There was a time, not so long ago, when reasonably priced voice service with decent coverage delighted most wireless subscribers. But subscribers soon were demanding the same features-like voice mail, caller ID and three-way calling-offered on wireline phones.
These features, previously known as enhanced services, today are integrated components of traditional wireless service, and the wireless consumer is still hunting for more options to add to his bag of wireless tricks.
Enhanced services, such as prepaid, wireless e-mail and dispatch, will be crucial weapons for wireless carriers in their ongoing battle for new subscribers and reduced churn.
“Mobile voice prices will continue to decrease, potentially leading to lower revenues per subscriber and decreased market share for those carriers who are not changing from their dependence on traditional voice services,” said Elliott Hamilton, director of U.S. telecom at The Strategis Group, Washington, D.C. “Enhanced services will be the key ingredient for carriers to differentiate themselves from their rivals.”
Prepaid; wireless data, e-mail and information; enhanced roaming; calling party pays; wireless location; and dispatch services will make the greatest impact on wireless carriers in the years to come, according to The Strategis Group’s new study, “Mobile Wireless Enhanced Services.”
In the near future, Hamilton sees prepaid as the most relevant and beneficial enhanced service. “If a wireless operator doesn’t have a prepaid option, they should.”
In the long term, dispatch services will become an attractive and useful offering for carriers.
“Most don’t (offer dispatch) though because the technology now is not a true dispatch, it’s more of a billing arrangement. A lot of carriers still aren’t sure what the market potential is, but they’ve seen the success of Nextel (Communications Inc.). Carriers are now devising plans to compete with Nextel,” said Hamilton.
Nextel offers Direct Connect, which allows a subscriber to speak directly to another subscriber by pushing a special button on a wireless phone, in essence, making a cellular phone a two-way radio. Nextel’s Direct Connect comes in local and business plans, and users can speak to one person, or multiple people at the same time.
Hamilton said a dispatch service such as Nextel’s is good for controlling churn because it’s hard for one person to opt out. Dispatch subscribers are expected to increase from 200,000 this year to approximately 25.8 million by 2004, according to The Strategis Group.
Prepaid perhaps has been the most popular service during the past year. The Yankee Group in Boston expects prepaid users to increase from 3.5 percent to 22 percent of all wireless users by 2003.
Most major wireless carriers have been reluctant to push their prepaid offerings, however, because prepaid subscribers historically have a very high rate of churn-about 9 percent per month for U.S. carriers, according to Andersen Consulting.
“In a perfect world, carriers would probably not introduce prepaid on their own. Prepaid definitely scares a lot of carriers,” Hamilton said. “But, as we see more PCS carriers enter the marketplace, there’s going to be a real competitive market in prepaid.”
On the infrastructure side, Nortel Networks has joined the prepaid game. The company recently entered into an agreement with Unefon in Mexico to supply infrastructure for a network that will almost exclusively be prepaid.
“We currently have a prepaid program in Canada. We have a WIN-based implementation and a prepaid service we consider a second-generation prepaid product that our customers can implement today. It parallels other prepaid offerings,” said Chris Deigle, senior manager of mobility services in the product marketing group at Nortel.
Deigle said Nortel is looking toward offering data services such as text messaging to mobile devices, and leveraging short message service and other products that enable Web-based messaging.
“We’re looking to assist our customers. There is a lot of pressure on price per minute,” Deigle said. “Enhanced services will help to shore up the value of revenue per customer. The customer will demand more and more along with their voice services.”
Deigle said Nortel also plans to develop group conferencing technology and make enhancements to two-way e-mail. The company sees group conferencing as a key element in helping work groups to better work together.
Data a la carte
With the advent of Wireless Application Protocol products and services, wireless e-mail, information services and other data delivery applications are clawing their way to the top of most carriers’ “next big thing” list.
Sprint PCS introduced in August its Wireless Web service, which officially launched at the end of September. The service includes Web browsing capabilities of select text-only versions of Web sites, automatic updates from Yahoo! on such topics as weather, sports and news headlines, and Web connection capabilities via a laptop, palmtop or other personal digital assistant, or a smart phone-like NeoPoint Inc.’s new smart phone and the pdQ smart phone from Qualcomm Inc.
Sprint PCS said it is offering the Wireless Web service to customers already subscribed to a voice plan valued at $30 or more at a flat rate of $10 per month.
Although Sprint PCS’ nationwide Wireless Web service is a beneficial move for the industry and an exciting new offering for the wireless consumer, Hamilton said he is scared the service will raise expectations in terms of data speeds.
“We don’t think that wireless data will truly catch on until we get some of the 2.5-generation technology, which will probably be in about two years,” he said.
Current data rates are at 14.4 kilobits per second, but given a few years, they could be as fast as fast as 118 kbps, Hamilton said.
For wireless two-way e-mail, a better keyboard entry system also is needed. Tegic Communications Inc. manufactures T9 Text Input software, which gives the phone’s standard keypad the capabilities of a full keyboard. T9 software requires one key press per letter, and recognizes the most commonly used version of a numeric sequence to form the correct word.
This software, however, has yet to be broadly integrated in wireless handsets.
The rising popularity of wireless two-way e-mail also could increase the use of text-to-speech technology. Users will speak their messages, rather than type them into the handset, laptop or PDA.
Like short message service and voice mail, Hamilton thinks carriers eventually will begin offering many information services as a part of their basic wireless service packages. Personalized functions such as the delivery of specific stock quotes, or access to niche Internet portals like women.com, will cost extra, Hamilton said.
Personalized service, as well as the obvious mobile benefits of wireless data, will be key in helping carriers differentiate their offerings from traditional Internet capabilities.
“You may find that the enhanced services are what people are shopping for in the future,” Hamilton said. “The emphasis now is on application. The more the carriers can offer personalized service, the better. I see a la carte menus developing.”
Hamilton also sees wireless data branching off into other areas.
“There will be offshoots, especially when you’re talking about Internet data. Probably the one that is most tentative is unified messaging. The question is, who sells that to you? It’s not quite clear who is going to get the revenues,” he said.
Various other enhanced services are being added to the mix as well.
Powertel Inc. introduced Appear Local. At $4 per month, it allows a customer to have two local phone numbers in two different area codes-one a hometown number and the other a number in another
Powertel service area.
“This will appeal to business users who want a local presence in two markets, even though they are in differ
ent area codes,” explained Mike Bashaw, vice president of marketing and product development for Powertel.
Comverse Technology Inc. also is beginning deployment of a global Internet Protocol-based network that will allow wireless carriers to offer to their roaming and visiting subscribers access to data and communication services by dialing “*home” on their wireless phones.
Enhanced services will be available to customers, even outside their local calling areas.
