THE VANCOUVER WIRELESS TELECOMMUNICATION INDUSTRY: A CLUSTER

ANALYSIS

Mourad Chergui Diplome d'Ingknieur d '~ t a t , Universitk Hassan 11, 1992

PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION EMBA Program

in the

FACULTY OF BUSINESS ADMINISTRATION

O Mourad Chergui 2004 SIMON FRASER UNIVERSITY

July 2004

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or other means, without permission of the author

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Title of Project:

Mourad Chergui

Master of Business Administration

The Vancouver wireless telecommunication industry:

a .cluster analysis

Supervisory Committee:

r Jill ~hebherd $i sistant Professor Faculty of Business Administration

Dr. Neil Abrarnson Associate Professor Faculty of Business Administration

Date Approved:

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Title of Thesis/Project/Extended Essay:

The Vancouver wireless telecommunication industry: a cluster analysis

Author:

Mourad Chergui

August 2nd, 2004

ABSTRACT

The global wireless telecommunication is one of the world's fastest growing industries.

Future growth will be fuelled by both enterprise and mobile workforce applications. The

changing industry landscape provides opportunities for new firms and nations to benefit

substantially from its growth and dynamism. In this context, this project's objective is to study

the Vancouver (Canada) wireless telecommunication industry cluster from different angles while

focusing on micro-level firm linkages and company strategies to analyze the development of the

cluster and its association with supporting infrastructure.

The analysis of four metropolitan wireless industry clusters in the Bay Area (California,

US), Helsinki (Finland), Calgary and Ottawa (Canada), reveals a wide variety in structure, origin,

internal dynamics and level of maturity. This variety suggests that there may be no universal

formula or strategy to create and make a cluster successful. The evidence examined in this

project not only confirms the presence of a wireless cluster in Vancouver, but shows that it is

fully engaged in the growth phase. The cluster is home-grown and its history goes back three

decades. It has survived losing its three anchor companies and weathered through the

"technology bubble burst".

The Vancouver region's most important benefits with regards to the wireless industry lay

in factor conditions. However, its differentiating characteristics are derived from the presence of

related industries. The nature of demand, and the internal structure and dynamics pose challenges

to this cluster. A survey conducted within this project shows that Vancouver companies

participate in disjointed portions of the global wireless industry value chains and that the cluster

does not have a strong core specialization or anchor companies. However, it has wireless activity

concentrations that are located close to the periphery of the cluster, particularity near the

intersections with the new media, enterprise software, and device and equipment manufacturing

local clusters. The inter-firm exchange and collaboration within the cluster are very limited and

remain to be developed.

The strategies and actions that aim at enhancing the Vancouver wireless firms'

competitive advantages focus on improving their internal structures and management processes,

and nurturing collaboration, and shared values and goals.

ABBREVIATIONS

ICT

LAN

NAICS

PAN

PCS

PDA

RFID

SAT

Vancouver

WAN

WLAN

WinBC

Information Telecommunication Technology

Local Area Network

North American Industry Classification Standard

Personal Area Network

Personal Communication System

Personal Digital Assistant

Radio Frequency IDentification

Satellite Telecommunication

Greater Vancouver Regional District

Wide Area Network

Wireless Local Area Network

Wireless Innovation Network of British Columbia

TABLE OF CONTENTS

.. Approval ....................................................................................................................................... 11

... Abstract ....................................................................................................................................... 111

Abbreviations .............................................................................................................................. iv

Table of Contents ......................................................................................................................... v . . List of Tables .............................................................................................................................. vn ... List of Figures ........................................................................................................................... VIII

....................................................................................................................... 1 Introduction 1 ...................................................................................... 1.1 Project Context and Objectives 1

............................................ 1.2 Cluster Approach Theory Backgrounds and Applications 2 1.2.1 Cluster Approach Overview ................................................................................ 2

................................................ 1.2.1.1 Nations Competitive Advantage and Clusters 2 1.2.1.2 Cluster Diamond ............................................................................................. 3

........................................................................ 1.2.1.3 Cluster Approach Assessment 4 ...................... 1.2.2 Cluster Approach Implications on Company Strategic Decisions 6

............................................................................... 1.2.2.1 Clusters and Competition 6 .................................................................. 1.2.2.2 Cluster Advantages to Companies 6

...................................... 1.2.2.3 Cluster Approach as a Tool for Strategic Decisions 7 1.3 Project Methodology ...................................................................................................... 9

.................................................................................................... 1.4 Project Organization 10

2 Wireless Telecommunication Industry ......................................................................... 11 ....................................................................................................... 2.1 Industry Definition 11

2.2 Industry Segmentation .................................................................................................. 12 2.3 Value Chain .................................................................................................................. 14

.................................................. 2.4 Industry Size. Growth. Prospects and Attractiveness 17 ............................................................................. 2.4.1 Telecommunication Services 17

2.4.2 Cellular Wireless Services ................................................................................. 19 .............................................................................. 2.4.3 Cellular Wireless Terminals 20

......................................................................................... 2.4.4 Public Wireless LAN 20 ...... 2.4.5 Wireless Telecommunication Equipment Concentration and Localization 22

.................................................................................. 2.4.6 Trends and Opportunities 25

.............................................................. 3 Wireless Telecomunication Clusters Analysis 27 3.1 United States ................................................................................................................ 27

........................................................................................................... 3.1.1 California 28 3.1.2 Bay Area Wireless Cluster ................................................................................ 28

3.2 Finland ......................................................................................................................... 30 .................................................................................. 3.2.1 Helsinki Wireless Cluster 31

3.3 Canada .......................................................................................................................... 33 3.3.1 Ottawa ................................................................................................................ 35 3.3.2 Calgary ............................................................................................................. 37

4 Vancouver Wireless Telecommunication Cluster ........................................................ 40

................................................................. 4.1 Vancouver Technology Industry Overview 40 4.2 Vancouver Wireless Cluster Anatomy ......................................................................... 41

............................................................................................................... 4.2.1 Origins 41 .................................................................. 4.2.2 Cluster Economical Characteristics 4 1

............................................................................. 4.2.3 Wireless Cluster Participants 42 ....................................................................................................... 4.3 Company Survey 4 4

.......................................................................................... 4.3.1 Survey Methodology 44 .................................................................... 4.3.2 Survey Results and Commentaries 45

4.3.3 Wireless Cluster Mapping - Value Chains and Network .................................. 52 4.4 Cluster Diamond Analysis ........................................................................................... 54

4.4.1 Factor Conditions .............................................................................................. 56 4.4.2 Related and Supporting Industries ..................................................................... 57

........................................................................................... 4.4.3 Demand Conditions 59 ................................................................. 4.4.4 Firm strategy, Structure and Rivalry 60

4.4.5 Chance Events ................................................................................................... 60 ....................................................................................................... 4.4.6 Government 61

4.5 Comparison with other Wireless Clusters .................................................................... 62 ................................................................. 4.6 Analysis of the Strategies of Sample Firms 63

............................................................................................. 4.6.1 Sierra Wireless Inc 65 ........................................................................ 4.6.2 Spectrum Signal Processing Inc 66

4.6.3 Epic Data Inc ..................................................................................................... 67 4.6.4 Firm Strategies ................................................................................................... 68

4.7 Vancouver Wireless Telecommunication Cluster Characteristics Summary .............. 69

5 Implications and Recommendations ............................................................................. 71 .............................................................................................. 5.1 Firm Strategic Decisions 71

5.2 Cluster Management .................................................................................................... 73 5.3 Public Policy ................................................................................................................ 74 5.4 Further Research .......................................................................................................... 75

References ................................................................................................................................... 76

Appendix 1 . Key Global Indicators for the World Telecommunication Service Sector ... 81

Appendix 2 . Vancouver Wireless Cluster Companies and Survey Results ........................ 82

LIST OF TABLES

Table 1 . Cluster's Dimensions and Firm Strategy .......................................................................... 9

Table 2 . World Cellular Phone Subscribers ................................................................................. 19

Table 3 - United States, Finland and Canada Mobile Phone Subscribers ..................................... 20

Table 4 - Worldwide Number of Public WLAN 'Hot' Spot Locations by Type .......................... 21

........................... Table 5 - Worldwide Sales Predictions for Wireless Infrastructure Equipment 23

Table 6 - Worldwide Sales of Mobile Terminals to End Users (2002-2003) ................................ 24

...... Table 7 - Top 5 Worldwide Wireless LAN Equipment Vendors by Unit Shipments (2002) 25

Table 8 - ICT Clusters in Canada ................................................................................................. 34

............................................ Table 9 - Vancouver Narrow Wireless Cluster Company Examples 43

Table 10 - Wireless Clusters Comparison Summary ..................................................................... 64

vii

LIST OF FIGURES

Figure 1 . Porter Diamond: the Determinant of National Advantage .............................................. 4

Figure 2 . Wireless Telecommunication Industry Tri-dimensional Segmentation ........................ 14

Figure 3 . Wireless Industry Value Chain . Technological Dependencies ................................... 15

Figure 4 . Wireless Industry Value Network ................................................................................. 16

Figure 5 . Wireless Industry Value Chains .................................................................................... 16

Figure 6 . Worldwide Growth of ICT Users ................................................................................. 17

Figure 7 . Worldwide Telecommunication Services Revenue Breakdown (1 992.2002) .............. 18

Figure 8 . Wireless Handsets Sale to End Users by Region .......................................................... 21

Figure 9 . Forecast for the Global WLAN Market Growth Segmented by Product Category ...... 22

........................................................... Figure 10 . Bay Area Wireless Cluster Diamond Analysis 30

Figure 1 1 . Helsinki Wireless Cluster Diamond Analysis ............................................................. 33

Figure 12 . Ottawa Wireless Cluster Diamond Analysis ............................................................... 37

Figure 13 . Calgary Wireless Cluster Diamond Analysis .............................................................. 39

Figure 14 . Vancouver Wireless Company Distribution by Ownership, Origin and Size ............. 46

Figure 15 . Vancouver Wireless Company Concentration ............................................................ 48

Figure 16 . Vancouver Wireless Activity Concentration .............................................................. 50

Figure 17 . Vancouver Wireless Company Distributions ............................................................ 51

Figure 18 . Vancouver Companies Positioning on the Wireless Industry Value Chains .............. 53

Figure 19 . Vancouver Wireless Cluster Value Network .............................................................. 54

Figure 20 . Vancouver Wireless Industry Cluster Diamond Analysis Summary .......................... 55

... Vll l

INTRODUCTION

The need for communication, mobility and overcoming the challenges of distance has

stimulated technological advancement in the field of wireless communications. Today, wireless

devices and solutions have infiltrated and transformed many aspects of corporate, community

and individual activities across the globe. The wireless telecommunication industry in particular

has enjoyed extraordinary growth during the last decade. In Vancouver, an expanding grouping

of more than 150 companies is involved in various activities related to this expanding industry.

This project intends to study the Vancouver wireless telecommunication industry cluster

characteristics, evolutions and prospects.

This first chapter further defines the context of this project. It also introduces the

industry clusters approach and provides a literature review about the topic. Then it describes the

project's overall methodology and organization.

1.1 Project Context and Objectives

The Vancouver area, in the context of this project, is synonymous to the metropolitan

region know as the 'Greater Vancouver Regional District' in the province of British Columbia,

Canada. This metropolitan area expands over 2 1 municipalities and includes two million

residents (GVRD, 2003).

This project approaches the topic of the Vancouver wireless telecommunication industry

cluster from different angles. It focuses on micro-level firm linkages and company strategies to

analyze the development of the cluster and its association with supporting infrastructure. First,

the project introduces and summarizes the theories and approaches related to industry cluster

economic development. In particular, the hypothesis regarding strategies that firms adopt within

their clusters is synthesized through a review of literature on the subject. Then, the project

defines and examines the external global environment where the cluster participates, especially

the size and attractiveness of the industry. These two aspects have important implications on new

business formation and cluster growth. Also, the project aspires to provide better understanding

of the cluster evolution, internal structure and dynamics. In addition, the Vancouver wireless

cluster is compared to a selection of similar groupings in other geographical locations. This

examination reveals aspects of its strengths and weaknesses. Furthermore, the project uncovers

some of the challenges and issues facing the cluster. Then, selected strategies and actions are

proposed to enable individual companies in the cluster, or dependant on it, to gain advantages

from the local environment in order to improve their competitiveness and sustain their growth.

Finally, recommendations are formulated regarding cluster management as well as public policy

approaches to enable companies to better compete globally and sustain their development.

1.2 Cluster Approach Theory Backgrounds and Applications

1.2.1 Cluster Approach Overview

1.2.1.1 Nations Competitive Advantage and Clusters

In the mid 1980s, Michael Porter introduced the concept of "competitive advantage"

(Porter, 1998c) that brought company strategy to the forefi-ont attention of both scholars and

corporate executives. This concept dynamically links a firm strategy to the industry it chooses to

participate in. In 1985, Porter extended the use of the "competitive advantage" concept from the

micro-level of a firm to the macro-level of a region or a nation to compete globally (Porter,

1998b). The central piece of "competitive advantage of a nation" is the notion of industrial

"cluster".

"A cluster is a geographically proximate group of interconnected companies and

associated institutions in a particular field, linked by commonalities and complementarities"

(Porter, 2000, p. 17). The cluster includes linked industries and organisations, including

suppliers, channels and customers, supporting industries and public institutions such as

government agencies, universities and trade associations.

On the practical side, the Strategy and Competitiveness Cluster Mapping Project led by

Michael Porter makes two important distinctions (Institute for Strategy and Competitiveness,

2003) that are very relevant to the discussion and analysis about clusters:

o Traded vs. local clusters: a "local cluster" is a grouping of "local industries" that are

usually present in most geographic areas and primarily serve the local market;

conversely a "traded cluster" is made of "traded industries" that are typically

concentrated in specific geographic areas and sell to markets beyond their local

region. In the rest of this document the term "cluster" is synonymous to "traded

cluster".

o Narrow vs. broad clusters: related specifically to traded clusters, a "narrow cluster"

defines industries that are unique only to the cluster and can be considered as its

core; while a "broad cluster" refers to industries that are not unique to the cluster.

They may fall into and overlap with other traded clusters and are better thought of as

supporting or peripheral industries.

On the surface, the cluster approach and the role of nations or regions seem to go against

the ever-increasing globalization trends (Porter, 1998a). Indeed, the advancement in

telecommunication technology and transportation has enabled companies on one hand to market

their products globally and achieve economies of scale. On the other hand, it has enabled them to

distribute their operations across the globe. Global companies are able to gain benefits from the

local advantages of particular geographical areas. These advantages could take the form of low

cost or skilled labour, proximity to markets or suppliers of raw materials, and taxation and other

policy incentives. However, Porter argues, "national differences in character and culture, far

from being threatened by global competition, prove integral to success in it" (Porter 1998b, p.

30).

1.2.1.2 Cluster Diamond

One of the most important aspects of the cluster approach, introduced by Porter, is the

cluster "diamond representing the four "determinants of national advantage" that shape the

evolution of a particular industry cluster (Porter, 1998b, pp. 71-124). The four determinants are:

o Factor conditions, which include human resources, physical resources, natural

resources, knowledge resources, capital resources and various aspects of

infrastructure.

o Demand conditions, which involve three characteristics: home demand structure,

sophistication of domestic buyers and anticipatory buyer needs.

o Related and supporting industries, which emphasise the linkage among industries

along the value chain as a way to create both synergies and additional

competitiveness.

o Firm strategy. structure, and rivalry, which reflect the way that firms are created,

organized and managed, and the nature of local rivalry among firms.

These four determinants continuously and dynamically interact and influence each other

and thus their representation is as a diamond with arrows between the different nodes, as shown

in Figure 1. Two more aspects also have great influence on the outcome of a cluster:

o Chance events, which are created by circumstances outside the control of the

cluster's stakeholders, have been in many instances crucial in shaping industry

success. These events include: inventions, revolutionary technologies,

entrepreneurship and changes in environment.

o Government role is also recognized to have a significant influence over the

determinants and the competitive environment.

