Turn Wireless Network Know-How Into Sales
CS Communications, Inc. expects $9.6 million in sales this year from recommending, activating, and monitoring cellular phone accounts for customers with asset tracking applications.
Some VARs and integrators with mobile computing expertise that are looking to supplement the minimal margins from hardware and software sales have become authorized agents for wireless network carriers (e.g. T-Mobile, Cingular, Verizon). As such, these companies receive a commission from the carrier for every customer they sign up for a cell phone plan. Commissions vary between $50 and $100 per activated account depending on the carrier and the type of contract signed. Some carriers also pay a residual based on minutes used, although this is becoming less frequent.
CS Communications, Inc. (CSC) (Reston, VA) is an authorized agent for every wireless carrier in the country. But unlike typical VARs and integrators using wireless carrier commissions and residuals as supplemental revenue, CSC relies on carrier services as its primary source of income. To understand how the company earned $6 million in sales last year, though, you first need to understand how to electronically monitor people on parole.
Combine GPS And Wireless Technologies
Ninety percent of CSC's business is related to electronic parolee tracking systems. These systems are usually composed of a customized watch or an ankle bracelet (that are not easily removed) and a GPS (global positioning system) unit. The GPS unit is either built into the watch or bracelet or carried within 100 feet of the person's body-monitoring device.
Inside the GPS unit are the guts of a cell phone. The GPS unit is always on and records the position of the parolee. The unit's cell phone is programmed to periodically call a number at a parole officer's office and download all of the location data into a computer program. This data enables the parole officer to view where a parolee is located at any given time.
CSC's clients are the companies that design and sell these parolee-tracking systems. These customers are often tracking thousands of parolees for cities or municipalities. Each parolee means a cell phone account that needs to be set up and monitored. That's a lot of cell phone accounts.
It Pays To Understand Cellular Networks
"We solicit customers who are designing some type of asset tracking [e.g. parolees] solution that requires large amounts of wireless phone accounts," explained Craig Hansen, VP of operations at CSC. "We help them decide which wireless technology is best for their application. For example, we discuss the impact of and the coverage issues related to CDPD [cellular digital packet data], CDMA [code-division multiple access], GSM [global system for mobile communication], TDMA [time division multiple access], analog, and two-way paging networks. These types of discussions are usually ongoing and part of our consultative services."
CSC also educates its clients on the impact of wireless carriers' frequent network upgrades. These upgrades are normally done for the benefit of a carrier's voice customers. However, CSC's customers are using the networks to constantly transmit location and demographic data - not voice - for hundreds or thousands of parolees. "A lot of the high-tech digital networks fail when transmitting high volumes of data," Hansen stated. "In theory, the networks can handle this amount of data, but in reality the carriers end up discovering glitches they did not know existed. It is very frustrating for them, us, and our customers." CSC usually finds out about these types of network changes before its customers via its many contacts in the industry. (The company's two owners used to own a cellular phone retail store.)
Monitor Thousands Of Wireless Accounts
Any company with the potential to have hundreds or even thousands of wireless service accounts is concerned about minimizing airtime charges and activation fees. CSC is able to address these concerns for its customers. "We know the published, unpublished, and bulk rate plans and we negotiate for our customers," Hansen said. "We usually negotiate better airtime rates than most companies can - even better rates than the government - because we pool all of our customers together. Sometimes we save our customers additional money by sacrificing our commission to absorb the activation fees some carriers charge customers."
Once a customer's wireless accounts are set up, CSC's staff monitors each account's daily airtime activity. The staff makes sure all of a client's GPS units are checking in at appropriate times and intervals (which corresponds to airtime). An excess or small amount of minutes used may mean a problem with a particular GPS unit.
CSC can view the minutes (in real time) used by its customers because CSC is often a carrier's biggest data agent, providing the carrier with significant revenue.
Save Customers The Work Of Two Employees
Hansen said a lot of companies try to enter the parolee tracking business but fail when they realize the manpower and expertise needed to manage large data accounts. CSC is currently monitoring either assets or parolees for 16 customers. "Most of our customers understand the value of what we do because they have tried to do it on their own," commented Steve Dowling, VP of sales and marketing at CSC. "For many of our clients, we provide the same amount of work it would take two of their employees to accomplish. Also, if our customers weren't working with us and they were having problems with their wireless accounts, they would have to call the wireless carriers and speak with someone not accustomed to dealing with large data accounts."
Dowling added that CSC doesn't actively market for new customers; customers find CSC via its Web site. CSC also uses its Web site to provide leads to its customers. For instance, CSC recently provided two different leads that resulted in $150,000 of profits in a year for a customer. Dowling said probation superintendents and bail bondsmen are the type of people frequently contacting CSC looking for a parolee tracking solution.
One of CSC's newest customers is the primary reason Hansen expects his company to increase its sales revenue 60% this year. The company is a large defense contractor that wants to overlap real-time location data of every electronically monitored parolee with the data of where all crimes are reported. Any cross matches will be reported to law enforcement. The lead came from CSC's Web site, but ironically the customer is just outside of Washington, D.C., nearby CSC's headquarters.
The Future Potential Of Parolee/Asset Tracking
People on parole commit 80% of all felonies. Furthermore, it costs approximately $100 a day to house a prisoner as compared to $12 a day to track a parolee with electronic monitoring. Even if an elected official disagrees with tracking people electronically, the cost savings alone make it difficult to not vote for such a system. Therefore, there is a great potential for parolee tracking companies and consultants like CSC.
"Network coverage and profits for parolee/asset tracking solutions haven't been good until recent years," said Dowling. "Now, with the lower airtime costs and equipment choices, I think these types of applications are going to boom."