NEW YORK-Instead of viewing paging as a dying industry, wireless telephony providers should recognize it as a service enhancement and growth catalyst, said Andrew Weisheit, vice president of the carrier service division of PageMart Wireless Inc., Dallas.
“Many folks we talk to on the facilities-based (carrier) side say they think paging will disappear,” he said May 18 in a presentation titled, “Creating Mutually Beneficial Network Alliances.” It was part of a conference on “Valuation for Telecommunications Licenses and Business,” sponsored by IBC USA Conferences Inc., Southborough, Mass.
Of course, there is at least one notable exception to this dour view. BellSouth Cellular Corp., also headquartered in Dallas, recently signed an agreement with PageMart allowing it to add paging to a mix of bundled services the cellular carrier plans to offer.
“While we have some dominance, PageMart is not as well known as a BellSouth, and retailers in many cases prefer to deal with a nationally known brand,” Weisheit said.
He also leveled an oblique critique of the paging sector, saying that some companies are poorly equipped to capitalize on the potential for bundled wireless services arrangements.
“Many folks who have come up through the ranks in paging are aware that many regional carriers lack triage plans or back-up systems for network delivery and information systems,” he said.
“A major concern of many (wireless telephony carriers) is whether they will add a service worth $8 a month and jeopardize a subscriber worth $150 a month. [They] want to exercise control, especially on the customer-care side, over the type and quality of service their customers receive.”
Nevertheless, for those on the telephony side of wireless who look down their noses at paging, Weisheit offered these statistics. The 50 million or so paging customers in the United States today equal the combined number of cellular and personal communications subscribers. By 2001, the number of paging subscribers is projected to grow to 66.4 million, according to The Strategis Group.
Today, more data is sent via paging than any other mobile communications network, he said. And he cited Strategis Group projections that an estimated 3.4 million wireless e-mail subscribers will transmit data over paging networks by 2001.
“We say there is substantial demand for advanced messaging, (although) 88 percent of industry revenue (today) is attributed to traditional one-way paging,” Weisheit said.
While it is true the average paging subscriber generates just one-sixth of the revenue of a traditional cellular customer, that is not the full story. Strategis also projects annual paging industry revenues to reach $7.2 billion within four years, up from $4.4 billion at the end of 1996, he said.
Furthermore, there is a significant degree of overlap in the customer base. Some 44 percent of paging customers also own cellular phones, and 27 percent of cellular subscribers also own pagers.
Of paging users surveyed, 31 percent have indicated they are likely to add cellular service within a year, while 14 percent of cellular customers say they are interested in purchasing a pager within that time frame.
“The average revenue of mobile phone users with paging is 21 percent higher than (of) non-paging [mobile phone] users,” Weisheit said.
“There is a linkage that can drive your core business, and the research has been validated by a number of different sources.”
Among users of all kinds of wireless services who were polled in one survey by The Yankee Group, 64 percent indicated their interest in using a single company for all telecommunications services and 34 percent said they wanted a single bill.
Demographics are on the paging industry’s side, Weisheit said. Half of all pagers in use today belong to people under age 30. Within this group, children under age 17 account for 14 percentage points, and young adults between the ages of 18 and 24 for another 24 percentage points.
Paging is therefore well positioned to serve as a rite of passage into a lifetime of multi-faceted wireless telecommunications usage.
According to one financial model Weisheit presented, a carrier can expect an average margin of $19 per month per customer for cellular service only on revenues of $51. This assumes technical, marketing and billing administration overhead of $32. Adding paging would raise margins to $23 on revenues of $59 after deducting $36 in overhead.
Teaming with mobile telephony in bundled service offerings would help paging carriers, which “traditionally have not had very robust voice-mail platforms,” Weisheit said.
“Voice mail can be used at the front end for cellular operators to let subscribers access the paging network.”
Wireless telephony carriers also control large blocks of telephone numbers, “and whoever owns the number owns the customer.”
Use of the cellular phone number would allow customers to migrate to additional services while also providing more control over carrier contact with subscribers, he said.
On the overhead side of the equation, Weisheit said bundled service arrangements could promote collocation of multiple wireless services transceivers at cell sites.