Besides providing a framework for understanding a regional and national economy and

organizing economic development thinking, the "national advantage diamond' is a very

powerful tool for analyzing and gaining valuable insights about the internal dynamics and the

potential of existing industry clusters.

1.2.1.3 Cluster Approach Assessment

One of the most important aspects of the cluster approach is that it provides a framework

for industrialization policies departing from traditional defensive and offensive policies that are

often unsuitable for the modem economic climate (Jacobs & De Man, 1996). On the one hand,

defensive policies perpetrate the practice of 'backing losers' in their courtyard by insisting on

raising protectionism barriers to protect weak industries from foreign competition. On the other

hand, defensive policies attempt to 'pick the winners' by directing the economic sectors toward

selected industries thought to have high growth potential. Both policies have been demonstrated

to be very restrictive and lead to poor results on the long term. Cluster based policies, on the

contrary, adhere to 'backing the winners'. They reinforce existing strengths of the economy by

improving the linkage between firms, networking opportunities and knowledge sharing

possibilities.

In recent years, the "cluster approach" has gained a lot of ground around the world

among academics (Porter, 1998a; Porter, 1998b; Martin & Sunley, 2001; Langford, 2002;

Langford 2004), government agencies (Industry Canada, 2004a and 2004b; Leppavuori, 2002;

Lord Sainsbury, 1999; Frighetto, 2001 ; Lundequest & Power, 2002; Santos, 2002), local

authorities and organizations involved in local and regional development (Deloitte, 2004;

Vancouver Economic Development Commission, 2002; Paija 2000; Tukiainen, 2002), and

industry associations (Pricewaterhousecoppers, 2004; RTA & OMC, 2002; TIEKE, 2003).

Furthermore, many organizations around the world are attempting to scan and map

clusters. Michael Porter is leading a group called the Strategy and Competitiveness Cluster

Mapping Project that exhaustively locates and compares clusters across the United States

(Institute for Strategy and Competitiveness, 2003). Another example is a group from Sweden

called the Ivory Tower that studies clusters worldwide. This group estimates that in 2003 there

are more than 500 cluster initiatives around the world (Solve11 et al., 2003, p. 10). These

initiatives tend to focus on large-scale economic sectors that may combine multiple industries.

Still, Porter's cluster approach has been the target of criticism. One of the most important

shortcomings of the approach has been its lack of specificity in terms of delineating the

boundaries of a cluster. In fact, the concept has been indiscriminately used for different types,

size, processes and geographical scales of economic localization. This "theoretical confusion

and conceptual fuzziness" poses problems in systematically and directly identifying clusters as

opposed to concentrations of activities that may not be linked (Martin & Sunley, 2002).

Furthermore, there is a lack of empirical evidence to establish a causality link between high

geographical concentration and economic growth or success (ibid).

Porter's quantitative approach for determining the presence of clusters also suffers from

the limitation that it doesn't show whether interrelationships between firms in a cluster really

exit. Thus a distinction is made between clusters and networks. "Clusters are broad sets of

industries in which not all firms are cooperating with each other. Those firms in cluster which do

interact form networks within the cluster, or between clusters" (Jacobs & De Man, 1996, p. 428).

1.2.2 Cluster Approach Implications on Company Strategic Decisions

1.2.2.1 Clusters and Competition

The major benefit of a cluster is that it ultimately creates "a system of interconnected

firms and institutions whose whole is more than the sum of its parts" (Porter, 2000, p. 21). The

cluster in its entirety benefits by leveraging the local demand advantages which "can reveal

segments of the market where firms can differentiate themselves." In this regard "the quality of

local demand matters far more than does its size" (ibid). It also reaps the benefits by affecting the

competition in three general aspects:

o Increase in the current productivity of member firms or industries,

o Increase in the capacity of cluster participants for innovation and productivity

growth,

o Stimulation of new business formation that supports innovation and expands the

cluster.

These aspects emphasize the fact that "many cluster advantages rest on external

economies or spillovers across firms, industries, and institutions of various sorts" (ibid).

1.2.2.2 Cluster Advantages to Companies

After studying the behaviour of companies that were successful in developing

sustainable competitive advantage, Michel Porter identifies various actions that these companies

adopt to take full advantage of their presence in a cluster (Porter, 1998b, pp. 578-84).

Innovation: a company should make the most use of home base innovation opportunities and

improve its own flexibility to pursue them. Innovation is not restricted to products; it also

incorporates business processes, marketing approaches, management, strategy etc.

Svstem view of the value chain: advantage may be gained trough better configuration of the

value chain that a company is involved in. Companies should help the extension and

strengthening of the cluster by encouraging the formation of suppliers, improving the

sophistication of customers or stimulating entry to related industries (Porter, 1998b, p. 580).

Continuous stratem adiustment: Sustaining a firm's own competitive advantage requires

continuous adaptation and improving of its strategy. A firm ought to "expose itself to

external pressures and stimuli that motivate and guide the need to act" (Porter, 1998b, pp.

58 1-2). Change rarely comes from inside the company; instead agents from the external

environment often trigger it. Thus, the company could gain an advantage by positioning itself

in such a way that these "outsider agents of change" are within the home base.

Improving the source of own competitive advantage: Companies should resist the urge to

lobby to suppress the sources of local pressures from factor suppliers or government. Instead

they would better consider these forces as opportunities to initiate change in order to improve

their competitiveness over time.

Global approach: Firms should pursue global strategies as much as possible. By doing so,

they would both offset some of the disadvantages of the home base and reach bigger markets.

The additional financial gains from global strategies allow these companies to be in better

positions to re-invest in improving and further strengthening the home base cluster's

advantageous features or eliminating its weaknesses. Thus global expansion is a self-

reinforcing mechanism for the company.

1.2.2.3 Cluster Approach as a Tool for Strategic Decisions

Porter identified multiple strategies that companies ought to adopt depending on the

nature of the cluster they belong to (Porter, 1998b, pp. 599-601).

Analwing international comvetitors: The diamond analysis is used for scanning competitors'

home bases. This investigation reveals some of these competitors' inherited advantages,

disadvantages and goals depending on the factors and structure they rely on. Eventually this

information enables companies to predict competitors' likely behaviours and future moves.

Industn, and location choice: "a firm or individual has the best odds of succeeding in

innovation, or in creating a new business, where the national diamond provides the best

environment" (Porter, 1998b, p. 602).

Strategy choice: The choice of basic strategy is tied to the nature and strength of particular

determinants within the diamond (Porter, 1998b, p. 602).

o Cost-oriented strategies are more suitable when there are distinctive advantages in

factor costs, the size of home demand, and the conditions that favour large-scale

plant investments.

o Dgffeerentiation strategies tend to rely more on specialized human resources,

sophisticated local buyers, and world-class local supplier industries.

o Focus strategies entail the presence of unusual demand in particular segments or on

factor conditions or supplier access that benefit competing in a particular product

range.

Penetrating foreign markets: A company should choose to compete globally on segments

where its home base provides advantages but which are modest or are emerging segments in

foreign nations. In these cases, local companies or international rivals based in other nations

will often have turned their attention elsewhere and be unprepared to compete.

Diversification: For mature companies the choice of new industries for diversification should

be based on those where a favourable national diamond is present or can be created.

"Diversification proposals should be screened for the attractiveness of the home base"

(Porter, 1998b, p. 606).

Jacobs and De Man (1996) take a pragmatic perspective on clusters. They suggest that

clusters may have multiple dimensions and propose a menu approach for picking firm strategies

specific to each dimension (Table 1). They argue that "by making the dimensions of clustering

explicit, we provide a basis upon which tailor-made policies can be developed. Consequently, the

effectiveness of policies and strategies will be enhanced" (Jacobs & De Man, 1996, p. 425).

The cluster approach has multiple level applications in economy and strategy. It has

gained such worldwide authority in macro-economical analysis and industrial policy design that

it is quasi-present in many government policies. It is starting to appear as a public policy panacea

that every government is trying to adopt (Martin & Sunley, 2001). A second area of application

concerns managing established clusters. The cluster approach put forward a pragmatic and

simple framework for studying, analysing and understanding the dynamics of local clusters. The

cluster approach has a third important application in shaping firm strategy. By being grounded in

the competitive advantage theory, the cluster approach helps companies formulate appropriate

strategies to take advantage of their presence or proximity to industrial clusters.

Unfortunately, the last application does not get as much attention as the two others either

in academic or business circles even though it is the firm that is on the front line of competition

and that ultimately produces value. More consideration needs to be directed to turning the

inherent advantages of an identified cluster into tangible benefits by helping companies take

appropriate actions.

The Vancouver region is home to various industry clusters and thousands of companies.

The wireless cluster in Vancouver is an important part of the local economy. It has been

continuously growing and competing globally in a dynamic industry. Thus, it is important to

analyze it and compare it with others to determine how it should position itself and be managed.

Furthermore, it is very beneficial to identify appropriate strategies and actions that allow the

companies belonging to this cluster to perform better.

Dimension

Geographical scope

Horizontal

Vertical

Lateral

Focal

Technological

Quality of network

Strategy towards own cluster Strategy towards other clusters

Behave positively in own regional networks

Take part in relevant programs

Strike a balance between competition and cooperation

Support sector initiatives in education, environmental and quality policies, internationalization and market development

Organize the user-producer-supplier

Exchange staff

Co-location in design and production

Strengthen relation with knowledge infrastructure in own environment

Is the basis for choosing between developing core competencies individually or in cooperation

Strengthen partners' knowledge

Enhance international orientation of cluster

Introduce of new coordination mechanisms between firms

Tap into foreign clusters

Take part in relevant programs

Learn from foreign competitors

International sector initiatives

Locate activities near advanced clients and suppliers

Forge relations with clients in other countries in order to upgrade products

Establish new combinations with (elements of) other clusters

Forge relations with top foreign institutes

Table 1 - Cluster S Dimensions and Firm strategy1

1.3 Project Methodology

This project combines data and information from various sources, and quantitative and

qualitative analyses to study the various aspects of the Vancouver wireless industry cluster. The

project starts with examining the wireless industry in its wider and global contexts and its

structure based on the synthesis of the findings of various academic publications and industry

trade studies. Following this review, the project proposes appropriate frameworks for industry

segmentation and value chain in order to investigate the Vancouver wireless industry's structure

and dynamics. The project then summarizes key numerical figures about the size, growth,

Adapted from Jacobs & De Man (1996, p. 434).

prospects and trends of the global wireless industry. These figures are synthesized from

secondary research sources, particularly reports and press released from trade associations, and

reputable market research and consulting firms. The purpose of this macro-analysis is to develop

an appreciation of the industry size and identify its degree of attractiveness to incumbent

companies and potential new entrants. These two features have important implications on the

development of Vancouver's local industry.

A study of selected wireless clusters is carried out using the Porter cluster diamond

framework. The information for the investigation is obtained from various studies that examine

these specific clusters. The results of these qualitative analyses serve as a comparison against

which to analyse and understand the Vancouver wireless cluster.

Next, the Vancouver wireless industry is analyzed in detail. This examination entails a

synthesis of previous studies' findings, a survey to collect selected data on all the firms

belonging to the Vancouver wireless narrow cluster, and a qualitative analysis based on

interviews of representatives from the industry and reviews of corporate and industry

publications. These analyses are instrumental in uncovering the most important challenges and

issues facing the local industry. The synthesis of the results of the various investigation and

analyses reveals the structure and dynamics of the local industry. It also supports the elaboration

of strategy recommendations to various participants in the cluster.

1.4 Project Organization

This project is organized into five chapters. Chapter 2 analyzes the telecommunication

wireless industry in general. It defines the industry and proposes a segmentation using multiple

dimensions. It also proposes an appropriate value chain framework to examine competitiveness

and rivalry in a wireless cluster. Additionally, it synthesizes various statistical data to provide

insights about industry size, structure, growth patterns and trends. Chapter 3 examines four

separate metropolitan wireless telecommunication clusters using the diamond cluster approach.

Chapter 4 examines in detail various aspects of the Vancouver wireless cluster, including

historical development, structure, strengths, weaknesses, and value chain. The chapter also

describes three sample companies within the cluster. Chapter 5 synthesize strategy

recommendations for the cluster individual firms and for the management of the cluster itself.

Finally, a section at the end lists the references used for this project.

2 WIRELESS TELECOMMUNICATION INDUSTRY

The wireless telecommunication industry is one of the main branches of the Information

and Communication Technology (ICT) economic sector. Wireless technology is not new; in fact

it dates back to the beginning of the 2oth century with the invention of radio broadcasting.

However, the tremendous expansion of this industry only started in the 1980s with the use of

wireless technologies for personal communication systems (PCS). Since then, wireless

telecommunication has been among the fastest growing industries and is expected to continue

expanding at a considerable rate. The International Telecommunication Union for example,

forecasted that in 2003, wireless telecommunication services revenues would amount to

approximately US$410 billions representing 36% of the total worldwide telecommunication

revenues (International Telecommunication Union, 2001).

This chapter defines and describes both the general and global contexts of wireless

telecommunication industry. It synthesizes qualitative and quantitative data to get an appreciation

of the size of this global industry, and its growth patterns and prospects. Additionally, it proposes

frameworks to analyze various aspects of the industry such as enabling technologies, interaction

between the participants and industry value chain. This information is fundamental for the rest of

this project because most of the Vancouver wireless companies are involved in traded sub-

industries and compete on a global scale.

2.1 Industry Definition

Clearly defining the perimeters of the wireless telecommunication industry is

challenging. The same challenge is facing the ICT sector in general. Traditional industry

classifications, such as NA1CS2, generally focus on the products or services themselves to define

the industry. In many instances, this classification fails to capture important aspects of

competition between firms such as those due to product substitutions or complementarities. For

this reason, the definition of an industry should be broadened beyond the nature of a product to

describe the function it accomplishes. This definition would inevitably group together firms

NAICS: North American Industry Classification System

11

usually classified under different standard economical industries, segments and even sectors3. In

the context of this project:

Wireless telecommunication industry encompassesJirms primarily engaged in

producing goods and services, or supplying technologies intended to fulJill or

enable the function ofprocessing, transmitting and receiving information that

move electro-magnetically through the airwaves.

2.2 Industry Segmentation

Industry segmentation consists of dividing an industry into stand-alone subgroups or

pockets in order to understand and analyze the scope of competition within each subgroup.

Industry segmentation builds on market segmentation, which focuses almost exclusively on

customer type, to add other dimensions for subdivision. Additionally, industry segments

"frequently involve differing buyer value chains and lor the value chain a firm requires to serve

them well" (Porter, 1998c, p. 231). Porter (1998~) suggests four variables to segment industries:

product variety, buyer type, channel and geographic buyer location.

Channel and geographical buyer location are not important factors for differentiating

wireless telecommunication sub-categories. This is due to two facts: that channels are generally

part of the industry and that globalization and standardization have rendered buyer location of

little impact on firms' general strategies. The basic enabling technologies used, however, create

distinctive divisions within this industry.

Therefore in this project, the wireless telecommunication industry is segmented based on

three dimensions: product variety, key technology and customer type. Similar to the

classification adopted by the Athena Institute (2002), each on of these dimensions is divided into

several subcategories. This chosen method of segmentation is used as the base for sketching an

industry value chain and value network, assessing the strength of the Vancouver wireless cluster

and analysing the patterns of specialization and cooperation within the cluster.

