While many in the wireless industry today target early adopters with high-tech gadgets and 3G services, Telular Corp. is taking a decidedly retro approach.
The Vernon Hills, Ill.-based company is hoping to entice wireline users to cut the cord at home with wireless products that mimic traditional telephone service. With Telular’s offerings, consumers can place calls on a wireless network from a wireline handset with a dial tone and without the need to push “send.”
Telular began trialing the devices, which also act as signal strength enhancers, through Sprint PCS last year.
“The market is really taking off in wireline replacement,” said Jeffrey Krevitt, Telular’s senior vice president of marketing. “For carriers, it’s a great way of dealing with a plateauing revenue stream” from voice services.
The 19-year-old telecom company is looking to shore up its bottom line by getting mainstream consumers to cut the cord at home. Telular’s stock has floundered since its 1994 debut on the Nasdaq, and the company reported a net loss of $2.9 million during its most recent quarter. Revenues during the period were down 47 percent from the same quarter last year, and the company’s chief executive officer stepped down in February.
It’s no wonder, then, that Telular is going after the home wireline market. One-third of respondents in a 2004 survey by online wireless retailer LetsTalk said they would cancel local phone service if wireless operators provided basic services at a lesser cost. And while the shortcomings of mobile service are well-documented, free features like caller ID, long-distance and night and weekend minutes can be compelling to wireline users.
“In the U.S., mobile number portability, coupled with improved cellular network quality, is encouraging many consumers to replace their landline service with wireless service in order to cut their phone costs and simplify billing,” said Krevitt.
Sprint is marketing the units as an additional line of service for users already under contract, and Telular is working to offer the devices through other carriers. In addition to voice service, the units can be used for faxes and, eventually, dial-up connectivity to the Internet.
Carriers will set the prices for the units, likely subsidizing the cost depending on a user’s rate plan and length of contract, Krevitt said.
Telular’s not alone among manufacturers encouraging consumers to cut the cord at home. Wireless Extenders, a Norcross, Ga.-based company, launched a home cell-phone signal booster last month, and Canadian cellular coverage company SpotCell is marketing a similar product with Cingular Wireless L.L.C.
“At the beginning of 2005, there were approximately 180 million wireless subscribers in the U.S., with about one-third of the subscribers having some coverage issues,” according to Lloyd Meese, president and chief executive officer of Wireless Extenders. “This puts the addressable market at approximately 54 million subscribers. The problem will get worse as carriers introduce higher speed networks.”
Home signal boosters generally start around $200, with more expensive systems nearing $1,000. Some have suggested that such a steep price could be prohibitive, particularly in light of cheap new voice services like voice over Internet protocol. But such nascent technologies can’t yet match the quality of cellular networks, according to Krevitt.
“Consumers are disappointed with new technologies like VoIP,” he said.
Telular’s “fixed cellular” offerings have met with success in other markets, as well. In nations like India and China that have yet to fully develop a wireline infrastructure, wireless networks are being deployed where telephone service never before existed. Telular products can get wireless service on yachts and in hard-to-access areas including remote vacation spots in North America. The company’s products also work as phone banks for on-site media events, and provides wireless security systems for law enforcement and emergency agencies.
For now, though, Telular seems focused on the wireline replacement market.
“This was really an attempt to see how the market would respond,” Krevitt said of the Sprint trial. “The early results are pretty encouraging.”
