The European paging industry got up in 1999 to an unpleasant wake-up call: A small consulting firm published in January a report, financed by the European Commission, which prophesied paging would be practically extinct within three years.
Six months later, the prediction looks unlikely to materialize, but operators and manufacturers have not yet fully recovered from the shock they felt in the first place. There is no panic, but there is no euphoria either. Business had been growing, between 1995 and 1998, at an average of 25 percent per year, with peaks of 196 percent in markets like France and the United Kingdom. Sales are now in the single-digit growth rate area. In more traditional industries, this would be considered a positive indicator. In wireless communications, it is a sign of decadence, the benchmark being cellular telephony, which grows at the pace of 40 percent.
The report that I referred to earlier gave no scientific explanation as to the methodology that drove its authors to their apocalyptic conclusion. It offered, however, an opinion: As penetration of cellular telephony increases and usage charges fall, everyone will end up having a GSM phone that will cover all the needs of the user.
But, although mobile telephony is omnipresent and affordable, people really use telecommunications to exchange messages. Professor Nicholas Negroponte and his colleagues at the Massachusetts Institute of Technology Media Laboratory strongly believe the most pragmatic and efficient form of communication is asynchronous-in the sense of non-real time. Many of us know, by experience, that it is true.
The distinct preference of telecommunications users-that is, all of us-for wireless solutions, and their need to communicate short pieces of information at their convenience, demonstrate there is an enormous market for paging. The world counts 130 million users, 10 million of whom are in Europe. The short-term potential, however, can be estimated to more than half a billion worldwide. Why is it, then, that people talk about a crisis in our industry?
It is because analysts confuse the potential size of the market for wireless messaging with the present lack of profitability for many operators. The demand is there, but the product is not properly positioned in the minds of the users. And the business model is based on calling party pays, or CPP, which has been defeated by the prepaid solution offered by cellular operators.
The European paging industry did not, obviously, wait until the referenced report slapped us in the face. EPPA, the European Public Paging Association, had already initiated in June 1998 strategy work with the aim of formulating a pragmatic vision for the medium term. The effort was shared by most of our members, and the results are about to be published. Some of the findings and conclusions of this report lead to these observations:
Users want wireless interactive communications that are user friendly and affordable. They are indifferent to the underlying technology (paging, SMS, or whatever).
Paging must converge toward wireless messaging, at the risk of eventually losing its distinct identity, in order to get a successful facelift.
The industry should focus on its distinctive core capabilities of short messaging, broadcasting, call-center management and know-how of selling messaging.
Essential for growth is that paging be complementary to, and in collaboration with, other forms of telecommunications.
Strategic alliances with reputed developers of applications and devices are key to repositioning paging as a communications tool for the 21st century.
The industry needs to re-conquer the business user, who was neglected during the race for CPP-based consumers.
The consumer segment is, nevertheless, very important and promising. Its segmentation for appropriate and lucrative products and applications will be essential.
Large organizations, such as former PTTs, are likely to abandon paging over the next couple of years. Consolidation will occur in every country. This will be beneficial to paging, as long as new motivated and powerful investors are found.
Such investors will be attracted if the market becomes truly European, rather than strictly domestic, to offer substantial economies of scale and scope.
The logistics of paging will have to become more efficient through frequency harmonization and protocol standardization throughout Europe, in order to positively impact the selling price of the pager.
It may not be obvious, but the European paging industry can walk and chew its vision at the same time. Some of the findings have already resulted in actions, such as the formation of the EPPA Globalization Working Group, which deals with improving the logistics of pagers. Furthermore, a sustained lobbying effort has resulted in a CEPT recommendation for allocation of harmonized frequencies in 43 countries to implement two-way paging. If the recommendation is adopted by the CEPT in July, we shall see the first interactive paging networks as early as the beginning of next year.
Jacques N. Couvas, is the chairman of the European Public Paging Association.