The wireless telecommunication industry tri-dimensional segmentation consists of the

following:

1. Product or Service Variety:

For example Statistics Canada identifies the Information and Communication Technology (ICT) Sector as a "special aggregation" of NAICS industries. This sector is defined as comprising "industries primarily engaged in producing goods or services, or supplying technologies, used to process, transmit or receive information". The "special aggregation" consists of 25 NAICS industries from four different economical sectors (Statistics Canada, 2002).

a- Equipment, which consists of both infrastructure (e.g. cellular base stations)

and end user products (e.g. wireless phone, pager). Components are also part of

this category.

b- Transport providing national or regional networks for carrying data and voice.

c- Software used both for infrastructure (e.g. operating or billing systems) and by

end users (e.g. web browser on wireless hand held devices)

d- Services for both infrastructure (e.g. installation) and end user (e.g. online

payment). Content for users is also included in this section (e.g. stock market

quotes)

2 . Key technologies:

a- CellularIPCS wireless, which replaces phone lines. Two examples are Telus

Mobility or Fido services.

b- Fixed wireless, which replaces the "last-mile7' copper or fiber cables connecting

homes, businesses and neighborhoods to the central station. For example:

RONA laser beams

c- Wireless local area networks (WLANs), which replace the cables connecting

Ethernet LANs. An example is WiFi (802.1 lb).

d- Personal area networks (PANS), which replace the cables connecting

electronic devices (PCs to printers, for example). Example: Bluetooth.

e- Satellite, which enables global reach and coverage.

3. Buyer types:

f- Carrier-class products and services are sold to the large wireless providers such

as Bell Mobility. Companies in this category include giants such as Nokia,

Ericsson and Motorola.

g- Enterprise-class products and services are sold to large organizations for their

internal use. IBM, Oracle, Datacritical, and others are in this space.

h- Consumer-class products and services are sold to individual end users. Handsets

are an example of a consumer-class product. Many carriers offer consumer-class

services, such as pre-paid wireless subscriptions or mobile message services

(MMS).

Thus the wireless industry segmentation is better represented as three-dimensional

parallelepiped as shown Figure 2.

Wireless \ /

ex^^ Figure 2 - Wireless Telecommunication Industry Tri-dimensional Segmentation

2.3 Value Chain

Porter introduced value chain analysis (1998~) in the mid 1980s to conceptualize and

analyze both the internal dynamics of an industry as well as its external interaction with other

industries in the course of creating, transforming and providing products and services to

customers. There are different ways to map an industry value chain. Figure 3 illustrates one

representation of the interaction within the industry that reflects the technological dependency

value chain. This representation is similar to one adopted by WinBC (2004a) for example.

This value chain representation has the merit of being simple and linear. It was valid in

the 1980s when large wireless phone carriers dominated the industry. The carriers used to

simultaneously provide the network infrastructure, the user equipment, the communication

access service and often some content. However, the industry has evolved to become more

fragmented and is now dominated by companies with narrow specializations. Additionally,

specialized value chains around specific sub-markets or product groups have emerged. Each one

of these chains has a different process, dynamics and economic relationships. More complex

mapping has been used to represent the intricate relationships between industry segments and the

emergence of fields of specialization. Various authors and organizations have proposed new

models such as a wireless value chain (Leppavuori, 2002, p. 2); and value chain relationship

(Constance & Grower, 2001, p. 19). Figure 4 illustrates a value chain mapping that is derived

from a Durlacher & Eqvitec (2001, p.23) report about mobile industry. This representation uses a

network value model that coherently translates the complexities of the interactions between

various industry sub-segments.

Figure 3 - Wireless Industvy Value Chain - Technological Dependencies

This project proposes a new representation of the wireless telecommunication industry

value chain. The proposed model is congruent with the industry segmentation described earlier.

However, it distinguishes multiple sub-value chains within this industry, depending on the end

user needs it hlfills. From the outset the wireless industry provides four types of output:

1 . Access points to a network for example public telecommunication system

connection;

2. End-user devices and terminals to be able to communicate, such as cell phone,

wireless PDA, a satellite modem or blue-tooth device, to communicate with

other devices, users, and systems;

3. Internal connectivity such as linking portable scanning devices to a central

database in a large department or grocery store;

4. Content for example transmitting real-time NHL games scores to a wireless

PDA.

These outputs are complementary but conceptually separate and quasi-independent

industry value chains produce them. The proposed model is represented in Figure 5.

Equipment

Figure 4 - Wireless Industry Value Network

Equipment Service Software

Figure 5 - Wireless Industry Value Chains

2.4 Industry Size, Growth, Prospects and Attractiveness

Determining the total size of the overall wireless telecommunication industry and its sub-

sectors is beyond the scope of this study because of its complexity and extensiveness. Instead,

this section provides numerical data about selected wireless industry sub-segments to develop an

appreciation of the total wireless industry size, past evolution and growth potential. The

information provided is based on secondary data obtained from various sources. The following

areas are examined because of their relevance to the Vancouver wireless industry:

o Telecommunication services

o Wireless subscribers

o Wireless handset sales

o Public wireless LAN (WLAN)

o Wireless data devices

2.4.1 Telecommunication Services

In terms of number of subscribers, wireless telephone has already surpassed fixed phone

and continues to grow at an enormous rate superior to all the other sectors, as shown in Figure 6.

The growth patterns of cellular usage suggest that wireless services revenues would continue to

grow and inevitably surpass those of fixed telephone services by 2005 or 2006.

- - - - . -

-e Main telephone lines (millions)

--b Mobile cellular subscribers (millions)

International telephone traffic minutes (billions)

,- Personal computers (millions)

+++ Internet users (millions)

91 92 93 94 95 96 97 98 99 00 01 02 03

- - - - - - - - -

Figure 6 - Worldwide Growth of ICT Users

Data source: International Telecommunication Union ITU (2001). Refer to Appendix 1 for further details.

17

Between 1992 and 2002 global annual revenues from telecommunication services had

more than doubled and increased from US$49 1 billions to US$l,O84 billions. Figure 7 reveals

that this extensive growth is primarily due to the expansion of wireless telecommunication.

Wireless telecommunication revenues progressed from US$26 billions (7% of total telecom) to

364 billions (34% of total telecom). During the same period, fixed telephone service only

increased by 32% (International Telecommunication Union ITU, 200 1).

-- 1992 Total Telecom Services

Revmue: US$491 billion

hbbile Other 5% ''5, 1.5%

- .

2002 Total Telecom Services Revenue: US$l,O84 billion

Other 1 A"/!

Telephone I

42%

Mo International

6%

Figure 7 - Worldwide Telecommunication Services Revenue Breakdown (1992-2002)~

Data source: Ibid

2.4.2 CeNular Wireless Services

According to recent statistics summarized in Table 2, 1,340 million people worldwide

subscribed to cellular phone services in 2003. In other terms, one of every five people worldwide

owns a wireless phone today. During the past five years the wireless services have grown at an

average of 33% every year. Very few industries of this size have achieved such a performance in

such short period of time.

Table 2 reveals an uneven spread of wireless usage across the world based on the

distribution of wireless subscribers by continents. On the one hand, considering the trends in

globalization and normalization of living standards across the world's nations, the current

inequalities in wireless distribution would sustain the high-rate growth of wireless

communication sector expansion for the upcoming years, especially in developing countries. This

translates into continuing high demand for wireless telecommunication equipment and network

infrastructure, as well as user terminals to access the service. On the other hand, the high

penetration rate in developing countries creates high competition because of the saturation of the

markets. Consequently this situation would drive up the need for innovation to improve the

wireless communication infrastructure efficiencies. In addition, there would be a rising need to

develop new products and services to ensure differentiation and increase revenues from exiting

customers.

Continent

Asia 1 108,320 1 543,153 1 38 1 15.0 ( 52.4

Africa

Americas

1998

World I 317,674 1 1,340,667 / 33 1 21.9 1 53.9

4,156

95,066

Europe

Oceania

Table 2 - World Cellular Phone subscribers7

2003

CAGR: Compound Annual Growth Rate

Data source: International Telecommunication Union (2004)

50,803

288,220

104,382

5,748

C A G R ~ (W

1998-03 65

25

441,235

- 17,256

Per 100 inhabitants

(2003)

As % of total telephone

subscribers

6.2

33.8

33

24

67.3

49.8

55.4

54.5

57.5

57.2

Country specific data for the United States, Finland and Canada are summarized in Table

3. Wireless telecommunication industry clusters in these specific countries are discussed in the

next chapter.

Continent

United States

Finland

As % of total telephone

subscribers

Canada - -

Table 3 - United States, Finland and Canada Mobile Phone Subscribers8

1998

69,209

2,846

5,365 1 13,221 1 20 1 41.7

2.4.3 Cellular Wireless Terminals

Sales of wireless cell phones have similar growth patterns to those related to the number

of wireless phone subscribers and service revenues. Figure 8 shows statistics related to

worldwide cell phone sales by region. The bulk of the sales are in the Asia-Pacific region, North

America and Western Europe. This year estimates predict that about half a million cellular

phones will be sold across the world.

2003

158,722

4'700

2.4.4 Public Wireless LAN

Wireless data communication is a sector that has lagged behind wireless voice

applications. However, this trend has been changing in recent years. Enabling employee mobility

has been the main driver behind this growth. An interesting aspect about this sector is a shift

toward providing this type of access service trough private non-telecommunication companies.

An important component of this sector consists of 'public wireless LAN' or 'public WLAN'. This

sub-sector has shown signs of tremendous growth in the past two years. Hotels, restaurants and

communities have been the main providers of this access service, instead of traditional

telecommunication companies. More than 70,000 public WLAN enabled, or 'hot', spots have

been enumerated in 2003 as shown in Table 4. This number is expected to more than double by

2005.

CAGR (%)

1998-03 18

10

Data source: Ibid

Per 100 inhabitants

2003 54.3

90.0

- - -- ppppp

Figure 8 - Wireless Handsets Sale to End Users by ~ e g i o n ~

The expansion of public WLAN access has also generated a ripple effect expanding to

other sub-sectors such as enterprise infrastructure, user terminals, enabling application and

Location type

Airports

Hotels

Retail Outlets

Enterprise as

Stations

Community

Others

Total Market

service delivery. As it was the case for cellular phone networks, substantial growth is predicted

Table 4 - Worldwide Number o f Public WLAN 'Hot ' Spot Locations by ~ypelO

2004

378

22,021

82,149

3,708

2,143

20,561

1,526

132,486

for these related fields (Figure 9).

2005

423 -

23,663

85,567

5,413

3,887

30,659

2,156

151,768

2001

85

569

474

84

-

2

-

1,214

Data source: Gartner Dataquest (2003a)

l o Data source: Gartner Dataquest (2003b)

2002

152

2,274

11,109

624

88

266

240

14,752

2003

292

11,687

50,287

1,762

623

5,637

790

71,079

WLAN overall market CAGR: 42% (98-04)

0 SoftwarelServices

0 Bridges

Access points

B Devices - .-

Figure 9 - Forecast for the Global WLAN Market Growth Segmented by Product Catego y.ll

2.4.5 Wireless Telecommunication Equipment Concentration and Localization

On the international scene a few countries stand out in terms of their leadership,

positioning and influence in the wireless telecommunication industry. The wireless activities are

regionally concentrated in a small number of areas. Some the most important spots are as

follows:

The United States is undeniably occupying the most prominent position in the worldwide

wireless telecommunication industry. It was one of the first countries to deregulate

telecommunication, which initiated the information revolution across the world. The United

States continues to lead the world.in innovation and entrepreneurship.

The Scandinavian countries were able to fundamentally transform their societies and

economies from being resource-based to become information based. They have set a

benchmark for successful public policy implementation and became the stars of the 1980s

and 1990s in terms of competitiveness. This region emerged as a major player in the wireless

telecommunication industry with two major companies: Nokja and Ericsson.

Data source: Krebs (2000, p.2)

Japan and Korea have distinguished themselves in this early part of the 21" century by taking

the lead in deploying the most advanced wireless telecommunication infrastructure (3G or 3rd

generation wireless). They have also significantly improved their research and development

capabilities and resources.

In terms of size, growth and future prospects, China stands at the forefi-ont of the world scene

by managing the deployment of the world's largest wireless telecommunication networks.

These deployments have been responsible for numerous industrial activities and firms'

creations within China.

Cellular wireless networks and terminal manufacturing industries tend to be global and

geographically concentrated. The leading wireless infrastructure equipment vendors are Alcatel,

Ericsson, Motorola, Lucent, Nokia, Nortel, Siemens and Samsung. Most of these players also

develop and supply consumer handsets. Table 5 provides a forecast for this industry segment

demand based on information provided by a leading market research firm. This table shows

sustained growth over the next five years.

Cell phone vendors market their products across the world in spite of country and

regional differences in communication standards. All the top players develop international

brands and adopt global strategies. The Finnish based firm Nokia dominates the industry with a

35% market share. The second largest vendor is the US based Motorola with 15% of the market,

which is less than half the share of the leader. Other major players in this industry include: the

Korean based Samsung, the German Siemens, the Swedish-Japanese joint-venture

Sony/Ericsson, and the Korean LG. The top six cell phone vendors are responsible for 80% of

handset sales worldwide, indicating a high concentration of this sector of the industry. Table 6

lists all the major wireless handset vendors and their market share.

l 2 In US$ million

Data source: DellYOro Group (2004)

Table 5 - Worldwide Sales Predictions for Wireless Infrastructure Equipment1-?

2007

32,700

2008

34,800

2004

25,700

2005

27,000

Year

Worldwide Sales l2

2006

30,500

2003

25,500

In contrast to the PCS industry, the WLAN equipment industry seems fragmented.

Indeed, Table 7 shows that the market leader, Linksys, controls only a 15% market share.

Company

Nokia

Motorola

Samsung

Siemens

SonylEricsson

LG

Panasonic

NEC

Alcatel

Sagem

Others

Total Market

Furthermore, nearly half of the market share is distributed among a large number of smaller

Table 6 - Worldwide Sales of Mobile Terminals to End Users (2002-2003)15

2003 Salesq4

180,672

75,177

54,475

43,754

26,686

26,213

16,809

1 3,484

7,246

6,241

69,228

519,988

companies. Currently WLAN is highly concentrated in North America and Europe but it is

7

2002 Market

Share (%)

35.1 0%

16.90%

9.70%

8.00%

5.40%

3.20%

2.50%

1.90%

2.80%

1.10%

13.60%

100%

2003 Market

Share (%)

34.70%

14.50%

10.50%

8.40%

5.10%

5.00%

3.20%

2.60%

1.40%

1.20%

13.30%

100%

expected to spread across the world.

2002 Sales

151,421

72,852

41,684

34,618

23,112

13,797

10,766

8,085

1 1,889

4,743

58,658

431,631

l 4 In thousand of units

l 5 Data source: Gartner Dataquest (2004)

2002 Market Share (%) Company I I

2.4.6 Trends and Opportunities

2002 Shipments

Linksys

D-Link

Buffalo Technology

Symbol Technologies

Proxim

Others

Total

The data presented in this chapter suggest the following trend about the global wireless

telecommunication industry:

o The wireless industry overall will grow.

o Market concentration in the wireless industry will change (especially in developing

countries).

o Wireless related service and application market will grow.

o The user terminal manufacturers will continue to innovate and add more

functionality and features into handsets.

o Deployment of wireless enterprise solutions will be one of the highest growth areas.

2.860 1 14.6

In congruence with these trends, Nokia, one of the industry leaders for example, predicts

that the industry "is moving rapidly into a new phase of advanced features and services. There

are three key industry drivers taking us there: applications on the move, increasing role of

software based on open compatible solutions, explosion of new innovative products" (Nokia,

2003).

