Navy awards $100M wireless phone contract
- By Bob Brewin
- Nov 07, 2004
Last week, Navy officials awarded one of the biggest wireless phone contracts in the history of the industry. With a potential total value of $100 million, the five-year deal secures nationwide service from three domestic carriers. Navy officials hinted that even bigger deals could come.
Bill Marsh, chief product officer at Traq-wireless Inc., which helps companies manage their wireless phone service and costs, said the Navy contract with Cingular Wireless, Nextel Communications and Verizon Wireless represents the third biggest wireless phone buy ever.
"This is a huge deal," said Tim Kridel, a senior analyst at Mobile Competency Inc.
Marsh estimated that the contract would give the Navy 300 million wireless phone minutes a year, or 1.5 billion minutes during the life of the contract. The cost per user would be between $60 and $80 per month for nationwide service.
Kridel estimated that the contract could give the Navy more than 2 billion minutes during the five years.
With an annual value of $20 million, the Navy's wireless phone contract is topped only by two other deals, Marsh said. One is a contract of about $35 million a year at a quasi-governmental agency he declined to identify.
The other is a commercial contract awarded by a company whose wireless phone bill runs between $20 million and $30 million a year.
The Navy contract was handled by the Naval Supply Systems Command's Fleet and Industrial Supply Center (FISC) San Diego for Commander, Navy Installations Command.
It will provide service to about 10,000 users, said Nannette Davis, a spokeswoman for FISC San Diego. Davis said the contract will allow Navy officials to use pooling arrangements to get the most for the service's wireless phone dollar.
Pooling plans allow officials at government agencies and corporations to control costs by moving unused minutes from one wireless phone account into a pool of
minutes that can be tapped by other users who go over their allotted monthly time limit.
Marsh said pooling plans are the most cost-effective way for officials at large organizations to manage wireless phone bills.
Although the Navy contract is one of the largest phone service deals in history, it still leaves a big group of Navy wireless phone users unserved by an umbrella contract, said Rear Adm. James Godwin, director of the Navy Marine Corps Intranet.
Godwin estimated that as many as 100,000 uniformed and civilian personnel may need wireless phone service. He said NMCI officials are working with the system's contractor, EDS, to add wireless phone service to the contract.
FISC San Diego officials estimated the number of wireless phone users under the NMCI contract at 10,000.
Officials at NMCI and Commander, Naval Installations have cooperated on a parallel approach to developing Navywide wireless phone contracts, Godwin said. The FISC San Diego award came first because of the urgency of the installations' requirements, he said.
Chris Hill, vice president of the government solutions group at Cingular Wireless, said the volume of users who could be accommodated on the FISC San Diego wireless phone contract could be between 15,000 and 20,000.
Each company will compete for orders. The indefinite-delivery,
indefinite-quantity contract is primarily for service, Hill said. But Cingular also will provide phones, including tri-band and quad-band handsets capable of operating on the digital Global System for Mobile Communications standard.
Cingular uses the GSM standard in the United States and internationally. Hill said he expected a large number of Navy users to choose the international phone.
John Johnson, a spokesman for Verizon Wireless, said his company will offer Navy users an international phone that supports two standards. One is the digital cellular Code Division Multiple Access standard, for Verizon's domestic network.
The other is the GSM standard for overseas networks.
In addition, Verizon will offer Navy users a secure wireless phone from Qualcomm Inc. that has been certified under the National Security Agency's Type 1 wireless standard.
Nextel officials were unable to provide details on their service or handsets in time for publication.
Can you hear me now?
Among the highlights of the Navy's $100 million, five-year contract for nationwide wireless phone service:
The deal is the third largest wireless phone contract in the history of the industry.
The contract would cover 10,000 to 20,000 users.
Experts estimate that the contract will provide the Navy with 300 million wireless phone minutes a year, or 1.5 billion minutes during the life of the contract.
The average monthly wireless phone bill is estimated at $60 to $80.
In addition to this contract, Navy officials will also provide wireless service to another 90,000 users under the Navy Marine Corps Intranet contract.