For U.S. carriers, the race to deploy ringback tones is on.
Ringbacks-the clips of music a caller hears instead of a traditional ring before the person being called answers the phone-began making headlines last year, when uptake exploded in some Far Eastern markets. Asian operators generated more than $100 million in ringback sales last year, according to a Yankee Group study, with carriers like Korea’s KTF seeing 70 percent to 90 percent of its subscribers using ringbacks in the first few months of coming to market.
First Cellular of Southern Illinois launched the first ringback service for U.S. subscribers last October, and Verizon Wireless followed suit a month later, offering the application to users in Sacramento and Southern California. T-Mobile USA became the lone carrier to offer nationwide ringback tones in December and is rumored to have about 250,000 subscribers who pay monthly fees for access to ringback tones.
The carrier declined to comment on specific figures, but said the ringback service has gained traction since coming to market just three months ago.
“In all truth, the uptake has really exceeded our expectations in terms of how well people have reacted and responded to the service,” said Michael Gallelli, director of content services for T-Mobile USA. “We’re continuing to add new subscribers every day.”
Analysts say ringbacks have at least as much market appeal as ringtones and have far more potential for generating revenues. Because the technology for the service resides on the network, not the handset, users can own several tunes at a time and can change ringbacks based on caller ID, time of day or simply on a whim. A teenager can choose an oldie for each of his parents, a rap song for his friends, and a ballad for his girlfriend.
What’s more, carriers have created subscription-based business models for their ringback services, unlike most ringtone offerings, which are one-time transactions. T-Mobile, for instance, charges $1.50 per month, and ringbacks cost $2 each for 12 months of use. The carrier offers a free first month of service and provides one free, pre-selected bonus tune to users each month.
T-Mobile is finding the demand goes beyond music clips, as well. The carrier is finding success with voice clips of celebrities like Snoop Dogg asking the caller, “Did you expect a ring?”
Because ringbacks are heard by only one person, their “viral” nature may not parallel that of ringtones, which can be heard be everyone within earshot of a ringing phone. But while ringtones caught fire among young users looking to use their phones to stand out among their peers, ringbacks may appeal to more mature subscribers looking to send messages in more personalized ways, according to Seamus McAteer, senior analyst with the mobile data measurement firm MMetrics.
“There are a lot of people who want to make a statement and have control over people to whom they make a statement,” said McAteer. “They’ll buy (a ringback tone) just for their partner to hear or something especially for their kids to hear.”
The projected revenues have resulted in a stampede of carriers of all sizes to deploy ringback tones. Verizon has expanded its service to several western markets and plans to deploy service nationwide by the end of the year. Cingular Wireless L.L.C. is shooting for a national launch by the third quarter of this year. And Sprint PCS was rumored to have launched service earlier this year, only to scratch plans due to technical issues. Last week, Sprint declined to give an estimated date for a ringback launch.
Meanwhile, second- and third-tier operators are scrambling to keep up with-or even outrace-their bigger brethren.
“We are seeing a lot of inquiries and activity” from carriers looking to deploy ringbacks, said Les Gay, vice president of business development for Preferred Voice Inc., which powers First Cellular’s offering. “Some of the Tier 2s are scrambling to re-budget” to more quickly roll out service. “They see tremendous opportunity; they’re hearing the same rumors.”
While nearly every wireless user knows what a ringtone is though, many are still unaware of what a ringback tone is. In fact, a ringback can be unnerving to a caller who’s expecting the traditional monotone ring. That’s why carriers looking to capitalize on the service need to educate customers about what they are and why they’re valuable, said Linda Barrabee, a senior analyst with The Yankee Group.
“Because there is still limited availability of the services and pricing is different,” said Barrabee, “carriers need to build market awareness around the service-what it is, what are the distinct value-propositions by segment, how to set it up, etc.”