From a technological point of view, wireless data and voice telecommunication

conversion are driving the growth of the industry. The demand for Internet and mobility to

improve the efficiency and effectiveness of the workforce is continuously increasing. This trend

is already apparent in the current amalgamation into a single device of a cell phone and PDA

Table 7 - Top 5 Worldwide Wireless LAN Equipment Vendors by Unit Shipments (2002) l6

1,881

1,857

1,762

1,741

9,495

19,598

l 6 Data source: Ibid

9.6

9.5

9

8.9

48.5

100

(personal digital assistant). Another trend is that handset software platforms will play an ever-

increasing role in wireless devices. As an example, the research firm ABI forecasts that about

150 million smartphones17 will be sold in 2008 (ABI Research, 2004). A further trend is the

ability of the same device to be able to use multiple radio access technologies to completely

fulfill the end-user's needs. For example, the same wireless PDA would communicate inside an

enterprise through the WLAN using a Wi-Fi interface; and would switch automatically to use the

public GSM network while outside the reach of the WLAN.

New areas for application of wireless technology continue to emerge. For example,

radio frequency identification (WID), which is a technology for enterprise asset tracking which

uses wireless technology, is poised for tremendous growth. The Yankee Group, a research

company, estimates that "during the next three years, manufacturers will spend approximately $2

billion on ePC RFIDI~ tags and $1 billion to $3 billion on infrastructure. The largest portion of

infrastructure spending will be allocated to consulting and systems integration" (Yankee Group,

2004).

In summary, the global wireless telecommunication industry is expected to continue to

grow. New applications, especially those destined for enterprise, are becoming major drivers,

enabling the industry to expand considerably. These new applications are changing the industry

landscape. By relying on disruptive technologies they also provide opportunities for new firms

and nations possessing relevant inherent strengths to emerge and perhaps move to leadership

roles in the industry.

A Smartphone is a handset which is an all-in-one device that offers the flexibility and facility of a hand- held computer (PDA) with the communications ability of a mobile phone.

l 8 The Electronic Product Code (ePC) is a new product numbering standard under development by the Uniform Code Council that can be used to detect, track, and control a variety of items using RFID (Radio Frequency IDentification) technology.

WIRELESS TELECOMUNICATION CLUSTERS

ANALYSIS

Wireless telecommunication companies, especially those involved in product

development and design, usually exist in clusters because they require people with industry-

specialized skills and experience in technologies such as radio wave propagation, analog design,

signal conditioning, telecommunication standards, among others. The grouping of multiple

companies in a geographical area creates the conditions for the development of the appropriate

infrastructure to support them. It also creates the establishment of relevant academic

specialization and the formation of related research and innovation environments. In this section

four metropolitan wireless telecommunication clusters are explored: Helsinki (Finland), The Bay

Area (US), Ottawa (Canada) and Calgary (Canada). These clusters are analysed to gain useful

insights and appreciation about their dynamics and strengths, and most importantly the

conditions that lead to the development of these strengths. In a later part of the study of the

characteristics of these clusters enable comparison with the Vancouver wireless cluster.

The choice of these four metropolitan clusters in particular was based on the variety they

present in terms of size, strengths, stages of development and conditions leading to their

emergence.

3.1 United States

The United States is the world predominant nation in the wireless sector. The penetration

of cell phones is high but it is lower than in many other developed countries. The country still

relies on fixed telephones as the fundamental means of distance communication (Table 3).

However, the defence industry, in addition to enterprise networks, is creating an unparalleled

demand for wireless products, solutions and services. In the United States wireless

telecommunication activities are concentrated in very specific areas and regions. The five largest

regional wireless clusters in terms of number of firms are located in California, with 2,000

companies, Texas with 1100, Florida with 1100, New York with 900, and Illinois with 700 (RTA

& OMC, 2002).

3.1.1 California

This section concentrates on exploring the Bay Area metropolitan wireless cluster within

the larger California regional cluster. California hosts more than 2,000 wireless companies that

employ in excess of 60,000 persons. This makes it the largest state in the United States and one

of the world main clusters in terms of size and concentration of wireless activities. From 1993 to

2001, venture capitalists invested more than $5 billions in the California wireless industry sector

(RTA & OMC, 2002). In comparison, Texas, the next leading state in wireless activities, had

only 1,100 companies, employed 34,000 employees and received $1.2 billions venture capital

funding (ibid). In spite of the large size and importance of its wireless sector, California State is

not the base of any major national wireless or data carrier. Neither is it the home of any dominant

infrastructure or handset manufacturer. Instead, California's wireless sector strengths lay in

industries that support the core infrastructure, such as chips and device development, and in

software and services. The bulk of the Californian wireless sector activities is concentrated in

three metropolitan regions: San Diego, Los Angeles and the Bay Area.

3.1.2 Bay Area Wireless Cluster

The Bay Area is the metropolitan region that includes three geographically close cities:

San Francisco, Oakland and San Jose. The region is known to draw some of the best professional

talents in the ICT sector. This is supported by the fact that the region's telecommunication

industry employee earned on average US $77,521 in 2001; which is the highest average

telecommunication industry wage across the United States' economic regions (Institute for

Strategy and Competitiveness, 2001). The region also has one of the highest average numbers of

patents per employees in the country, which is 27.87 patents per 10,000 employees compared to

7.71 for the United States as a whole (ibid).

Among California metropolitan wireless clusters, the Bay Area ranks second in terms of

size after Los Angles. In 2001 it employed around 22,500 people and has more than 600 firms.

However, it significantly surpasses the other two areas in terms of venture capital expenditure

that totalled close to $4 billions and employment growth that increased by 257% between 1993

and 2001 (RTA & OMC, 2002).

Three key factors contributed to the emergence of the Bay Area wireless cluster:

o Defence industry: historically the area was home to Fairchild, a major semiconductor

supplier to the defence industry. This company spawned the creation of many large

companies such as Intel and paved the way for the creation of a strong ICT cluster.

The United States government continues to invest significant defence R&D budgets

in the region.

o ICT cluster: the region is the base of one of the world's major ICT cluster with

companies such as Intel, Oracle, Sun and 3Com.

o Venture capitalist: the region is also known for the presence of an extremely high

concentration of venture capitalists. These investment institutions backed the

creation of numerous start-ups, which targeted the wireless sector for its high growth

and potential.

Benefiting from the presence in the region of well-developed satellite and software

industries, the Bay Area wireless cluster is particularly strong in the following fields:

o Satellite telecommunication equipments

o Enterprise access software

o Carrier class management software and applications

With regards to research, many Californian universities spearhead advanced research in

wireless communication although they are not all located in the metropolitan area. These centres

include:

o Stanford University - Wireless Communications Research (WCR) Group

o University of California Los Angeles - Wireless Integrated Systems Research Group

(WISR)

o University of California San Diego - Center for Wireless Communications

o The California Institute of Telecommunications and Information Technology - Cal-

(ITP

o California Institute of Technology - Lee Center for Advanced Networking

In summary, the Bay Area wireless cluster is a very sizeable grouping of large and small

companies engaged in diversified sub-sectors, most notably satellite communication, enterprise

access and carrier management software. In spite of its size and maturity, the cluster is still

growing and evolving. The wireless companies in the region maintain close relationships with

local universities and suppliers. In addition, microelectronics, software and investment, which

are important to wireless telecommunication industries, are well developed in the region. The

Bay Area cluster's various characteristics are summarized in Figure 10. This cluster stands out

for its growth and the fertile entrepreneurial environment it presents, which are favourable to the

expansion of mature companies and the creation of start-ups.

Bay Area Wireless Telecommunication Cluster

J Synergies and Inter-exchange w~th Los Angles and San D~ego wlreless clusters

J Mature and large firms such as Intel, Oracle, Sun and 3c0m

J Diversification J 600+ companies (2001) J Expansion: 257% employment

growth (1993 to 2001) I_ __A_I_- r-"

\ -- -

7 knoiat ion 27 87 patents1 10,000 i employees vs 7 71 for the US ' J Large employee pool: 22,500 ' (2001) 4 Skilled professional h~ghest

average wage In the country 1 J R8D many university have

\ research centers specializing in

j wireless

J Defense industry (commun~cation) J Satellite mdustry

/ J H~gh defense R I D spending

x No national telecom carrier bas

, J Silicon Valley ICT cluster espeaally

electronic components and software

J Strong venture capital industry J Very advanced satellite industry '

Figure I0 - Baq' Area Wireless Cluster Diamond Analysis

3.2 Finland

Finland has been the focus of numerous studies and research for being the best nation in

the world in terms of its use of networking and information technology. Finland extends s over

337,030 square kilometers, of which 10 % is water and 69 % is forest. It has a population of 5.2

million people, with two thirds living in towns or urban areas (CIA, 2004).

During the 1990's, Finland succeeded in performing an extraordinary economy

conversion from being based on forestry and metal to relying on knowledge and high technology.

This transformation was not limited only to the industrial and economical structure but extended

to the social and cultural fabric. The Intemational Institute for Management Development ranked

Finland as the world's most "competitive nation" with a population of less than 20 millions in

2003 (Intemational Institute for Management Development, 2003). "Competitiveness of a

nation" is defined as "a field of economic knowledge, which analyses the facts and policies that

shape the ability of a nation to create and maintain an environment that sustains more value

creation for its enterprises and more prosperity for its people" (Garelli, 2003, p. 702).

The ICT sector has played the major role in this transformation and success. This sector

generates about 30% of Finland's exports (Paija, 2000). Several of these facilities may belong to

the same organization. The development of the ICT is attributed to three primary factors (TIEKE,

2003):

o Sparsely populated country with extremely long distances

o Heavy investments made in education and R&D

o Well-functioning regulatory environment

Related to the last point, Finland has never had one single incumbent telecommunication

provider. Instead, dozens and sometimes hundreds of companies were competing to provide

services and products. The government, via a state owned company, had an active role in

ensuring compatibility and connectivity between all these companies. In the early 1990's this

state owned organization was privatized. The early liberalisation of the telecommunications

market in Finland might be the catalyst to the success and growth of the ICT sector.

Additionally, Finland adopted a unique governmental policy that helped the rapid

adoption of wireless cell phones in the country. The government granted for free the rights for

firms to operate within the cellular bands of the radio spectrum (Kuusipalo et al., 2001). This

allowed the local companies to have quick access to a strong home base demand for innovative

products. This is a contrast to most other developing countries, where governments opted to

charge the telecommunication operator heavily for licensing the rights to portions of the radio

spectrum. These policies have been blamed for significantly slowing down the spread of wireless

telecommunication as well as the advancement and technological infrastructure upgrade in these

countries, most notably the United States, because of the restriction and extra licensing fees.

As shown in Table 3, Finland has one of the highest cell phone ownerships per capita in

the world. Nine of every ten Finnish residents have a cell phone. In recent years, the high

percentage of wireless cell phone subscribers as part of the total phone subscribers has resulted

in an increasingly significant portion of the households completely abandoning wireline phones

and exclusively relying on wireless technologies.

3.2. I Helsinki Wireless Cluster

With a population of about a million, Helsinki area hosts a large proportion of Finland's

companies involved in the ICT sector. The wireless cluster, or mobile cluster as it is generally

known in Europe, is one of the fastest growing and major components of ICT. It is difficult to

separate wireless activities and statistics from the rest of ICT activities in Helsinki. Helsinki is

the home of Nokia, the world's predominant supplier of mobile phones. Nokia had a 30%

worldwide market share in 2002. There are about 9,000 single offices or manufacturing facilities

that are ICT related in the Helsinki area, of which 78% have fewer than 4 employees and 19%

between 5 and 50 employees (Tukiainen, 2002, p. 12). In 2000, the Helsinki ICT industry

employed about 100,000 persons (ibid, p. 14). In the same year about 1,500 ICT start-ups were

registered in Helsinki (ibid, p. 15). This denotes the entrepreneur culture of the country and

makes it challenging to determine the number of firms in the narrow wireless cluster. As the

major part of the ICT clusters, it is reasonable to estimate that the number of wireless companies

would number more than a thousand. Nokia is the major actor in the Helsinki cluster and is the

anchor of the wireless and the ICT clusters.

The Helsinki wireless cluster (Nummi & Lahenius, 2003) is composed of:

o Nokia, the giant mobile phones and network equipment vendor.

o Four other large companies: Sonera and Elisa, both telecommunication operators, as

well as TietoEnator and Novo Group, providing internationally various tailored

services, software for different environments, and IT consulting.

o R&D facilities for Siemens and Ericsson, also international wireless handset vendors

and networks from Germany and Sweden.

o A pool of small and medium companies which deal mainly in software support and

services to the other large players.

o Four universities and three polytechnics Institutes involved in research, especially

Helsinki University of Technology.

o Finnish venture capitalists, most of whom are located in Helsinki.

The intense competition in providing telecommunication services in Finland "creates an

ideal environment for application developers to create and test their products. Also the high

penetration rate of mobile phones enables to test application efficiently" (Nummi & Lahenius,

2003, p. 2).

The collaboration between university and industry is very intense and contributes to the

expanding innovation in the region. "The telecom operators and companies in electronics

business have usually formal collaboration with universities whereas the software companies are

mainly depended on universities as a source of skilled labor" (ibid, p. 11). Figure 11 summarizes

the characteristics of this cluster using the cluster diamond tool.

Over the years the Helsinki wireless cluster has gained a worldwide reputation. The core

of the cluster is the giant company, Nokia. The cluster overall has reached the maturity stage.

However, the momentum reached in the region is creating initiative to rejuvenate the cluster and

pursue emerging growth opportunities. The cluster benefits from an outstanding supporting

structure provided by the local economic and societal environments, which has proved to be

mutually benefiting.

Helsinki Wireless Telecommunication Cluster

J Early telecommunication liberalization

J Government policy creating an "information economy and society"

J 4 universities and 3 polytechnic institutes

J 100,000 ICT employees J Innovation: active university-

industty cooperation

J Nokia the world largestwireless handset manufacturer; cluster anchor

J 5 larqe firms J ~ l o b a l expansion: export \ ,

r 1 J Europeandemand I J Local market open to

experlmentatlon and early adoption

J Wreless cell market expansion espeaally Into develop~ng countne

J Electronic component manufactunnq

J Software development industty / J Venture capitalist

Figure I I - Helsinki Wireless Cluster Diamond Analysis

3.3 Canada

Canada, as the geographically second largest country in the world, has an inherent

incentive to develop and deploy wireless solutions and networks. Surprisingly, compared to other

developed countries, Canada has one of the lowest wireless penetration rates with only 41% of

the population having cell phones (see Table 3). The number of wireless phone subscribers as

portion of the total telephone subscribers is merely 40%.

For many years public policy has been promoting innovation and regional development.

ICT is among the sectors that have benefited from this policy. Industry Canada identifies several

ICT sector groupings across the country (Table 8). A grouping with significant size is labelled a

'cluster'; otherwise the grouping is called a 'spotlight'.

1 Location I Networking I Core 1 Software & I New Media I ICT I

Smaller Grouping

Table 8 - ICT Clusters in Canada19

Within the ICT sector, two wireless clusters are recognized in Vancouver and Calgary. A

wireless cluster under development is identified in Ottawa (Industry Canada, 2004a). The

l 9 Source: Industry Canada (2004a)

34

Calgary and Ottawa clusters are analyzed in the following two sections, while the Vancouver

cluster is the subject of an extensive study in the next chapter.

Ottawa telecommunications equipment cluster is one of the most developed and mature

high technology clusters in Canada. The Ottawa region has more than 212 companies engaged in

the telecommunication industry (Industry Canada, 2004a), including centres from international

telecommunication leaders such as Nortel, Alcatel, JDS Uniphase, Cisco Systems and Nokia.

About 80,000 people are employed in advanced technology industries in the region. In addition

to telecommunications, the region is also known for having strong industries such as

microelectronics, photonics, software development, and professional services. The Ottawa region

is home base to national wireless access providers such as Bell Mobility and Rogers AT&T.

The emergence of a wireless cluster in the area is mostly due to local mature

telecommunication companies extending their activities to include new wireless applications and

products. Around these large companies, a grouping of smaller companies and start-ups

specializing in niche wireless applications has formed over the past few years. Currently the

Ottawa wireless cluster includes about than 70 companies (Ottawa Global Marketing, 2004a) and

employs 1,500 persons (Deloitte, 2004).

