Brian Pemberton is president and chief executive officer of ROHN Industries, Inc. Previously he served as president and CEO of American Mobile Satellite.
Prior to joining American Mobile Satellite Corporation, Pemberton was president and chief executive officer of LA Cellular Telephone Company, one of the world's largest cellular systems, where he led the company from pre-operational status to full-systems operation. Pemberton also played an integral role in the growth of AmeriSource, a subsidiary of United Telecommunications.
He built AmeriSource from start-up to a staff of more than 500; and successfully marketed computer hardware and software through 289 business centers-creating a firm foundation for what is now a major business to-business marketer of computer and telecommunications equipment.
Earlier, Pemberton served as president and chief operating officer for Monroe Systems for Business and as vice president and general manager for Mitel Corporation. Before that, he spent 17 years in various marketing and manufacturing positions with IBM.
Pemberton served on active duty as a lieutenant in the U.S. Marine Corps. He is a member of AC Nielsen Corporation board of directors, where he's a member of the audit and compensation committees, and also a member of the Coast Guard Foundation board of directors.
In addition, he served on the executive committee of the board of trustees at Trinity College.
Tell us about your background, schools attended, family, etc.
I joined ROHN Industries, Inc., in April 1997. I am currently on the board of directors for the Peoria Children's Home, and I also serve on the OSF Saint Francis Foundation.
I received my bachelors in finance from the University of Puget Sound, and my masters in business from Columbia University. My wife, Carol, and I have five children. In my spare time, I enjoy bicycling and climbing.
Tell us about ROHN Industries.
ROHN Industries, Inc. is a leading manufacturer and installer of infrastructure equipment essential to the wireless and fiber optic communications industries.
We believe the company holds the number-one market share in tower structures, as well as a leading market share in equipment enclosures. In addition to tower structures and equipment enclosures, the company offers design and construction services, steel and concrete poles, antennae mounts, cabinets, and other related products.
The company serves numerous market segments within the communications industry, including cellular, personal communications services, enhanced specialized mobile radio, paging, wireless cable, private microwave, fiber optic network, and radio and television broadcast.
ROHN does business around the world, with major projects in Mexico, South America, and the Middle and Far East. We produced more than $253 million in revenue in the year 2000, and are projected to sell more than $300 million in 2001.
Much of this success was attributable to the rapid pace of growth in both the wireless communications and fiber optic network industries. ROHN developed a strategic plan that identifies three primary business lines involved with telecommunications infrastructure equipment and services vital to the wireless communications and fiber optic network industries: tower structures, equipment enclosure, and construction services.
As new technologies emerge, the need for coverage and capacity will increase, positively impacting the market for tower products and equipment enclosures and, in turn, our construction services.
Currently, the number of U.S. consumers subscribing to wireless communications is only about 36 percent, but this figure is expected to double over the next three-to-five years.
With ROHN's new tapered steel pole facility and equipment enclosure facilities, along with our three existing domestic manufacturing plants, we are positioned to continue being a leader in the infrastructure equipment and services market.
International sales comprised approximately 15 percent of ROHN's revenues in 2000. Our products have been installed in 55 countries.
We believe the Central American and Latin American region, including Mexico, represents an attractive marketplace for all of our products.
Several of our largest customers are expanding their operations there, adding to our potential in this region. Currently, ROHN offers direct sales of our products and construction management services in Mexico.
Under the direction of a country general manager, we developed local manufacturing capabilities and shipped equipment enclosures from this facility to customers in Mexico.
In addition to our Mexico City operation, we maintain a joint marketing and construction services agreement with Radiotronica, S.A., a Spanish multinational telecommunications company with interests throughout Latin America.
ROHN owns and operates, or is constructing, six manufacturing facilities: Peoria-A 417,000-square-foot tower facility dedicated to manufacturing and galvanizing towers, and a 50,000-square-foot facility dedicated to manufacturing tapered steel poles. Bessemer, Ala.-A 250,000-square-foot facility believed to be one of the largest equipment enclosure plants in the world. Frankfort, Ind.-A 180,000-square-foot facility that manufacturers small towers, satellite dish mounts, antennae mounts and fencing. Casa Grande, Ariz.-A 242,000-square-foot facility dedicated to manufacturing equipment enclosures. Mexico-A 7,000-square-foot leased facility outside Mexico City, dedicated to the manufacture of equipment enclosures for the market.
