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May 23, 2016 Focus: Manufacturing

FCC repacking program creates growth opportunity for Meriden company

PHOTO | Contributed Meriden's Radio Frequency Systems tests one of its antennas in an anechoic chamber, which absorbs sound and electromagnetic waves.
This is the broadband antenna purchased by NBCUniversal in Dallas, Texas.
Nick Wymant, chief technology officer, Radio Frequency Systems (RFS)
PHOTO | Contributed RFS has expanded its manufacturing facility in Meriden, at 200 Pond View Drive, to accommodate increased production and testing of its products.
PHOTO | Contributed RFS has expanded its manufacturing facility (shown from above) in Meriden, at 200 Pond View Drive, to accommodate increased production and testing of its products.

Nick Wymant, chief technology officer of Meriden-based Radio Frequency Systems (RFS), is facing a rarity in business: a substantial growth opportunity fueled by a shrinking market.

In fact, his company has invested millions of dollars in recent years expanding its manufacturing capabilities to prepare for a production boon of broadcast equipment at a time when the government is trying to decrease the number of broadcast stations to clear room for more mobile broadband.

At the heart of the opportunity is a first-time effort, led by the Federal Communications Commission (FCC), to purchase spectrum — the range of frequencies used to transmit sound, data and video nationwide — from broadcasters to, in turn, auction it to wireless providers.

If the wireless market-share wars are being waged over coverage areas and data speed, spectrum is at the center of the battle. The auction is expected to place nearly 50 percent of the nation's spectrum up for grabs — a sale of capacity that will likely fetch billions from mobile providers like Verizon, AT&T and Sprint and could be worth hundreds of millions of dollars in equipment sales to RFS in the next few years.

Explosion in Users

“Spectrum is a finite resource,” Wymant said. “And more broadband capacity is needed so mobile providers can increase speeds and connectivity.” In the U.S. alone between 2010 and 2016, the number of mobile-phone users has increased from 62.2 million to 207.2 million, according to recent data from online statistics company Statista.

The Cellular Telecommunications Industry Association (CTIA) forecasts that by 2019 — when it's projected America will have nearly 237 million mobile-phone users — the nation will need to increase its existing supply of licensed broadband spectrum by 50 percent.

To achieve that goal, Wymant said, the FCC in March initiated a reverse auction. The voluntary, market-based auction — made available to the nation's nearly 1,800 broadcast stations — provided broadcasters with an opportunity to sell their spectrum and go off air, share a channel with another broadcaster, or move to a different frequency.

“We expect that [after auction] between 800 and 1,200 broadcasters will remain and need to be repacked [assigned a different frequency],” Wymant said. That figure represents a potential revenue windfall for RFS, according to Wymant, not only because broadcast stations will need new equipment to transmit different frequencies, but because the federal government — which is incentivizing remaining broadcasters to repack their channels — will provide $1.5 billion in funding to upgrade station infrastructures.

That means plenty of high-end equipment will require updates, said Dennis Heymans from Myat, a New Jersey-based distributor of RFS equipment. “Broadcasters will need new transmitters, filters, antennas,” Heymans said, noting the final price tag for upgrades could range from $500,000 to $1.5 million per station.

Wymant anticipates that his company — one of three major manufacturers nationwide that specialize in global wireless and broadcast infrastructure — could gain more than 300 new stations using RFS equipment, which could generate north of $250 million in sales over the next three years.

Early Success

RFS is seeing some early success as some stations — particularly in major metropolitan areas — have already begun preparing for the repack. The NBC Universal affiliate in Dallas-Fort Worth, for example, has replaced two existing antennas with an RFS-manufactured broadband antenna that can operate over an entire television frequency band.

That expanded flexibility — which enables an antenna to capture a range of potential frequencies — is a major advantage of the newer infrastructure technology coming on the market today, Wymant said. “Traditionally, a broadcast antenna could pick up one frequency,” Wymant explained, “but now we're developing technology that's more versatile so stations don't have to replace their infrastructure if there's a [channel frequency] change.”

“This technology will help future-proof our infrastructure, while enhancing the quality of our over-the-air coverage,” said Matt Varney, vice president of technology for NBC 5 and Telemundo 39 in Dallas-Fort Worth.

Wymant expects more broadcasters to follow suit. Once the spectrum is auctioned and stations are repacked, Wymant explained, the government is giving broadcasters 39 months to enhance their studios.

“There will be plenty of business,” he said.

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