From a historical point of view, the principal factors that have contributed to the

emergence of the Ottawa wireless cluster include:

ICT cluster: The high demand and the growth prospects for wireless devices and

infrastructure pushed some of the established companies involved in telecommunication to

move into wireless applications. This move was facilitated by the availability in the area of

the talents and resources required. "There is increasing evidence to show growth in the

Ottawa wireless sector in the last few years. Wireless is at the intersection of several sectors

such as telecommunication, semiconductor, software and services" (Santos & Krishnapillai,

2002, p. 11).

Strong research and development facilities: Industry Canada estimates that 90% of

Canadian telecommunication R&D takes place around Ottawa (Industry Canada, 2004b). The

Communications Research Centre, Ottawa Centre for Research and Innovation, and the

National Research Centre located in the Ottawa area are spearheading advanced wireless

research in several fields For example, "the Ottawa based Communication Research Center

(CRC) is one of Canada's best antenna research centres". (Santos & Krishnapillai ,2002, p.

11). In addition to employing a large number of professionals in wireless research, these

centres have created company incubator facilities and helped start-ups begin operations.

Additionally, the region has three universities actively engaged in research: Ottawa, Carleton

and Algonquin.

Home based demand for wireless applications: a survey conducted in the region in 2004

has shown that 73% of wireless industry revenues originate from Canada. Furthermore,

more than half of the revenues originate from the Ottawa region itself. Very few revenues are

being generated from overseas clients (Deloitte, 2004, p. 10).

A study by the global consulting firm Deloitte (2004, p. 4) identified "software

development and solution development/consulting as the most common types of wireless

activities." Other fields of specialization include:

o Enterprise solutions

o Satellite equipment

o Communications interface devices

The same study found that "wireless companies have demonstrated their ability to stay in

the market place, with close to 70% of respondents having been in the industry for over 2 years,

including one-third that have over 10 years of wireless experience" (Deloitte, 2004, p. 5). This is

evidence for the stability of the cluster in spite of the challenges that have faced the ICT

following the technology bubble burst.

In the field research, in addition to CRC, the region's universities are actively involved

in the wireless research and technologies (Ottawa Global Marketing, 2004b):

o University of Ottawa, the School of Information Technology and Engineering (SITE)

is working on the development of mobile telephone protocols.

o Carleton University, through its world-class wireless researchers and broadband

communications lab, is teaming up with Ottawa's National Capital Institute for

Telecommunications to create a new Centre for Wireless Research. The centre will

provide access to a wealth of wireless expertise and equipment, while conducting

research into the next generation of wireless systems, both mobile and fixed.

One of the major hurdles facing the development of the Ottawa cluster is the absence of

a "prospective company to become the local wireless anchor7' (Santos & Krishnapillai, 2002, p.

16). The anchor company has an important role in promoting the cluster and managing the

dynamics for bringing the cluster together. Another challenge faced by the emerging local

industry is the limited availability of venture capital in the region (jbjd, p. 17). An initiative

called Ottawa Wireless Cluster (www.OttawaWirelessCluster.com) has been created by the

Ottawa Center for Research and Innovation (OCRI) to promote and build the cluster. Currently

the Ottawa wireless cluster is at an early stage of development. Figure 12 presents the cluster

diamond analysis for the Ottawa region wireless industry.

Ottawa Wireless Telecommunication Cluster

4 10 international firm including Nokia

J Generally stable and lasting firms 1 J Ottawa Wireless Cluster (OWC) \

80,000 high tech professionals 90% of Canada telecommun~cat~on R8D CRC and 3 universities

. - -

x No anchor company x Lnstructured networmq and

/' J Substant~al natlonal and home

base demand

4 Very strong and mature ICT cluster

J Strong software industly J Ottawa Wireless Cluster (OWC)

1 1 x Insuficient venture capital funds L.." --- - - - - - - - - -

Figure 12 - Ottawa Wireless Cluster Diamond Analysis

3.3.2 Calgary

Calgary is the heart of economic and industrial activities in the Province of Alberta.

Since the early 1980s, Calgary has been a centre for leadership in wireless innovation. Currently,

it is the home of more than 100 companies specializing in various fields of wireless

telecommunications. These companies employed around 12,000 persons in 2001. The

development of the Calgary cluster is attributed to three main reasons (Industry Canada, 2004b):

Oil and gas industry: "There is a little doubt that it was the needs of oil and gas industry that

stimulated the key events at the foundation of the Calgary wireless cluster" (Langford et al.,

2001, p. 1). Prospecting and exploration in remote areas requires transport of large amount of

geological and logistical data to research centres across long distances of unpopulated land.

Wireless transport is very suitable because it allows the flexibility in moving the exploration

sites and relatively low investment compared to wireline infrastructure (ibid).

NovTel: In 1982, a partnership between Nova Corporation, the largest company collecting

and transporting gas across Alberta, and Alberta Government Telephones (AGT) that later

would become Telus. NovaTel is accredited for deploying, in 1993, the first cellular network

in North America. NovTel also developed handheld devices that captured, at one time, half

of the North American market share (ibid). Many of the current companies trace their origins

to NovTel either through spin-offs, partnerships or transfer of employees.

Nortel: This company has large telecommunication equipment manufacturing facilities

located in the region.

The wireless research in the region is lead by:

o TRLabs Wireless Research Centre (cooperation between industry, government and

universities)

o University of Calgary

o iCORE

The qualified workforce in the region is considered to be the major asset of the region.

"The labour force is the central node that grounds the wireless cluster in Calgary and from it

stems a regional system of innovation" (Langford et al., 2001, p. 15). There are strong

community links in the region between wireless professionals that contribute to the emergence of

"a constellation of firms enjoying rich knowledge flows, largely mediated 'on foot' or in

conversation among close associates" (ibid, p. 16). In comparison with other wireless clusters,

Calgary firms have strong expertise in communication systems integration into complete

solutions. These firms differentiate themselves through "efficient import of technology and

science from the global knowledge system, its efficient configuration to create new knowledge

and add value, then successful export of product to a world market" (ibid, p. 16).

Although the Calgary region has a history of individuals and firms collaborating and

sharing knowledge, these interactions remain informal and lack the focus and drive to enhance

the cluster. It is only last year that an initiative called Wireless City (www.WirelessCity.ca) was

instigated to promote the Calgary cluster.

The Calgary wireless cluster appears as a growing cluster with solid roots in wireless

applications development and proven past performances. The cluster size is medium with

numerous companies focusing on GPS technologies and system integration. Although the cluster

has a long history and anchor firms, it hasn't developed formal structures for facilitating

cooperation between the firms until this year. Figure 13 summarizes the cluster diamond analysis

for the Calgary region.

Calgary Wireless Telecommunication Cluster

- - K - - - - - 12,000 wireless industry employees R8D TRLabs Wireless Research Center, CORE, Un~versly of Calgary Expandmg emnomlc environment H~story of early innovation In w~reless PCS

J 100+ companies J Actwe informal collaboration and

networking J 2 anchor finns: NovAtel8 Telus J Expert~se in wirelesssystems \

integration

x Embryonic cluster management institutions

.-

J Oil and gas w~reless telecom needs

Communication equipment

Figure 13 - Calgary Wireless Cluster Diamond Analysis

The analyses of these different clusters reveal a wide variety in terms of structures,

origins, internal dynamics and levels of maturity, despite a common goal to pursue a high growth

industry. In particular, this small sample suggests that there may be no universal formula or

strategy to create and make a cluster successful. These clusters rely on the presence of related

industries and well-developed academic and research environments. The analysis of these

clusters serves as a comparison against which to analyse and understand the Vancouver cluster.

This analysis appears in the next chapter. The last chapter extends this analysis into

recommendations for the improved management of the Vancouver cluster.

4 VANCOUVER WIRELESS TELECOMMUNICATION

CLUSTER

After defining the general context of the wireless telecommunication industry and

analysing a sample of its particular regional groupings, the rest of this study focuses specifically

on the particular Vancouver grouping. This chapter investigates the structure, dynamics, and

characteristics of Vancouver's wireless telecommunication cluster.

4.1 Vancouver Technology Industry Overview

The province of British Columbia's technology sector employed 45,550 people and

generated revenues in excess of $6 billion in 2001. The sector was responsible for 2.9% of the

province's GDP. It also employed 2.9% of the entire provincial workforce but was the origin ofr

4% of aggregate salaries. Most importantly, for the last 10 years, the high tech sector has been

growing at an average rate of 6.3%, which is twice as fast as the average rate for the rest of the

province's economy. The bulk of the high tech activities is concentrated in the Greater

Vancouver Regional District.

The technology sector in British Columbia is very varied. However, in recent years a few

distinctive concentrations have formed to constitute the base of five distinct clusters

(PriceWaterHouseCoopers, 2003). In addition to the wireless cluster there are:

a: This is a mature and large cluster responsible for the majority of the high tech

contribution to the province's GDP. There are more than 5,000 companies

participating in this sector. For the most part their activities are related to electronics

and software.

New media: This cluster group consists of companies engaged in activities related to

interactive multi-media products and services. Electronic games, e-learning software

and web-related services are some of the most important sub-categories. About 700

companies operate in this cluster.

Fuel cells: This cluster includes more than 25 companies participating in various

parts of the fuel cell industry value chain.

o Biotech: 43 companies operate in this cluster engaged in developing pharmaceutical,

therapeutic and genomic products. Because of the large investment in R&D, this

cluster is expected to grow at phenomenal rates in the following years, when the

innovations are fully commercialized.

4.2 Vancouver Wireless Cluster Anatomy

4.2.1 Origins

Historically, the wireless industry in Vancouver, and by extension in British Columbia,

traces its origins as early as the 1960s. Three companies had a major impact on forming the local

industry (Langford, 2004):

o MDI (Mobile Data International) was founded by Macdonald Dettwiller and

Associates in 1978, and then bought in 1988 by Motorola to become its Wireless

Data System Division. In the early 1 WOs, MDI employed more than 1,000 people

and had $100 million in revenue.

o Glenavre (founded in 1963) during the 1990s it managed to position itself as a world

leader in mobile data systems and pagers and employed more than 600 people.

Glenayre went bankrupt in 2001, after the demise of the wireless paging market.

o MPR-Teltech, founded in 1979 by BCTel, existed until1986 and provided up to 700

jobs. It disbanded in 1986 when BCTel (which would become Telus later) decided to

adopt a "follower strategy that does not support the innovation and research thrusts

of MPR" (Langford, 2004, p. 3).

These companies reached significant sizes and were leaders in their respective fields.

They shaped the wireless industry in Vancouver. They also constituted solid industry anchors for

the Vancouver cluster for more than two decades before they ceased to exist. Most of the

companies currently participating in the local wireless industry have either direct or indirect

connections with one or more of these three companies either thorough technology or people

transfers (PriceWaterHouseCoopers, 2003).

4.2.2 Cluster Economical Characteristics

Currently, about 100 companies in the Vancouver area have direct activities in the

wireless industry, excluding consumer retail stores. A previous survey of 67 companies within

this cluster conducted in 2001 (PriceWaterHouseCoopers, 2002) revealed that:

o About 1,500 people were employed in the cluster and this number was expected to

more than double in the following three years

o The companies surveyed generated $253 million in 2001. Ten of these companies

were responsible for 95% of total revenues.

o The cluster exported 61% of its products and services. The US was the major

destination and was responsible for 42% of the total revenues. The Asia Pacific area

was responsible for 9% and Europe 8%. Revenues originating locally or from other

parts of Canada constituted only 39%.

o 357 patents were filled.

o Providing enabling software services and enterprise class solutions was among the

activities of 48% and 37% of the respondents, respectively.

4.2.3 Wireless Cluster Participants

Wireless narrow cluster: the survey conducted within this project revealed that currently

there are 89 companies in the Vancouver narrow wireless cluster. Further details about the

survey are presented in Section 4.3 Company Survey. The sample of these firms presented in

Table 9 shows a variety of business specializations.

Wireless broad cluster: about 50 more companies and organizations provide related and

supporting services to the wireless narrow cluster. These include, for example, electronic

manufacturing, marketing, consulting, legal services, and technical services firms.

Education and research institutions: The Vancouver area has two large universities and

one technology institute actively engaged in wireless research:

o Simon Fraser University: The Centre for Systems Science (CSS) is a research

organization, which promotes advanced research in computers and communications,

microelectronics, and intelligent systems. The centre has more than twenty years of

wireless research with a large portion of it in cooperation with local companies. SFU

also has the Communication Networks Laboratory, where "current activities

encompass wide area and wireless data networks, with emphasis on traffic

collection, modeling and characterization, and on performance analysis of packet and

ATM networks" (SFU, 2004).

Company

Air Games

Colligo Networks, Inc.

Con-Space Communications

Digital Dispatch Systems

Kinetix Wireless

Norsat International

Telus Mobility

TRL Microwave Technology

Activity

Global provider in publishing and distributor of mobile entertainment products.

Provider of peer-to-peer wireless productivity software designed for notebooks, Tablet PCs and handhelds.

Provides two-way wired and wireless voice communication products for confined spaces and other hazardous work environments.

Provider of turnkey wireless mobile data systems for the taxi, courier, shuttle, vehicle tracking, and airport asset management industries.

Provider of leading edge mobile platform and wireless applications enabling Mobile Asset Management, Mobile Workforce Management and Mobile Field Service

Developer of portable satellite terminal products that provide rapidly deployable broadband satellite data and video connectivity.

Provides its three million clients across Canada with a full suite of wireless voice, Internet and data services through its Mike and PCS digital wireless network.

Specializes in the research, development, and manufacturing of microwave and millimeterwave components for the satellite, terrestrial and wireless communications industries.

Table 9 - Vancouver Narrow Wireless Cluster Company Examples

o University of British Columbia: The Data Communications Group in the Department

of Electrical and Computer (http://datacom.ece.ubc.ca) pursues research activities in

wireless personal communication systems, internetworking of mobile and personal

communication networks, wireless data networks for mobile computing, satellite

networks, and other projects.

o British Columbia Institute of Technology: This institute trains technologists in

various areas of telecommunication, device and equipment development,

maintenance and installation.

WinBC: This is an initiative from the local private sector, which created a new

organization to promote British Columbia's wireless industry and promote cooperation,

networhng and knowledge sharing within the industry. This organization, called Wireless

Innovation Network of BC, was founded in 2003. Its mandate is to bring "this diverse sector

closer together by fostering collaboration among early-stage wireless companies in BC" (WinBC,

2004b). It also aims at creating "awareness of BC's wireless sector as a geographic centre of

excellence in the research, development and deployment of wireless communications solutions"

(ibid).

CWTG: Canada West Telecom Group is a public-private partnership founded by the BC

provincial Ministry of Science, Competition and Enterprise. Its main objective "is to pool the

resources of members to market their products and services in overseas markets and to provide

quality telecom solutions worldwide" (Lee, 2004, p. 4). This initiative was particularly focused

on helping British Columbian small companies penetrate the Asia Pacific region markets. It

assisted these companies to overcome the limited availability resources in marketing overseas

and their lack of experience in Asian markets.

PriceWaterhouseCoopers: This is one of the major global consulting firms particularly

active in the technology sector. It has performed many studies about the local technology sector

in British Columbia. Particularly, the Genealogical Map of BC technology firms

(PriceWaterhouseCoopers, 2004), the BC Technology Clusters white paper

(PriceWaterhouseCoopers, 2003) and the BC Wireless Industry Survey

(PriceWaterhouseCoopers, 2002) are good references for understanding the local industry.