ROHN's products are purchased by a variety of businesses. Our primary customers can be grouped into the following categories: Wireless service providers. Independent tower owners, from whom wireless service providers generally lease tower space. Owners of fiber optic networks. Builders of special communications networks, such as states and municipalities.
How has the focus of ROHN Industries changed since its beginning in 1948?
ROHN was founded to manufacture towers for home television reception. ROHN not only builds the tallest towers in the world (broadcast towers up to 2,000 feet), they also build the best ... a little history tells us so. When people think of communication towers, the ROHN name always comes to mind.
ROHN's beginning was the result of a demand crated by the growing television industry. Dwight Rohn, then manager of the Peoria Airport, had no idea the first tower he built for airport use would lead to the development of the world's largest tower manufacturer only 40 years later.
In 1971, this family-owned business became part of UNARCO Industries, Inc, a publicly traded company that reorganized in 1979 to form UNR Industries, Inc.
Beginning in 1993, UNR, which also owned several other steel-product businesses, began to concentrate on its ROHN division, which had evolved from manufacturing television towers to a broader collection of infrastructure products and services serving the telecommunications industry.
By the end of 1996, UNR had divested itself of all other divisions, leaving ROHN as its only remaining business.
In 1997, UNR changed its name to ROHN Industries, Inc. and continues its focus on the manufacture and installation of infrastructure equipment for the telecommunications and fiber optic network industries.
Other divisions owned by UNR at various times included Midwest Steel, Midwest CATV, Unarco Material Handling, Unarco Commercial Products, UNR Leavitt, UNR Home Products and Real Time Solutions, Inc.-all metal-fabricating related businesses.
How did you first become involved in this industry?
I got involved when I was selected as CEO for Los Angeles Cellular in 1987, which grew to be the largest cellular operating company in the world.
Subsequently, I became CEO of American Mobile Satellite Company, providing infrastructure products for satellite communications.
These changes were the result of my continued interest in riding the next wave of technology, directed at helping businesses become more productive through enhanced communications.
What role does ROHN play in the wireless communication industry?
ROHN towers and equipment enclosures are a critical part of the infrastructure required for wireless communication.
To transfer voice, data and video messages from one wireless device to another, wireless service providers need access to antennae mounted on towers and rooftops, each of which represents a type of cell site location.
Wireless service providers and independent tower owners also use equipment enclosures at the base of their towers, and on building rooftops, to house valuable electrical equipment. In addition, fiber optic networks need equipment enclosures to house and protect valuable electrical components and power systems that regenerate signals transmitted along their underground fiber optic networks.
In the fiber optic build-out currently under way, signal regeneration equipment is needed approximately every 60 miles.
Wireless service providers require new cell sites to service an ever-increasing customer base. Towers and equipment enclosures are required at many of these new cell sites.
What is the future of wireless communications?
More than one-third of the U.S. population currently uses cellular or personal communication service wireless phone service.
Businesses are also users of wireless communication services such as enhanced specialized mobile radio, wireless cable, private microwave, and radio and television broadcast communications. We believe the usage of wireless communications in the U.S. and worldwide will continue to grow.
Wireless service providers will continue to compete for wireless voice subscribers with a goal toward establishing a loyal customer base that will subscribe to wireless voice and data services-when data services become available in the future. Wireless data subscribers are forecast to grow at even higher rates than wireless voice services, starting in 2002.
As new technologies are introduced, the demand for greater bandwidth capacity is expected to increase, which should have a positive impact on the demand for tower build-outs.
Second generation technology such as personal communication services, which is now at the forefront of wireless communications, makes possible the transmission of voice, data and fax communications, plus caller ID, call waiting, voice mail, on-line news and other enhancements from a single handset. Because personal communication service technology operates at a higher frequency than does older wireless services, it can operate at lower power levels and uses its capacity more efficiently. However, personal communication service cells are smaller, so more cell sites are needed to cover a given area.
