Tantalus Emerges in AMR
In our third article exploring changes in customer business requirements for automatic meter reading (AMR) and their effect in driving market growth and competitor repositioning, we turn to a rising competitor: Tantalus (www.tantalus-systems.com).(1,2) Their story provides insights into the evolution of a technology driven company from services towards products, the building of a technological solution specifically adapted for a target market, and the requirement to adapt a business model that creates both market adoption and financial performance.
Tantalus was founded in 1989 but reengineered their business model to attack the Utilities market in 2000. In this market, Tantalus provides a two-way real-time data communications network for advanced AMR applications, expanding to meter reading, outage management, load management and distribution automation. In the 90’s, Tantalus was an RF engineering consulting firm that provided turnkey product development for other businesses in process control and industrial automation. Their direct customers used their designs in security and industrial control solutions for auto manufacturing, canned food production, correctional services, and pulp and paper manufacturing. These developmental years provided Tantalus access to understanding customer requirements for robustness and reliability in environments plagued by numerous signal interference sources. Like other companies covered in the Wiglaf Journal, Tantalus understood that the technology industry was changing in the late 90’s and early 00’s. In this time frame, the technology industry developed from the exploration stage towards the early maturity stage. As the industry developed, the demand for general services declined while the demand for market specific repeatable solutions increased. For two comparative examples of companies in different industries that have made this transition, consider SPL WorldGroup and Taratec. In 1999, SPL WorldGroup evolved from providing mission critical systems design and development for the general market towards providing customer information systems specific to the utilities market. In 2000, Taratec evolved from providing general IT services for the pharmaceutical industry to providing a specific solution for managing Part 11 regulation of the FDA.(3) In this time frame, Tantalus too understood that future market success and financial performance required a strategic change towards providing a specific market solution. By making this type of strategic change, Tantalus created the opportunity to achieve market success similar to that attained by SPL WorldGroup and Taratec. According to John Brett, VP Marketing and Operations at Tantalus, they investigated a number of market opportunities to refocus their energies from providing time with talent towards selling a product solution. By July of 2000, Tantalus had selected to serve the utilities industry with a wireless data communication system appropriate for managing millions of data transmissions over a large geographical area. Their choice reflected not only their expertise in RF engineering, but also the changing customer requirements of this industry.
Right-Sizing the Solution
Building upon the knowledge learned in their formative years, Tantalus created a wireless data communication solution specifically designed for the emerging utilities AMR market. Technologically, this included choices concerning the data packet size, geographic spread, and frequency band. In creating a business solution, Tantalus had to meet the business requirements of meter reading as well as the evolving requirements for the creation of a real-time utility. The Tantalus solution uses a preamble for data communication that only requires 20 milliseconds per transmission. While small preambles are not important for broadband communication or large dataset transmission, it does become important when the data packet being transmitted is small. When communicating small amounts of data with millions of meters and load points, the preamble can become a significant portion of the overall data packet transmission. Tantalus understood that this feature would be important in a solution for the utilities market and incorporated it. Two competing engineering challenges drove Tantalus towards the creation of a mixed frequency network. (1) The distance that data can be transmitted over an RF network decreases as the frequency increases and (2) the cost of the transmission equipment increases as the frequency decreases. These engineering challenges were often addressed in the past by using high frequency transmissions over short distances with numerous repeaters for transmitting data over long distances. However, as the distance increased, the costs of this solution became prohibitive. To reach both rural and congested geographies, Tantalus created a network that uses both the 220 MHz spectrum for long-distance communication and the 900 MHz spectrum for short-distance communication within the range of the long-distance communication tower. Data transmission at 220 MHz travels 4 X the distance, or 16 X the area, of standard RF fixed networks. This lowers the number of transmission towers required to serve rural areas, thus lowering the total cost of the solution thereby making the solution cost competitive for both rural electric coops and larger investor owned utilities. Background research by Tantalus also uncovered that the electric coops had collectively attained rights to use a band in the 220 MHz RF spectrum. Operating an AMR solution at 220 MHz would require no further licenses for spectrum by the utilities. Thus, Tantalus had uncovered a second factor that would drive their business decisions. The specific low RF frequency that Tantalus would incorporate within their fixed wireless network would be that which their customers already own. Meeting the technical requirements of utilities in fixed RF wireless networks is an only entry barrier for serving the market. Creating a market success requires delivering the right business solution. Tantalus is delivering to these business requirements as well. The Tantalus Utility Network addresses the standard AMR business requirements of gathering meter data throughout a utility’s service area as well as the evolving business requirements in managing a real-time distribution network. On-demand meter reading, outage and load management, and demand-response programs are all enabled through the Tantalus two-way data communication solution. Moreover, the Tantalus solution addresses the advanced business requirements of utilities at a competitive price.
A New Start in RF Networks for AMR
Tantalus isn’t alone in providing a two-way telemetry for the utilities AMR market, nor are they the first, but they differ from the others in their business model. One of the early suppliers of dedicated two-way fixed network solutions for AMR had a very different business model. They implemented their fixed network solution with investor’s money and charged utilities for the use of their network as a service. In the recent past, investors appear to have become unwilling to continue taking the financial risks associated with high-cost new installations and long payback periods. As such, this early supplier’s marketing penetration has slowed. Dedicated fixed networks are also not the only means to provide real-time two-way data communication with service points within a utilities service area. Another competitor uses a two-way paging network that is already present throughout the United States.(4) Their business model achieves recurring revenues for the use of the paging network. Because of the service fees, this solution is appropriate for specific deployments by utilities to large commercial and industrial customers, but is cost prohibitive for mass deployment to residential service points. Tantalus avoided the investment challenge of an early entry competitor. They also avoided the cost structure challenge of a pay-as-you-go system. Unlike either of these competing business models, the Tantalus solution is wholly owned by the utilities. There are no ongoing service charges for use. Dodging these two bullets enables Tantalus to be a serious contender in the AMR market.
With a strategic business focus to serve the utility AMR market with a productized solution, and with the right technological solution for today’s business requirements which also enables tomorrow’s business desires, and a business model that can perform financially, Tantalus’s remaining success factor is customers. Although Tantalus is a recent entry into the utilities AMR market, they have quickly gained market attention. In November 2002, the Central Texas Electric Coop selected Tantalus for a pilot deployment within their service area. Early reports indicate success with the Tantalus solution in cost effectively providing robust and reliable two-way telemetry with customer service points. In September 2003, Anaheim Public Utilities selected Tantalus for a residential AMR pilot test. To continue these early successes and to capture more customers, they improved their sales team with the hiring of Eric Murray as VP of Sales and Business Development. The technology solution, business decisions, and market accomplishments all indicate that Tantalus has truly emerged in the AMR market. ____________
- See AMR Market Penetration Forecast 2003, Wiglaf, http://www.wiglaf.biz/LOB/Research/2003AMR.htm
- See Changing Business Requirements Shifts Value Demand, Tim Smith, PhD, Wiglaf Journal, 29 October 2003 http://www.wiglafjournal.com/Articles/2003/2003-10-29-Changing-Requirements-Drive-Industry.htm
- See Growing in Downturns, Tim Smith, PhD, Wiglaf Journal, 26 June 2002 http://www.wiglafjournal.com/Articles/2002/2002-06-26%20Growing%20in%20Downturns%20-%20Taratec.htm
- Best Practices: SmartSynch’s Partnership, Tim Smith, PhD, Wiglaf Journal 19 March 2003 http://www.wiglafjournal.com/Articles/2003/2003-03-19%20BP-SmartSynchs%20Partnership.htm