Other organization for cooperation in the region includes New MIC and British

Columbia Technology and Information Association (BCTIA). Finally, its worth mentioning that

two organizations funded by the Canadian Government, the Canadian Institute for Market

Intelligence CIMI and National Research Council (Industrial Research Assistance Program NRC-

IRAP), are investigating the local development in the region. The latter conducts studies about

various technology clusters across Canada with a specific emphasis on innovation and R&D.

4.3 Company Survey

A survey of the companies constituting the Vancouver wireless narrow cluster was

conducted within this project to determine the major business orientation of the cluster and

reveal the presence of possible sub-clusters. This section presents the methodology, then

synthesises and interprets the results of this survey.

4.3.1 Survey Methodology

The identification of companies participating in the wireless industry was based on a

review of several business directories. The sources of these directories include Wireless

Innovation Network in BC (www.winbc.org), the Advanced System Institute of BC (2004) and

other industry associations. The result of this research is the compilation of an exhaustive list

that enumerates all companies participating in the wireless telecommunication industry located in

the Vancouver area. Then the particular information about each one of these companies was

obtained from the Internet by reviewing, for example, the company website, and its public

announcements and reports.

Eight categories of company information were considered for this study:

Product/technolog;v/customer: These are the three dimensions presented in the section about

wireless telecommunication segmentation (refer to Figure 2, p.14). Each company was

assigned to only one category in each dimension that corresponds to its primary activity.

Size: This represents the number of employees in the company. For firms that have multiple

locations or are involved in many industries, the size represents the number of employees

based in Vancouver and involved in wireless telecommunication activities. In high tech

companies the number of employees is generally an appropriate proxy for the firm's

magnitude of economic activity. Companies were categorized as small (less than 50

employees), medium (5 1 to 200) or large (more than 200). Only a few companies have data

available about the exact number of employees. For all the others a subjective determination

of the size was made based on the sophistication and diversification of their products or

services, financial performance when available and the level of maturity of the firm.

Status: This refers to whether the company is private or public.

Origin: The location refers to where the company headquarters are located. Location was

divided into four categories: Vancouver, the rest of Canada, the United States or elsewhere in

the world.

Nature of activity: this is a short description of the products or services, and nature of the

company business activity.

4.3.2 Survey Results and Commentaries

Upon investigation, there are a total of 89 companies in the Vancouver area with direct

operation in the wireless industry. The detailed list of these companies is reported in Appendix 2.

The appendix also includes the information collected within this survey.

Figure 14 summarizes the distribution of Vancouver wireless companies by ownership,

origin and size. The analysis of the results shows the following:

The large majority of Vancouver wireless companies are home grown. 84% of the

companies have their headquarters in Vancouver. Another 9% belongs to companies based in

other locations in Canada. The remaining 7% are local subsidiaries of US based firms. This

data indicates that the wireless industry development in Vancouver is mainly the result of

entrepreneurial initiatives from the region.

Public Canada 9 O h

7%

Vancouver 84%

Large >200 10%

Medium 50-200 29%

Small <5 61%

Figure 14 - Vancouver Wireless Company Distribution by Ownership, Origin and Size

The results also reveal the surprising fact that no company outside North America has a

wireless activity operation in Vancouver. Global wireless leaders like Nokia, Philips or

Alcatel certainly have large research and development centres of excellence in Vancouver.

However, these centres focus their research on fields other than wireless specific core

technologies, such as networks, software development or new media applications. This fact

suggests the possibility that Vancouver wireless industry may be relatively unknown outside

British Columbia, and particularly outside North America.

The majority (61 %) of the companies are small in size. Only 10% are relatively large20. On

the one hand, this attribute may be a reflection of the Vancouver cluster being in the

development phase typically characterized by the abundance of start-ups. If this is the case, it

is a healthy indication of the state of the cluster. On the other hand, considering that the

20 A large company in the context of this project means a company employing more than 200 people in wireless industry related activities.

wireless industry has more than 30 years of history in the region, this characteristic may be

an indication of difficulties for local companies to grow beyond a certain size.

Three quarters of the companies are private. In the current situation, this detail is congruent

with the fact that most of these companies are small or medium in size. However, if the

cluster continues growing and maturing, many of these companies would need to seek

additional financing including initiating public offerings to support their expansion.

Based on the data collected, the companies were grouped into different categories

depending on the product, technology and customer types. The result of this grouping is

synthesized in Figure 15 and the upper row of Figure 17. Reviewing the results provides the

following insights into the local wireless industry:

The single narrow specialization with the highest concentration of firms is "enterprise

software development" particularly in the field of "mobile data management, acccss and

distribution through public networks". About 19 companies specialize in this field.

The other noticeable concentration is around "enterprise class equipment manufacturing"

combining the various technologies used, where 21 companies participate. An additional 7

firms specialize in the related specialization of "carrier class equipment manufacturing".

Most companies are engaged in various aspects of enterprise wireless solution. This is

congruent with the trends of wireless industry that indicate that the enterprise solutions

sector is expected to be the main driver for future growth of the industry as indicated in

Section 2.4.6.

Very few companies are producing consumer products or marketing their products or

services directly to consumers. Companies in Vancouver appear to favour narrow business-

to-business (B2B) relationships. Even with "enterprise class application" Vancouver

companies usually sell their products to enterprise solution providers and integrators rather

than directly to corporate end-users. This observation suggests that Vancouver firms'

abilities for marketing, distribution and sales are rather limited and that their strengths lie

more in innovation and R&D.

Most companies develop products related to PCS or WLAN technologies. PCS based

technologies are mature, standardized, well established and widely deployed across the

world. WLAN based systems, on the other hand, are emerging technologies with a few

standards shaping out. But the industry is still dominated by proprietary technologies

especially for industrial applications. The absence of industry standards not only limits the

company's capacity to cooperate with others but most importantly strategically forces the

company to own a large part of its own industry value chain and restrict its ability to focus

on selected core competencies.

Consumer 1 2 3 4

I 41 Fix 2

WLAN 3 PAN 4 SAT 5

Enterprise 1 2 3 4 5 PCS I[ 1

WLAN Fix 3 2t SAT 5

arrier PCS

Fix W LAN

PAN SAT

I

Figure 15 - Vancouver Wireless Company Concentration

Using the number of companies to analyze firm activities, specialization and

concentration provide valuable insights on both the cluster's composition and the direction it is

heading. However, it doesn't truly reflect the extent of the concentration of economic activity.

The data is very skewed because of the high number of small firms and start-ups. For example, a

single large company such as Sierra Wireless or Telus Mobility may have revenues surpassing

those of a dozen small companies. To correct this data skew, there is need to measure each

company's output and aggregate the results together for each concentration. However, in a

competitive environment dominated by private firms, it is very difficult to obtain this type of

information. An alternative to approximate the economical activity consists of appending a

weight to each company depending on its size, then adding the individual companies' weights by

concentration instead of just counting their numbers. The weights are chosen so that a 'large'

company would be on average four (4) times bigger than a 'medium' one; which in turn would be

eight (8) times bigger than a 'small' firm21. A small firm has one unit weight. The modified

results are summarized in Figure 16 and the lower row of Figure 17.

The new distributions reflecting the size of economical activity reinforce the previous

observation. Additionally they reveal that:

"Providing wireless cellular services and consumer products" is the most important

economical activity in the area, although only a handful of companies are involved in such

activities. This result is expected considering that the company must be large in order to

provide public wireless access.

"Satellite geo-location services" using GPS and online web technologies appear as an

important activity in the region. Theses services primarily involve enterprise asset tracking

such as corporate vehicle fleet management or inventory management. They also involve

determining location of people.

21 The choice of these weights is justified by 2001 distribution of employment in wireless companies (PriceWaterhousCoopers, 2002, p.9). Employment was less than 20 in 77% of the companies; 21-60 in 18%; 41 -60 in 5%; and more than 61 in 5%.

Consumer 1 2 3 4 5

WLAN 3 PAN 4 4 SAT 5

Enterprise 1 2 3 4 5 PCS I[

Fix 2 WLAN 3 30 60

PAN 4 60 SAT 5 102 180 180

Carrier 1 2 3 4 - -

PCS 11 48-

PAN 4

Consumer

EntrepriseJ

Carrier

Figure 16 - Vancouver Wireless Activity Concentration

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4.3.3 Wireless Cluster Mapping - Value Chains and Network

Based on the previous sub-section analysis, the Vancouver wireless cluster areas of high

activity concentration are mapped to the value chains defined in section 2.3. They are marked by

the dark shade on Figure 18. "Network OperatorICarrier" and "Service Provider" are local

industries while "Conversion Software", "Carrier Class Enabling Software", "Enterprise Class

Enabling Software" and both "End-User and Network Devices" are traded industries.

The most important observation that transpires from the value chain mapping is that the

Vancouver wireless companies participate in disjointed portions of the global wireless industry

value chains. More specifically, they do not specialize in any particular vertical market or value

chain. A 'vertical industry' specialization is represented in Figure 18 as a horizontal value chain,

while a 'horizontal specialization' is vertical. The "Access" value chain gives the impression of

being locally integrated. In fact it is not. Local "Network Operators" and "Service Providers" are

not generally users of the local carrier class "Enabling Software" products. The later sell their

products mostly to US wireless network operators. The lack of local integration in industry value

chains limits the ability of the Vancouver cluster to control its expansion, because it depends,

both downstream and upstream, on segments located outside the geographical cluster.

There is, however, evidence of concentration around two horizontal activities, which are

software and device development. This horizontal industry specialization reinforces the view that

the Vancouver wireless cluster, in its current state of development, is reliant on factor conditions,

especially the availability of skilled workers and talents in software and device development.

The Vancouver wireless cluster value network mapping represented in Figure 19

emphasizes the previous observations. Furthermore, it shows the wireless cluster positioning

among some of the other Vancouver high technology clusters, such as electronic and telecom,

new media, and software development. Excluding the "network operators" and "cellular

serviceldevice providers" as they belong to non-traded industries, wireless leading activities are

located close to the periphery of the cluster, particularity near the intersection with the other

clusters. This is an illustration of an important advantage of clusters whereby valuable

opportunities may occur bccause of dynamic interactions and cooperation between

geographically close clusters from different industries. As an example, many local firms

specialize in wireless enterprise software to manage mobile workforce. This type of product is

similar in nature to enterprise reporting or customer relationship management (CRM) produced

by leading companies such as Pivotal or Business Objects, which have a very large presence in

the Vancouver software cluster.

Equipment Service Software Delivery End-User

Figure 18 - Vancouver Companies Positioning on the Wireless Industry Value Chains

The thin arrows on Figure 19 represent the channels of exchange between the Vancouver

wireless industry sub-segments. They are drawn based on evidence of publicly disclosed

partnerships or other forms of cooperation between firms, and interviews with individuals from a

few companies and organizations participating in the industry. In spite of these channels being a

subjective representation of cooperation between the firms, they highlight the fact that inter-firm

exchanges and collaboration within the cluster are very limited.

Figure 19 - Vancouver Wireless Cluster Value Network

4.4 Cluster Diamond Analysis

This section analyses the Vancouver wireless cluster using Porter's diamond framework

to further characterize the cluster and expose its strengths and weaknesses on each determinants.

This qualitative analysis is synthesized in Figure 20.

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4.4.1 Factor Conditions

The availability of factors appears to be the most important consideration behind the

choice of many wireless companies to locate their operation in the region. Vancouver indeed has

multiple attributes that are advantageous to the development of wireless industry in the region.

The most important attributes of the area are:

Natural environment: Vancouver is considered one of the best places to live. The

combination of the natural beauty and variety; and the mild weather makes an excellent city

for living and enjoying the surrounding landscape. The west-coast lifestyle and the natural

wonders of the region directly influence the city's ability to attract and retain both talents and

entrepreneurs, especially those who like the outdoors or prefer an active lifestyle.

Qualified workforce: as outlined in the section about the origin of the Vancouver cluster,

wireless companies have existed in the region for decades. In addition, a considerable

number of people graduate every year from universities at various levels of instruction. Many

of these graduates have specialization related to the wireless industry. Thus, the universities

are creating an expanding pool of qualified people.

Economical workforce: the salaries of wireless workers in the region are low compared to the

United States by all measures. For wireless companies, as it is the case for other high tech

industries, payroll is by far the largest expense. A more economical workforce is certainly

one of the most important reasons for many companies, especially the international ones, to

locate in Vancouver.

Information and transportation infrastructure: this is one of the benefits of large cities. They

usually have good telecommunication infrastructure. In addition, airlines through the

Vancouver airport connect to all major worldwide cities. The airport is one of the busiest in

the country, which as a result offers of frequent and direct flights to most destinations. This

makes it easier and more convenient to commute to any regions globally. Also, equipment

and components can be shipped to other locations in North America within a day. The city

also has good road network and public transportation that enables easy commute within the

region.

Asia Pacific links: As mentioned in sub-sections 2.4.5 and 2.4.6, a large part of the current

wireless technology deployment and network innovation is taking place in Asia. Vancouver,

compared to other Canadian cities, has the strongest links with the Asia Pacific region. Some

of the conditions contributing to strengthen the relationship between Vancouver and the

Asia-Pacific region are the geographical proximity, frequent flights to the region, the port of

Vancouver being the point of exchange of most the goods traded between Asia and Canada,

and the presence in the metropolitan area of large communities originating from this region.

This situation offers local companies advantages and possibilities to be able to export their

products to the Asia-- Pacific region. However, the evidence available suggests that this

advantage is little exploited by the local wireless industry. Indeed, the 2001 industry survey

conducted (PriceWaterHouseCoopers, 2002) shows that only 9% of the Vancouver wireless

products and services were exported to this region.

Proximity to California regional cluster: Vancouver is the closest Canadian city to

California. A flight from Vancouver to San Francisco takes just a little bit more than two

hours. This enables easy commuting between the two regions. Additionally, the fact that

British Columbia and California are in the same time zone makes conducting business

between the two regions more convenient.

However, the Vancouver area suffers from deficiencies that inhibit the expansion of

wireless industry. The most important contributing factor is:

Capital Resources: the region does have a few venture capital firms and investment funds.

However, their resources are limited and insufficient for the region's need. Also because of

the small number of venture capitalists, they usually lack the sophistication needed to

specialize in certain industries. As a result, the process and the requirements for obtaining

funding are much more stringent and difficult than they might otherwise be. This is

congruent with the results of a survey of the local industry (PriceWaterhouseCoopers, 2002),

which revealed that "obtaining funding7' is the second most important critical success factor

facing wireless companies in Vancouver.

4.4.2 Related and Supporting Industries

The presence in the area of well-developed wireless related or supporting industries is an

important characteristic strengthening the Vancouver cluster. The previous analysis revealed that

many of the wireless companies' sub-segment specializations are localized at the intersection

with other clusters. Indeed, the variety of local industries creates unique business opportunities

and gives the companies involved differentiating sets of strengths. The industries that most

benefit the wireless industry in Vancouver include:

Electronic manufacturing services and comvonent suvvliers: The presence in the region of a

strong ICT cluster and the act that most high tech companies subcontract most of their

electronic manufacturing has been favourable to the development in the region of large

electronic manufacturing and assembly facilities, such as Dorigo Systems and Creations

Technologies. Beside the fact that these facilities are using state of the art technology, they

allow the local high tech companies to have a quick turnaround for manufacturing

equipment. Another important factor is the ability to speak face to face between the designers

and manufacturers, which allow greater flexibility and quality control. The same conditions

have also caused the major electronic manufacturers and suppliers to maintain local presence

and representation to be able to better address the local needs.

Leading universities and associated academic research: The institutions, described in Section

4.2.3, provide a fertile ground for enterprise-academic cooperation to innovate and produce

new technologies. The situation is also responsible for providing qualified people in the

region.