Third generation are the next generation of wireless service currently under development. These services can be broadly characterized as high-speed, high-bandwidth services that facilitate a variety of uses, including high-speed Internet, video conferencing, digital television and interactive games.
These services will require new spectrum allocation by the FCC, and signal transmission will be at higher frequencies. Given that higher-frequency technologies have a lower coverage range, the development of third generation services will also require more cell sites. Industry experts forecast that the number of new cell sites required to deliver combined second and third generation services will grow at an approximate compounded annual growth rate of 31 percent through the year 2008.
The number of international consumers subscribing to wireless services utilizing wireless phones has increased dramatically from 1998 to 2000.
Furthermore, industry analysts project that this growth is expected to continue. This growth in global wireless subscribers is expected to spill over into the global tower/pole market.
Global cell sites were estimated to grow from approximately 4.3 million in 1998 to approximately 1.6 billion in 2000. And the number of cell sites located throughout Latin America is anticipated to grow dramatically over the next several years.
We believe Mexico represents the largest growth area within the Latin America market.
Have changes in the wireless communications industry had any impact on ROHN's customer base?
Up until three to four years ago there was no sharing-cellular companies considered their tower placement one of their competitive advantages. Today, however, cellular companies share space on community towers. This sharing provides for reduced expenses, and the resulting consolidation decreases the number of towers on the community skyline.
In the mid 1990s, when U.S. wireless subscriber penetration was much lower than current levels, wireless service providers focused on building and owning their own wireless networks and attracting subscribers for basic service.
In the late 1990s, wireless service providers found that owning a network of towers and providing basic, regional services-their focus until that time-was no longer enough to differentiate them from their competition. Instead, go to market with new wireless services and national coverage became their key success factors.
Independent tower owners became a primary customer of ROHN in the late 1990s. Independent tower owners bought towers from wireless service providers in 1998 and 1999, and the tower industry experienced a slow-down.
For the first time in the wireless industry's history, wireless service providers gained access to towers without having to build them, via independent tower owners who leased space to them on existing towers.
Also, co-locating on existing towers by wireless service providers eased the burden of working with local zoning officials, who must approve any new tower erection.
Wireless service providers, previously ROHN's primary customer base, now serve their new tower needs largely through lease contracts with independent tower owners. As such, independent tower owners have become a new key customer base for ROHN in the last few years.
There has been a controversy over erection of cellular towers-location, height, etc. What factors contribute to the decision as to where and how many towers must be built?
There are two factors that directly contribute to the decision as to where and how new towers must be built, both of which are required to provide better customer service.
One is the need to increase capacity, which allows more wireless communications traffic. The other is to improve coverage to ensure there are no dead zones or interruptions of service.
New tower construction must first meet FCC and FAA approval. Then the tower site must meet local zoning authority approval.
FCC deregulation has had a positive outcome for businesses and individuals. At first, deregulation allowed only two telecommunication carriers to coexist in any one community; today seven to eight such carriers could share community service.
As a result, wireless toll charges have dropped dramatically-from as high as 50 cents per minute to 5 cents per minute. Costs will soon be low enough that we will become indifferent as to whether we should use a land line or cell phone. Don't expect any further deregulation, rather continued consolidation.
What is the demand for amateur radios today? Operationally, how it is different from cellular phones? Is that industry being replaced by cellular services?
Amateur radios and cellular phones both use radio frequencies; however, that's the only similarity. Amateur radios are useful in times of emergency, but have limited commercial use. Cellular phones are fast becoming the standard for personal and business communications.
How are you and/or ROHN Industries involved in the community?
ROHN participates in the annual United Way campaign and is a corporate sponsor for Relay for Life and Race for the Cure. We also donate to various organizations such as Easter Seals, Peoria Children's Home, Toys for Tots and Steamboat Days. Many of our employees are also active in local community organizations. IBI
An Interview with Brian Pemberton
Brian Pemberton is president and chief executive officer of ROHN Industries, Inc. Previously he served as president and CEO of American Mobile Satellite.