If the promise of enhanced wireless services was a hot-fudge sundae with lots of toppings, about the only thing wireless customers have been served so far is vanilla ice cream sprinkled with nuts.
That according to Larry Swasey, senior wireless analyst at Allied Business Intelligence, New York.
Analogies aside, the underlying point is the potential of enhanced services has yet to be realized. It’s no secret the take rates on most value-added services are extremely low.
“It’s a sad commentary that voice mail is the leading enhanced service in the marketplace,” said David Kerr, director of wireless programs at Strategy Analytics.
According to Strategy Analytics’ “Cellular & PCS Market Outlook,” penetration of voice mail is about 14 percent, followed by information services at less than 10 percent, fax services at nearly 4 percent and e-mail services at less than 2 percent.
Most carriers offer voice mail and caller ID as standard services and charge a monthly fee for other enhancements.
“We’ve taken the position that voice mail and caller ID are inherent,” said Walter Zirkle, vice president of CFW Communications, a cellular and personal communications services carrier with markets covering about 5 million people. “All services include those as standard features.”
Enhancements, such as the combination of a voice mailbox for home and wireless phones, have proven to be popular, he said. The company also is considering offering a service that rings multiple phones simultaneously.
Powertel Inc. also includes voice mail and caller ID in its service plans and charges extra for custom-call services, call forwarding, enhanced voice mail, fax service, alphanumeric messaging and call detailing on bills.
“The take rates are very low on these services,” said Mike Bashaw, vice president of marketing and product development at Powertel. Bashaw said the most popular service is detailed billing, followed by alphanumeric messaging and Powertel Mail, which is an enhanced voice-mail application. “The rest are kind of niche-oriented and do not necessarily have broad appeal.”
Reaching the customer
There is no shortage of ideas for wireless enhancements, and many carriers are testing and offering a wide variety of value-added services. So why are the take rates on most services less than impressive?
The answer may have to do both with the message and the messenger.
In a nutshell, customers are bombarded with offers of services promising to make their lives easier. Wireless phones can do everything from notifying customers of breaking news, telling them their stock has dropped or alerting them anytime someone has tried to reach them.
It’s no wonder customers are confused and overwhelmed.
“Consumers tend to forget things because they are inundated with so much information,” said Powertel’s Bashaw. “We find that customers that have been on our service for a year or more forget about some of the basic services we offer.”
One solution to the information overload, said Bashaw, is to segment customers by their propensity to use a certain service. Carriers then can market that service, or a bundle of services, only to customers who might need and be willing to pay for that service.
Once customers start using an enhanced service, he said, they won’t want to give it up.
“A good example is caller ID,” said Bashaw. “It is the one feature that if customers were faced with having to give it up, they would be willing to pay more for it.”
But how do carriers get customers to try an enhanced service for the first time? Bashaw said offering a service free on a trial basis is one way to get customers interested.
“We’ve never wanted to be in the bait-and-switch mode, so we were reluctant to do that,” he said. “On the other hand, we want customers to use and like the service and not want to give it up.”
Another area carriers need to work on, said ABI’s Swasey, is customer service. If a customer is interested in a service but has to wait an hour to get a representative on the line to answer a question or set up the service, that customer is going to give up.
“Carriers need to call stuff like caller ID and voice mail `basic services,’ ” said Swasey. “It is upsetting to consumers because they aren’t getting the services they thought they were promised, and then they can’t even get to customer service in order to get the ones that are available.
“It turns them off of wireless because it feels like a form of false advertising,” continued Swasey.
More power
Wireless handsets are getting smaller and lighter, which can lead to a difficult situation for enhanced services, particularly data.
“You’re never going to write a dissertation on your wireless handset,” said Swasey. “You’re probably not going to do more than simple calculations.”
The reason is the size of the keypad and screen make it difficult to manipulate data coming in or going out.
Only about 5 percent of consumers use data services, and voice applications still comprise most wireless enhancements, said Swasey.
“Right now, there are much better vehicles for getting the information you need-a laptop, a wired phone, even a newspaper,” said Swasey. “If an information service delivered a headline that says, `The world is ending,’ you still don’t have the story. You still have to go out and get a newspaper.”
And in order to support more complex services, digital signal processors are going to have to do more work.
“You really need to have a lot of computing power in order to have great voice and robust enhanced services that go beyond voice mail and caller ID,” said Swasey.
Alex McCarthy of Dialogic Corp., a company that manufactures computer-telephony components, said improvements in DSP capability are key to enhanced services.
“Look at the enhanced services in the wireless space,” he said. “With prepaid, you need the ability to play prompts. That requires a DSP. Voice-recognition technologies use software running on DSPs. Text-to-speech technologies all typically run on a DSP.”
Enhancements such as word and voice-recognition technologies, which make it easier to input information into handsets, and text-to-speech technologies that can help deliver data to users will contribute to the growth of enhanced services, say analysts.
Intellivoice Communications Inc. is one such company developing voice-activated dialing services, operator services and conversational user interfaces. Intellivoice’s product supports applications, including a service that would allow customers to check their voice mail without ever having to touch the keypad and a service that would read e-mails to customers.
Another enhancement that could lead to increased use of services is a filtering function for wireless customers who receive e-mail messages on their handset. RTS Wireless offers a system that allows customers to determine which messages will get forwarded to their phone depending on who sent it or what the subject line says, for instance. Messages also can be delivered only at certain times of the day, or a summary of all messages can be sent rather than each individual message.
The proliferation of the World Wide Web also will continue to be key in the growing use of enhanced services. The Web allows end users to do things like change the information services they are receiving.
Tomorrow and beyond
Short message services could be the next wave of services to gain mass market acceptance.
“We believe that SMS does have significant potential among the consumer market, but not at an additional monthly fee of $10 or more per month,” said Strategy Analytics’ Kerr.
SMS and information services, said Kerr, stand the best chance of widespread adoption if they are priced on a per-event bas
is or even sponsored, and if the information sent to customers is highly localized.
The key is to determine what information is valuable to the recipient. For inst
ance, consumers might be interested in receiving notification if their child’s school is closing due to bad weather.
And for the power users who need more than just information, Aether Technologies International is working on a service that would allow customers to do real-time stock market transactions via their wireless device.
Another service thought to have a lot of potential is unified messaging platforms like the one Lucent Technologies Inc. and Sun Microsystems Inc. this month agreed to collaborate on. The service would allow voice mail, e-mail and fax services to be delivered to any device or media, said the companies.
Excel Switching Corp.’s wireless product marketing manager, Rick Rotondo, said he expects we’ll see services that bring together private branch exchange networks with wireless networks to allow customers to use wireless handsets like they would a phone in their office. He also said the possibility of advertiser-supported calling could gain popularity.
Although the market for enhanced services may be in neutral right now, the potential for growth is there. In its “1997 Mobile User Survey,” the Yankee Group indicated interest in enhanced services is higher than usage, with between 11 percent and 33 percent of respondents indicating an interest in a variety of enhanced services.
The Yankee Group also forecasts revenues for the U.S. enhanced services market to reach $1.3 billion in 2006 from only $59 million in 1996.