Software industry: Wireless equipment is more and more reliant on software to ensure

hardware platforms have flexibility, adaptability and versatility. It is much more economical

and convenient to change the functionality through downloading new software than replacing

part or all of the equipment. Wireless equipment also relies on general-purpose software such

as operating systems, development tools, simulators etc. Thus the presence of a strong local

software industry is beneficial to wireless companies developing products.

New media industrv: developing wireless content and application is one important driver for

the wireless industry in general. Many of the software and content developed by new media

companies for computers is transferable to wireless devices. This includes, for example,

games, entertainment content, graphic optimization, and animation. The presence of a well-

developed new media cluster is a considerable asset to the local wireless companies because

of the synergies that are created between the two industries.

Service companies: The Vancouver region is full of companies providing various types of

professional services, such as consulting, accounting, financial, export import, freight

forwarding, legal, marketing communication boutiques, and other services.

The industries that need development in the region are:

The small number of financing institutions: As outlined in the section about factor

conditions, the local financing companies do not have sufficient resources and specialized

expertise to support a large variety of entrepreneur initiatives and established companies'

expansions. Therefore, the Bay Area destination is often frequented by local CEO's to secure

financing for their local companies.

4.4.3 Demand Conditions

From the demand side, the emergence of wireless companies in the area has been mainly

fuelled by:

Niche marketing: Entrepreneurial individuals in the area continue to recognize niche

opportunities based on the needs of sophisticated buyers, mainly in the United States, that

could be more efficiently satisfied using the local factors.

Centres of excellence: Large international companies, such as Motorola, Nokia, Alcatel and

Philips, have located R&D facilities in the regions to take advantage of local tax benefits and

the availability of talented but economical employees.

Industrial and transportation applications: many Vancouver companies are developing

devices and integrating systems to enable local firms and organizations to deploy WLAN

applications particularly for industrial and transportation use. These companies have

developed systems using wireless technologies for fleet management, taxi dispatching and

customer billing, and warehouse and inventory management. Then they progressively moved

to marketing these products and services to other geographic areas.

However, the general observation about the local demand for wireless applications is that

it is has been lacking scale and sophistication. This environment did not offer incentives for the

development of wireless companies. This is different from cases such as the case for Calgary

with the gas and oil industry demand, Nokia with the emergence of an information society in

Finland, or the Bay Area with the demand of the defence industry. Some of the contributing

factors include:

Consumer demand: Cellular phone penetration rates in Canada lag behind most developing

countries. There is no evidence that would suggest that rates in Vancouver would be much

different from the national average. In general, the demand for wireless connectivity and new

services has been relatively low.

Conservative attitude of wireless access providers: The local wireless providers have chosen

a technology follower strategy. Particularly they have refrained from deploying new network

technologies and offering innovative services.

Absence of l a r ~ e companies: The cluster does not have large exporting companies competing

internationally. This environment has not been favourable to the creation of supporting

industries. Large companies usually have sophisticated needs and require higher standards

and performance from the their suppliers, including the local ones.

Wireless svectrum band availability and licensing: In North America, the slow and

conservative government policies regarding spectrum licensing have slowed down network

improvement and offering of new services. The licensing fees imposed on wireless operators

increase the prices of wireless services and further restrict market development and usage

penetration.

4.4.4 Firm strategy, Structure and Rivalry

Some the vehicles for cooperation in the local wireless industry are

Wireless Innovation Network of BC (WinBC): This is an organization established by the

local wireless industry in 2003, to promote cooperation between the local wireless

companies. This organization has organized multiple social events to enable wireless

participants to meet each other and exchange ideas. This year it has organized an innovation

contest to spur on the rivalry between the firms.

Board of directors participation: Executives from some companies in Vancouver also assume

the position of director on the board of other Vancouver companies. This is a method for

firms to cooperate, share experiences and influence each other's strategies. Of course it

presupposes that these firms do not compete directly against each other.

The elements that have been hindering the development of the cluster include:

Industry fragmentation: The results of section '4.3 Company Survey' have highlighted the

fact that the local industry is fragmented. Particularly, there is a deficiency in terms of

company specialization around particular value chains.

Lack of large integrators: Large technology wireless industry integrators and solution

providers could help the development of the cluster by offering possibilities for the

development of smaller companies developing enabling technologies and products. That is

the case for the Calgary clusters However Vancouver lacks these types of companies.

4.4.5 Chance Events

There were events attributed that played a major role in the development of the cluster,

the most important ones are:

The decision of Motorola to locate its Wireless Data System Division in the area had a

significant role in planting the seed of wireless activities in the region.

The liquidation of Gleynare had opposing effects on the cluster. On one hand it was a loss

for the Vancouver wireless cluster of one of its anchors and industry leaders. Indeed, this

company pioneered an important sub-sector of wireless data transmission. On the other hand,

Gleynare employees have joined other companies in the area. This has contributed to

knowledge and experience spillover. In addition, some of the former employees have

established start-ups participating in the local wireless industry.

4.4.6 Government

The various levels of governments have not had a direct and specific role with regard to

the local wireless industry. However, the public policies favourable to the high technology sector

in general, have benefited the local wireless industry. They include:

Academic research and education support: Vancouver area is home to two large universities

and one technology institute. In an effort to reinforce innovation, the federal government,

thorough various programs, has been sponsoring both fundamental and applied research. The

provincial government has committed itself to not only increase funding for post-secondary

skills training but to doubling the number of yearly graduates in computer science, and

electrical and computer engineering by 2007 (Allan et al., 2002, p. 14). These types of skills

are indeed crucial for the wireless industry.

Technolo~v Partnership Canada: This is a federal program in which the Canadian

government contributes a portion of the R&D investment needed for the development of a

marketable product or technology. The government gets back returns as royalties when the

product is launched to the market. A few Vancouver wireless companies have benefited from

this program.

Employee share option plan: The British Columbia provincial government currently

maintains a labour-sponsored fund, which represents the province's largest venture capital

fund. It entitles employees to receive 30% tax credits when investing in their companies

(Allan et al., 2002, p. 14). In addition to making investment funds available, it provides

incentives for retaining employees.

R&D taxation benefits: both the federal and provincial corporate taxation systems have

significant advantages to companies having activities in the area. These benefits include

better advantages in term of R&D expenses, capitalization and tax credits. For example

British Columbia R&D tax credits are 20% and can be carried indefinitely (Frighetto, 2001,

p. 50).

Firm incubation programs: BC Research Inc. 22 is a major incubator that helps develop

technology companies by providing office or lab space, management support and consulting

to entrepreneurs. The Science and Technology Fund is another mechanism by which the

province of British Columbia drives innovation commercialization initiatives through the

enhancement of university-industry mechanisms. This Fund has continuously been increasing

and has resulted in establishing industry liaison offices, technology transfer and business

development centres in all the universities and even most of the colleges in British Columbia

(Allan et al., 2002, p. 13).

Canada West Telecom Group (CWTG): This is another initiative of the provincial

government to help the local telecommunication industry export its products and services

especially to the Asian markets.

4.5 Comparison with other Wireless Clusters

The comparison of Vancouver wireless clusters to similar industry clusters in Helsinki,

the Bay Area, Ottawa and Calgary is summarized in Table 10. Vancouver and Calgary clusters

are similar with regards to having comparable size. But more importantly, because of their

historical involvement in the wireless industry, both clusters have already emerged from the

formation phase to be fully engaged in the development phase of their respective lifecycles. In

contrast, the Ottawa cluster is still in an early stage of formation. The Bay Area and Helsinki

clusters have reached maturity and significant sizes.

The Vancouver and Calgary clusters, being in the development phase, are still relying on

factor conditions as the primary driver for the growth of the cluster. Once they reach critical

mass, other factors may become more important. Some of these factors include wealth creation,

in the case of the cluster becoming the base for multiple large and successful companies, or

innovation production in the other case of the cluster developing a fertile and rich environment

and supporting idea generation and incubation.

Each cluster has emerged from different conditions. This has resulted in theses clusters

having very different characteristics, strengths and specializations. These various clusters do not

compete directly for customers or markets with one another because they serve different markets

22 BC Research Inc. was founded in 1944 by the provincial government, and then it was taken public in the beginning of 1990s after running into financial difficulties.

62

and segments. However, The Canadian clusters do compete among themselves for attracting

global firms to establish activities in their respective regions. The Vancouver wireless cluster

may particularly benefit from synergies with both the Bay Area and Calgary clusters.

Collaboration possibilities with the Ottawa or Helsinki clusters are less obvious, mainly because

of remoteness and less specialization commonality. There is evidence of significant collaboration

between Vancouver and the Bay Area clusters. Surprisingly there are very few signs of actual

cooperation between Vancouver and Calgary wireless companies.

Ottawa and Vancouver both suffer from the lack of anchor firms. However, the

Vancouver cluster has the benefit of previously having anchor firms that helped shape the

industry. Additionally, a few companies in Vancouver, such as Sierra Wireless, are gaining

critical mass, which will enable them to potentially lead the cluster.

The limited collaboration with the local wireless carrier and service providers is one

particular disadvantage that the Canadian wireless industries in general have been facing. Such a

collaboration, that benefits both parties, has been instrumental to the growth of the Helsinki

wireless cluster. The availability of venture capital resources has also restricted the growth of the

Canadian wireless industry clusters.

Compared to all the other clusters, one of the disadvantages of Vancouver's wireless

industry appears to be the lack of a solid local demand base and reliance on other regions' needs.

4.6 Analysis of the Strategies of Sample Firms

In this section the cases of three Vancouver wireless companies are examined. In

addition to investigating typical strategies adopted by Vancouver firms, this analysis allows

pragmatically exploring aspects of the derived benefits from the presence in a cluster.

Clu

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4.6.1 Sierra Wireless Inc.

Sierra is a relatively large public company in the Vancouver wireless data

communications industry. The company revenues for 2003 surpassed $US 101 million while it

spent $US 16 million in R&D. The company was initially incorporated in 1993. Over the years, it

completed many acquisitions of firms related to its activities in Canada and the United States.

During the late 1990s the company was specializing in wireless data modems with three product

lines. These different product lines use the same core technology but commend different

distribution strategies: (a) PC cards are sold through wireless service providers such as Verizon

or Telus and a few independent telecommunication resellers; (b) ruggedized vehicle-mounted

modems are marketed directly to corporate end users such as law enforcement agencies, public

safety services and transportation organizations; (c) OEM modules are embedded by

manufacturers of computers and other devices into their products to provide wireless access

hnctionality .

The company adopts a differentiation strategy based on "delivering best-in-class

customer and channel partner satisfaction based on pre- and post-sales resources, programs and

information" (Sierra Wireless, 1999a, p. 16). The strategy additionally involves advancing

"product quality and reliability" and aggressively investing "in its own intellectual property

portfolio and, where appropriate, acquires or licenses technologies from third parties" (ibid). The

company also views "strategic relationships within the wireless communications, portable

computing and internet industries as critical to maximizing sales opportunities and optimizing

next generation technology investments" (ibid).

Encouraged by its strong growth and success in the past few years, Sierra Wireless

continues to target the "wireless data industry" as it believes it is "still early in the adoption

cycle" (Sierra Wireless, 2003a, p. 2). It has also extended its activities further down the value

chain by entering the Smartphone market tabulating on the company "background in enterprise

wireless data" and the "existing channels and relationships7'(ibid, p. 3).

The relationship between Sierra Wireless and the Vancouver cluster is mutually

beneficial. Sierra Wireless benefits from both the advantages presented by the governmental

policies and the availability of a qualified yet economical workforce. The company also gains

advantage from the wireless research in local universities. For example, at the end of 2003 it

announced the donation of $430,000 to create the Sierra Wireless Chair in wireless

telecommunications in Simon Fraser University, School of Engineering Science, and support

research in this field (Sierra Wireless, 2003b). Additionally, the company benefits from the local

presence of supporting industries especially electronic manufacturing as mentioned in a company

report: "on the supply side, we outsource all production, most procurement and some business

services to our partners" (Sierra Wireless, 1999b, p.5). The presence of Sierra Wireless in the

region has also spawned a few companies, such as Oballa Consulting, that use Sierra Wireless

technology to build custom solutions for fast, secure and reliable wireless access to corporate

information and systems, or Cypress Solutions, which builds wireless rugged modems with

integrated GPS and provides engineering services. Considering its size, growth and active

involvement in supporting the local industry, Sierra Wireless is emerging as a potential anchor

for the Vancouver wireless telecommunication cluster.

4.6.2 Spectrum Signal Processing Inc.

Spectrum is a medium sized public company. It generated in 2003 about $US 20 million

in sales and spent more than $US 4.7 million in R&D. Spectrum was founded 1987 and has gone

through several transformations over the years. During the 1990s the company specialized in

producing innovative general purpose digital signal processing electronic cards that were used as

part of sophisticated industrial equipment such as semi-conductor production equipment, medical

imaging such as scanners, and military applications such as radar. In 2000, the company shifted

from the general-purpose markets to very specialized sub-segments and accelerated "its

expansion into the fast-growing digital wireless and wireline telecommunications infrastructure

markets" (Spectrum Signal Processing, 2000). Currently, the company specializes in developing

processing elements for satellite and military wireless telecom applications. From this brief

historical overview, it is evident that the company has constantly adopted a focus strategy and

oriented itself to serve the needs of sophisticated buyers in specific parts of the world, especially

in the United States.

Reviewing Spectrum's public announcements and releases reveals that similarly to Sierra

Wireless, the company may be gaining advantages from two aspects of the Vancouver cluster.

The first element is favourable government policy, especially provincial tax incentives and

federal government support through two "Technology Partnership Canada" investments. The

second element is the availability of factor conditions, especially a workforce that is very

qualified yet inexpensive compared to other places in North America. The company considers its

employees as its best assets; which is illustrated, for example, by its selection as the "#I

Company to Work for in British Columbia according to a recent Watson Wyatt Canada1 BC

Business Magazine survey" in 2003 (Spectrum Signal Processing, 2003).

Spectrum has its headquarters in the Vancouver region. However it maintains three

regional offices in the US in Maryland, California and Texas. Each one of these states is the base

of one of the major wireless industry clusters in the United States. Thus, the company is reaching

to the strength of other wireless clusters. This is also a means to overcome some of the

disadvantages of the absence of local demand and the unavailability of interaction with

sophisticated local buyers.

4.6.3 Epic Data Inc.

Epic Data is a medium sized software company. In 2003, the company revenues were

US$ 26.5 million, and its R&D spending amounted to US$ 2.3 million. Since its inception in

1975, Epic Data has gone through three major strategic changes. In its first phase of existence,

the company focused on the design, manufacture, and sale of data collection terminals (fixed and

mobile keypad devices) and custom software that enabled these terminals to collect and transmit

data for use in various business systems such as warehousing, manufacturing plant operations

and access security (Epic Data, 1998).

The second phase started in the mid 1990s when the company recognized the

"opportunity to use its experience and engineering capability to provide data collection sub-

systems to organizations using or implementing systems" (Epic Data, 2000, p. 2). During

this period enterprise-wide management information and control systems started being widely

implemented by organizations. The company developed a line of software products consisting of

'middle-ware' to link an organization's data capture network with its application software or

chosen ERP software. The company marketed and sold its products throughout North America

and Europe both directly to large organizations that implemented an ERP solution, and indirectly

through consulting firms, assisting companies to implement ERP systems, that act as value added

resellers. The company was able to develop a large installed base and partnerships with major

consulting firms.

The third phase started in 2000, after company revenues from its core activities stopped

growing (ibid). This stagnation was mainly due to dramatic decline in enterprise IT spending

following the 'technology bubble burst'. Reacting to this change, the company launched new

23 ERP: Enterprise Resource Planning

software product lines for "development and deployment platform for mobile wireless and data

collection applications; application products for mobile and data collection markets that are

designed to interface with enterprise applications" (Epic Data ,2003, p. 3).

