New protocol-based paging technologies may not only alleviate carrier capacity problems but also may transform the nature of service offerings from “cheap beeps” to “paging on steroids.”
Alphanumeric paging, the first “enhanced service” to be offered by carriers, ran smack into the problem of network capacity limitations dogging the industry. Even though alpha subscribers reportedly generate two to three times more revenue per subscriber-with less churn-than numeric subscribers, most carriers simply lack the capacity to offer the service.
Prudential Securities estimates alphanumeric and enhanced messaging devices account for less than 10 percent of the industry’s subscriber base.
MobileMedia Communications Inc. has been the exception. Before its recent acquisition of BellSouth Corp.’s paging subsidiary, MobileComm, 16 percent of MobileMedia’s subscriber base was alphanumeric, according to Prudential.
“MobileMedia has been the leader in alpha and will probably use MobileComm to push alpha nationwide,” said Ann Lynch, an analyst with Boston-based Yankee Group.
But all paging carriers have a stake in developing new enhanced services.
A new study from the Yankee Group notes, “Service revenues have been declining by 10 to 15 percent per year for the last five or six years*…*It is imperative for service providers to collectively reverse this trend by adding value as a competitive tool rather than by decreasing price.”
But Lynch added, “It’s going to take some time before these new technologies come to market in a radically new form of paging.”
Mobile Telecommunication Technologies Corp. was first out of the gate, winning a pioneer’s preference narrowband personal communications services license from the Federal Communications Commission for a national two-way service that currently uses Motorola Inc.’s ReFLEX high-speed paging protocol. The FLEX family of protocols overcome the capacity problems that have held paging companies back from introducing enhanced services.
SkyTel 2-Way service was rolled out in 1,300 cities covering the top 50 markets last October. Users could respond to a page by scrolling through and choosing from a response list of 16 canned messages or compose a response on a cable-attached personal digital assistant.
Like many pioneers, Mtel has been hit with a lot of arrows in its trailblazing. SkyTel 2-way has suffered technical glitches that have impacted the company’s profitability, stock price and debt rating. The Motorola Tango two-way pager has also been criticized for its bulk and flip-style design.
But beyond what the Yankee Group calls the “teething problems” of introducing a new technology is the question of how new enhanced services will integrate into paging company culture and their markets.
“Paging won its customer base because of some very simple features: coverage, in-building penetration, cost and battery life. That gave them a mass market with a variety of widely available low-cost devices,” Lynch noted. But with the new technologies, “Operators now have the capacity to chase those guys that want channel-hungry applications, but the key selling propositions have to be maintained, or they’ll lose market share,” she said.
Paging companies are going through a period of rationalization as they try to become more operationally efficient in the face of declining service revenues.
“Right now, paging carriers are focused on consolidation and managing fast growth,” said Ron Lipof, president of Arch Nationwide Paging. At this point in its growth curve, the paging industry may not need market segmentation and niche applications, just better service overall, he said.
Toward that end, Arch developed a bundled package of enhanced services all tied to the user’s toll-free pager number. Along with numeric and alphanumeric paging, these services include the electronic storage of voice mail, faxes and e-mail with instant notification forwarded to the pager. A live telephone call also can be held while the pager rings to alert the user.
Using personal computers to load messages onto the paging network is becoming commonplace for Arch and other paging companies. Some carriers have taken the practice a step further by facilitating message input using the Internet or online services such as CompuServe, as well as embedding messaging capability into popular software packages.
“[Microsoft Corp.’s] Windows 95 is capable of sending messages directly to alpha pagers; such software interfaces should lead to an explosion in demand for applications and services,” Prudential said.
The industry’s largest carrier, Paging Network Inc. is taking an even bolder step toward user-friendliness with its VoiceNow voice messaging service using Motorola’s most advanced InFLEXion technology.
VoiceNow reportedly will be introduced on a limited basis in Dallas, New York and San Francisco this summer with a general service rollout in January.
“We could see it really take off,” the Yankee Group’s Lynch said. “It’s intuitive and fairly easy to input a message.”
One potential problem Lynch sees is that only one voice pager is currently available, the Motorola Tenor.
Lynch believes that vendors need to offer a variety of colors and sizes, just as they do for traditional numeric paging. But, “Manufacturers are sitting there and thinking, `Which technology should I build to?’ Everybody’s waiting,” she said.
Some vendors already are pushing into the final phase of enhanced services-two-way data transfer using PC Card paging receivers and embedded telemetry applications-by marketing software developer kits.
Leading paging carriers have a tremendous advantage in introducing such enhanced services because of their national coverage footprints. They won’t have as many of the fragmented interoperability problems cellular carriers have had to deal with in introducing their own enhanced services.
