is a voice on the other end of a security call. We know that right now, the biggest use of vehicle tracking has been the cellular. We know that the cellular business is changing to 3-G, which means that is new equipment; you move from an analogue cell phone to a digital cell phone. We know that there are many people out there that are very dissatisfied with this service but I don’t believe they know that there is a system like ours that is quite as ubiquitous as it is. We have our work cut out for us. The primary way to sell this, in my opinion, would be the people who would already install and maintain radio systems anyway, such as a heating and cooling company that is dispatched, taxi companies, police companies, and truckers all have some sort of a communication device, some sort of antenna. I don’t think they take care of that themselves, they usually go to a private radio shop and there are thousands of them around. I think the best source of our customers would be putting together a dealer relationship with these people selling and maintaining these other types of radios.” CEOCFOinterviews: So, are you doing it? Mr. Brown: “We have identified quite a few, we are not actively doing it until we can point to a radio that is finished. We are starting to compile lists and speak to people who want to distribute for us.” CEOCFOinterviews: Is word-of-mouth very big in this area? Mr. Brown: “Yes. The best part is you can go into a city like Denver, and with 40 radios, which is essentially the size of a large heating and cooling company, that would make us profitable and on the whole front range of Denver you could imagine what a few police departments or ambulance companies would do or local trucking companies. It doesn’t take much, but what I have found ironically is there is a tremendous amount of stealing. It is amazing at three o’clock in the afternoon to go behind a shopping center and see trucks. The phone companies and utility companies are there; these guys are sitting around smoking cigarettes and laughing; it is amazing that you rely on these employees that have a forty thousand dollar truck with tools in it or whatever you are delivering or maintaining and these people are just stealing time from their employers and it is every where. To me, that is the biggest advantage of a system like ours. There are other advantages, such as being able to track a trucker so you can know exactly where his load is, but at the same time, you can verify how much sleep he has been getting in case there is an accident. There are federal laws that dictate how much you can drive over a certain time.” CEOCFOinterviews: What are you going to provide to the customer, are you providing hardware and software in addition to the network? Mr. Brown: “We are
creating our own box that has many different types of capabilities and it will be
installed by technicians. We will give customers the software to monitor exactly where
vehicles that they are tracking are at anytime of the day. These systems are programmed
remotely in that if we do a system upgrade, we don’t have to go out and find 50
thousand radios across the country; they will be automatically updated as they approach
the signal or when we want them to be upgraded at a push of the button, so all upgrades
are free. If we decided to use a different frequency set, we could. CEOCFOinterviews: Is this the biggest part of your business? Mr. Brown: “This is my favorite part of the business. We have all heard the phrase NAFTA (North American Free Trade Agreement) and recently Costa Rica was one of the last Central American companies that had finally completed negotiations with the United States and we are waiting for their congress to approve it. It is clear to my organization that this whole hemisphere will become one very large free trading block, which I feel will mean there will be a lot of trucking and a lot of shipping and a new dynamic to trade in this hemisphere. I want to put together a system to track the ships and trucks or trains, efficiently. The only other system that I am aware of that would work is the satellite based system and unfortunately because of the shadow angles in mountainous regions such as Latin and South America, it isn’t very good. Our system based on the frequency we have, hugs the earth, penetrates buildings and from all the research we have been able to come up with, we know our system will work. We don’t know of any other system that is as adept to those conditions.” CEOCFOinterviews: Why did you choose Costa Rica? Mr. Brown: “We got lucky! We had a fellow that came on board that had done a lot of work with Costa Rica. This is a bit different model, which is to build the best AVL (Automated Vehicle Location) and telemetric design radio that can be done and sell it around the world. We are going to concentrate on the western hemisphere. On the other hand, we had an opportunity to go into Costa Rica with a couple of wonderful partners, one of which has a huge retail establishment to government and other institutions, and they have been on the ground for a long time with good relationships. Another partner has most of the towers in the country that we need, and based on those relationships, we are now installing in Costa Rica, a wireless broadband service, that is a different model and we would never try to do that here in the Untied States. I have done that a few times and the U.S. has plenty of broadband but almost every other place has a shortage of broadband, and Mexico has 200 broadband customers; there are more than that in Sarasota Florida. There is a huge problem getting telephones and we can provide voice over Ethernet as opposed to voice over Internet. We are providing it. Costa Rica just so happens to have a very stable government, the style of living is good and people can afford computers and telephones, and there aren’t a lot of computers and telephones and computers there so this is a ideal for us.” CEOCFOinterviews: If the AVL (Automated Vehicle Location) business starts to ramp up, how are you ready for that? Mr. Brown: “We are ready in that the type of the equipment that we are designing is equipment that is not calling for antiquated parts or parts that are yet to be developed. We are taking new technology and pieces of hardware and putting software to it that makes it very flexible. There are many manufacturers of radios in our particular frequency set, which means that our design, and the way it is put together, won’t limit the amount of manufacturers.” CEOCFOinterviews: What are your biggest challenges going forward and how are you ready? Mr. Brown: “If you
asked anybody that commands a fleet if they would like to have a service like this, I don’t
think they would say no unless the fleet was too small. I think that there is an awareness
that you need to know exactly what is happening now days. We have heard from school
systems that want to be able to track a bus. I think that we have applications for
homeland security and with first response for the fire department and the police; those
are the toughest guys to please and that is where we are directing our energies because
their requirements are far above anybody else. Police and fire departments talk a lot and
that would open up the doors to start going to some of these seminars and conferences
because this type of stuff is talked about a lot and I think it is a good way to build it
out and to market it.” Mr. Brown: “I spend a lot of time talking to our offices in Costa Rica and our partners there, our engineering team and our marketing team in Seattle. I spend a lot of time talking to brokerage firms to help us raise money because we have come so far that we are now starting to buy some expensive testing equipment. We lay money out for tower releases and flying to meet investors, customers, and distributors. I spend a lot of time doing those things.” CEOCFOinterviews: In closing, why should potential investors be interested now, and what should they know that they might not realize when they first look at the company? Mr. Brown: “You
have to look at the people we have; the engineers that we put together, have created
technology of which patents have been filed. We put together a team of guys that have
spent millions of dollars and many years designing this type of system. They didn’t
go as far as we are going and didn’t create quite as good a system, but they know how
to do it. We have been able to save millions of dollars and years of time. I believe we
have the energy and the connections to do well in the state. We already have the
relationships and we are starting to deploy; we have been doing testing for several
governmental agencies in Costa Rica for four weeks. There is no down time and the speed is
fast. We know we have something that people want on a broadband basis and we are now
talking with large fleets in the Latin American communities that have fleets of thousands
of busses and trucks. We don’t want to over commit until we are finished and shake
out any bugs that we have. I am comfortable it is happening quickly; I think it is a new
type of industry and that it is under-exposed. The problem is that our industry is
fragmented and if you look around there is probably no less than 150 manufacturers of
radios that communicate in this frequency set. There are scores of companies that put
together tracking capabilities but there are only a couple with networks where you can go
from one location to another county to another state.” |
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