This last transition marked the company's full entry into the wireless industry. Unlike

ERP based products that were mainly targeted to large customers in the United States, the

wireless products were initially deployed locally. The company adopted a focus strategy and

chose to "enter the wide area wireless market principally through the government vertical

market9'(ibid, p. 10). For instance, the company's first "parking ticket issuance" real-time system

was deployed in 1999 as a pilot project in the City of Vancouver( Epic Data, 1999).

With regard to the interaction with the local clusters, this last example indicates that the

company started drawing from the sophistication of the local demand to develop innovative

solutions to be marketed worldwide. Additionally, it leveraged its experience in data capture

solutions and interface with enterprise to address mobile application that require access to real

time data. Thus, the company is operating at the intersection of two clusters: wireless and

enterprise software. The example of Epic Data reinforces the idea that the presence of two

industry clusters in a single geographical area creates unique opportunities for companies to

differentiate themselves and create innovative product offerings.

4.6.4 Firm Strategies

The analysis of these sample firms reveals common themes with regards to company

strategy. These firms rely heavily on customers and demand located outside the Vancouver area,

mostly in the US. Their competitive advantage is founded on technology innovation and the

availability of economically advantageous factor conditions in the Vancouver area. Both Epic

Data and Spectrum Signal Processing enter the market with focused niche market strategies.

Sierra Wireless adopts a differentiation strategy that is sustained through innovation and

establishing a network of business relationships.

Faced with stagnant sales, Epic Data cut its R&D budget and started focusing on

developing a base of local customers for its new product line. While Sierra Wireless,

experiencing substantial success and growth, started developing a network of local partners and

suppliers along its value chain to further enhance its position. It is also showing potential for

becoming an anchor to the Vancouver wireless cluster. These are examples of the benefits

derived, both in good and bad times, from belonging to an industry cluster.

4.7 Vancouver Wireless Telecommunication Cluster Characteristics Summary

At the beginning of this project, the presence of a wireless industry cluster in the

Vancouver area was assumed. In accordance to the definition of a cluster, being "a

geographically proximate group of interconnected companies and associated institutions in a

particular field, linked by commonalities and complementarities," the evidence presented in this

chapter positively confirms the original assumption. Furthermore, the cluster continues growing

and developing well beyond the emergence phase. The cluster is home-grown and its history goes

back three decades in time. It survived losing its three anchor companies and weathered through

the "technology bubble burst" that had severely impacted the telecommunication field.

The Vancouver region's most important benefits with regards to the wireless industry lay

in factor conditions. However its differentiating and unique characteristics are derived from the

presence of related industries. The basis for factor conditions are the prosperous academic,

research and innovation environments, the substantial pool of technologically talented and savvy

workforce that has the advantage of being economical compared to other locations in the US and

even in Canada, the ability of the region not only to retain but also to attract people with talents

and skills, the advantageous public policies at various levels of government that both encourage

R&D and innovation, and provide advantageous taxation and investment incentives. The only

drawbacks to factors' availability are the limited scale and sophistication of local financial

investment organizations. The wireless telecommunications related and supporting industries that

are well developed in the region include electronic chip design, telecommunication equipment

development, enterprise software and new media. The interaction and the synergies among these

industries provide a fertile ground for producing innovation and competitive solutions and

products. The combinations of these conditions present many opportunities for both internally

expanding the local industry and attracting investment from other regions.

The nature of demand, and the internal structure and dynamics, pose challenges to the

Vancouver wireless cluster. The local demand for wireless related products and services in

general lacks the sophistication and scale necessary to provide a global competitive edge for the

local wireless companies. With regards to structure, the local industry is fragmented in terms of

specialization, which is also reflected in having only discrete parts of the industry value chains

located in the region. The cluster appears to lack a solid core and competency. Instead, three or

four horizontal concentration poles are emerging at the periphery of the wireless cluster

especially at the intersections with other related local industry clusters. Moreover, very few of

the local companies produce consumer goods. In fact, the majority of them, which are

predominantly small and private, tend to focus on very narrow business-to-business (B2B)

relationships, especially with US counterparts. This also reveals a one-dimensional focus on

technological expertise and ingenuity, but also indicates limited business management

resourcefulness and notably a lack of marketing and sale management vigour. Furthermore, the

cluster is vulnerable by relying on a single foreign market and not following the wireless

industry's trend of leadership slowly relocating to Asia and Europe. Concerning the cluster

dynamics, the patterns of internal cooperation and rivalry between firms have been limited and

until recently have been unstructured. There is evidence of various initiatives, which need further

coordination and enhancement, to increase firms' cooperation and knowledge spillovers.

Still, the Vancouver wireless telecommunication cluster continues to develop and thrive.

In fact, there are 30% more companies in the cluster compared to three years ago. The

participants in the Vancouver wireless industry are becoming more and more self-aware of the

cluster presence and are adopting corresponding steps to further harmonize its development and

growth.

IMPLICATIONS AND RECOMMENDATIONS

This chapter serves to use the analysis detailed in the previous chapter to create a series

of recommendations for the Vancouver wireless telecommunication cluster. These

recommendations fall within three categories: Firm strategic decisions (decisions which need to

be made within individual firms within the cluster), cluster management (how the cluster as a

whole could improve its management), and public policy (how local policy could be enhanced to

support the development of the cluster). In making recommendations at the firm, cluster and

institutional level, this chapter proposes a comprehensive and synergetic approach for the cluster

development.

5.1 Firm Strategic Decisions

Wireless telecommunication companies often have to compete globally. This is most

definitely the case for Vancouver companies. In the ever increasingly fluid and competitive

global context, companies continuously innovate to stay ahead of the competition. However,

technology leadership alone does not guarantee success. It has to be coupled with a sound

business strategy to sustain a company's growth and prosperity. In the face of globalization, the

home base provides the company with the ability to innovate and differentiate itself. This section

examines a few strategic actions that the Vancouver wireless companies may consider to take

advantage of their home-base environment.

For established companies:

Further develop core competencies: Vancouver companies are generally small in size and are

faced with scarcity and limited access to capital resources. They need to learn to better

leverage their assets by identifying, concentrating and hrther developing their core

competencies, those activities that they do better than the competition. All other activities, if

not critical to success of the company, may be outsourced and contracted as needed. These

critical choices are not only about what a company should do but also about what it shouldn't

do. Because of proximity, cultural and environmental communalities, a local partnership and

cooperation is much easier to develop, nurture and enhance. If companies outsource and

contract nonessential work, they simply have more time to concentrate on what they do best.

Locally strengthen industry value chain: The discussion in the previous chapter revealed that

only discrete parts of the segments' value chains are located in Vancouver. By locally

encouraging the development of either supplier or customers, Vancouver wireless companies

would have better influence and control over the value chain, which in turn would result in

improving their performance and gaining competitive advantage.

Develop and join networks: The local companies, which are small and medium in size, need

to develop their ability to join forces to face larger competition. They have to become more

agile and capable of changing and reconfiguring. A company's boundaries may need to

become more and more fuzzy as activities are continuously positioned and rearranged from

wholly owned operations, alliances, joint ventures, subcontracts and supply agreements.

Pool resources for training employees: By teaming up to organize training for their

employees and further develop their skills, Vancouver companies would reduce their

employee development costs and access better quality learning. For example, by organizing

joint-technical and professional seminars and inviting the best experts in the field, all

attendees will emerge with a higher knowledge base. Another aspect of cooperation is for

companies to allow and encourage their own experts to train and mentor their peers from

other organizations. This strategy also involves strengthening industry-university

relationships, for example, by partnering for research, providing temporary or part time jobs

to students as part of their education, creating industry specific educational programs, etc.

Consult each other on stratew and processes: These actions are recommended for companies

that do not directly compete with each other. The benefit for the companies is to learn from

others' experiences and share tacit knowledge. Going through this process also provides

company with feedback comparable to an outside audit. This type of action presumes

reaching a certain level of openness and trust.

Partner on specific business opportunities: Integrating two or more companies' skills for

specific business opportunities would allow them to access and complement each other's

advantages, then potentially gain a marketing advantage and better access to new markets.

The proximity of the partners allows for the establishment of more efficient relationships to

take advantage of emerging opportunities.

Follow the local industry leader in their markets: This strategy may be beneficial for small

companies to enable efficient and economical access to new markets. Establishing new

market channels is complex, onerous and time consuming; sometimes only large companies

can afford it. Targeting the same markets as the local wireless industry or related business

leaders would enable easier access to their established channels and experiences.

Get closer to customers: Local wireless companies may gain tremendous advantage by

locating part of their activities, generally front-end or back-end activities, geographically

close to their largest customer concentrations. Examples of these activities include sales

functions, marketing, system design and integration, value added services, post sale support,

etc. In addition to improving the customer relationship and being more attentive to their

needs, this action would potentially allow the company to take advantages of the strengths of

their customers' industry cluster strengths.

For investors and entrepreneurs:

Scan new business opportunities for congruence with cluster strengths: Entrepreneurs and

investors contemplating new business opportunities in Vancouver would have more chance

of success if the business advantages relied on more than just the advantages of factor

conditions. Business opportunities that can satisfy sophisticated local demand or necessitate

the combination of multiple disciplines that are locally strong would provide more solid

foundation for later global competition and differentiation.

Adopt upfront sound stratev and business management: Technological innovation may be

what enables a company to enter a market, but good strategy and rigorous execution is what

enables it to self-sustain, creating value and reaping the benefits. Entrepreneurs ought to have

a larger planning scope that extends beyond proving that the idea is marketable to include

strategies about sustaining and growing the business and reaping the expected benefits.

5.2 Cluster Management

As a group, the local Vancouver wireless telecommunication industry may benefit from

the following activities:

Develop a shared vision for the cluster: This starts with first determining the existing sources

of the region's competitive advantages. The next step is identifying the shared values of the

participants in the industry. Then the focus should move towards creating a cluster vision.

Cluster management: An entity has to be created, or alternatively a few people have to be

authorized, to act as the cluster driver. This entity, or group of people, has to create

opportunities and events for improving the interaction and networking activities between the

local firms. In Vancouver this has already taken place with the creation of the Wireless

Innovation Network of BC organization.

Marketing; the cluster: This is an important communication activity that has both internal and

external components. On the one hand, marketing the cluster internally within the industry

facilitates bringing the participants together and develops a shared identity. Additionally, it

increases the participants' awareness of each other and stimulates a healthy local rivalry. On

the other hand, marketing the cluster externally helps attract investors, entrepreneurs, skilled

workers, and multinational companies to the region, resulting in further development of the

cluster. It also enhances the individual companies' branding activities.

Develouing the cluster: The cluster management entity can further play an important role in

facilitating the exchange between the participants and spearhead collaborative programs that

would benefit a large number of local companies. Such activities include, for example,

organizing seminars or administering funds for innovation or university research. Over the

long range, this entity can also enhance the corporate compatibilities, and harmonize and

upgrade the managerial techniques of the local companies. The development of such

corporate culture would benefit the companies directly, and also enable them to easily create

business relationships and partnerships.

5.3 Public Policy

The role of public policy should be to create and maintain internally market-based

business environment and to overcome obstacles for free trade. Directly funding or subsidizing

an entire industry or company grouping, especially in the technology sector, has medium-term

negative effects, as the protected firms do not develop a sustainable competitive advantage.

There are few policies impacting the wireless telecommunication industry alone. Overall the

public policies aimed at enhancing the business environment in general and the high technology

sector in particular would benefit the wireless companies regardless of their location within

Canada. The most important public policy actions that would benefit the Vancouver wireless

cluster include:

Liberalization and breaking monopolies in the telecommunication market: This should

happen in order to improve competition that would drive high quality services and affordable

prices, which in turn will create demand.

Making more wireless spectrum available and affordable: Lowering the spectrum licensing

fees and making more bands available would create lower consumer service charges and

enable the development of newer applications that require more data bandwidth.

Further support research and innovation: More funding for universities and advanced centres

would benefit the local wireless companies that derive from and draw on their strengths.

Support exporting: The majority of Vancouver wireless companies are exported. Removing

trade barriers and lowering the export risks would positively help the local companies,

especially if they go after Asian and developing countries' markets.

Further enhancing copyrights and patents protection both domesticallv and ~loballv: Many

of the firms in Vancouver are engaged in developing content for wireless devices. This

measure will enhance their ability to innovate and produce. Content development is further

enhanced by the presence in the region of a strong new media cluster, cosmopolitan culture,

high tolerance and cultural diversity.

Enable networking and partnerships opportunities: The various levels of government may

help the sector by sponsoring and organizing opportunities for firms to showcase their

products and providing forums for networking and exchange.

5.4 Further Research

The implementation of the recommendations in this chapter will strengthen the

Vancouver wireless cluster and enhance its ability to grow and develop. Ultimately this will

translate into sharpening the competitive edge of the local companies. It will also better position

them on the global stage. The necessary actions involve improving strategies and management

processes, adopting a system view taking in consideration the local environment and enhancing

collaboration within the cluster.

The methodology adopted in this project is by no means unique to the Vancouver

wireless cluster. It could be used for studying other clusters from other industries. It pre-supposes

the existence of a cluster and proceeds with a top--down approach to determine its

characteristics, structure and dynamics, combining available quantitative and qualitative data.

This approach has inherently some caveats stemming from being considerably based on

secondary data and from subjectivity caused by restricted information.

Further research may need to focus on investigating specific issues, which may need to

be eventually based on primary research. A better understanding of the particular knowledge

spillovers mechanisms, organizational learning methods, informal network operations, and

cooperation and rivalry patterns, would further enhance the development of the Vancouver

wireless cluster.

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APPENDlX 1 - KEY GLOBAL INDICATORS FOR THE WORLD

TELECOMMUNICATION SERVICE SECTOR

Note: 2002 data were estimated while 2003 were forecasted.

subscribers (millions) International telephone traffic minutes (billions)

Personal computers (millions)

Internet users (millions)

Source: International Telecommunication Union (2001). Retrieved on June 10,2004 from http://www.itu.int/ITU-D/ict/statistics/at~~1ance/KevTelecom99.html

16

38

130

4.4

23

43

155

7

34

49

175

10

56

57

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21

91

63

235

40

145

71

275

74

215

79

325

117

318

89

375

183

490

100

435

277

740

118

500

399

127

555

502

9551,1551,329

135

615

580

140

650

665

APPENDIX 2 - VANCOUVER WIRELESS CLUSTER COMPANIES AND

SURVEY RESULTS

Legend

C: customer type 1 consumer 2 enterprise 3 carrier

P: productlservice type 1 components 2 equipment 3 transport 4 software 5 service

T: Technology type 1 PCS 2 Fix Wireless 3 WLAN 4 PAN 5 Satellite

0: Origin A Vancouver C Canada U United States X Global

L: Legal Status P private S public

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wor

ks.

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Net

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td is

a w

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tern

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bas

ed

n Va

ncou

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olum

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are

a of

ex~

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udes

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less

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psid

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plifie

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0 fo

r bot

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obile

and

fixed

wire

less

voi

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nter

net a

nd d

ata

base

sta

tion

and

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quip

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nity

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oprie

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wire

less

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pnco

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tions

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deve

lopm

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wire

less

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form

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rver

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appl

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look

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w.ip

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appl

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to th

e ve

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grat

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way

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tem

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data

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plic

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hard

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par

king

and

wire

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spo

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erru

s Va

ncou

ver (

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642

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sing

any

mob

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SAF

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eld

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suite

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for t

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uple

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filte

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y,vw

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302-

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suite

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ervi

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desi

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spe

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to

Burn

aby

604-

630-

5653

'la

ndle

the

esse

ntia

l day

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ay su

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have

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ppor

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tiple

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tele

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mun

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couv

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04)

for w

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form

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vices

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dLog

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sses

the

need

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obile

25

7-36

60

3evi

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sers

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sim

pler

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tem

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wire

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604)

638-

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lead

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ext g

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tellig

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ters

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stru

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plic

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rovi

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