Hands-free technology gets a boost

Most U.S. states are weighing legislation that would prohibit talking on a hand-held mobile while driving, but New York last week became the first to approve such a ban — an action that promises to highlight alternatives such as hands-free systems and voice recognition.

Just weeks after national programs such as NBC's Dateline investigated fatal accidents blamed on drivers distracted by mobile-phone use, New York legislators passed the ban, which was expected to be signed by Gov. George Pataki after press time. The law, which does not address the issue of dialing when driving, is expected to become effective on Nov. 1.

Wireless carrier opposition to the New York decision may not be as loud as analysts expected. However, the potential snowball effect the ban might have could pressure carriers to re-examine the marketing of hands-free options and other technology that might alleviate safety concerns (see figure).

At the same time, analysts do not believe the New York law will deter usage of wireless devices.

“This is a safety issue and has nothing to do with taking away carriers' ability to attract usage from drivers,” said Eugene Signorini, an analyst with The Yankee Group.

While the legislation highlights the negative effects of using a hand-held phone while driving, analysts also are quick to note the safety benefits of wireless access.

“Carriers might be frightened by this, but there is equally compelling evidence that cell phones promote safety,” said Cliff Raskind, senior industry analyst for wireless data and computing services at Strategy Analytics. “While there have been awful accidents caused because a driver was distracted by using a cell phone when driving, at the same time, people have been rescued by having a cell phone.”

Education is the key, according to Raskind. The Cellular Telecommunications & Internet Association and some carriers echoed this sentiment.

“We believe that education and the enforcement of existing laws is the most effective way to deal with the overall issue of driver distraction,” Cingular Wireless said in a statement released in reaction to the vote.

But wireless carriers are not the only companies to be affected by the ban.

Plantronics, known as a supplier of communications headsets in the call-center market, expanded into the cellular segment in 1997 after noticing that headset demand was growing year after year, said Beth Johnson, Plantronics' director of marketing for the mobile communications division. Now that New York has legislated in favor of hands-free technology, Johnson believes growth in the headset space will be on the rise.

“If you look at the market in general over the last three years, headset penetration has doubled year over year,” Johnson said. For the year ending in March 2001, Plantronics grew by 300%, according to Johnson.

“I think one thing that the New York legislation has done is brought up the hands-free angle to a wide audience and not just in New York,” she said.

Others foresee more carriers offering bundles that include headsets. In addition, the ban could create opportunities in telematics, said Signorini, who also believes the legislation will create opportunities for voice-technology companies.

“Voice activation may be promoted heavily in conjunction to safety — or as an add-on function to the handset [and headset] instead of a standard service — so that carriers can bring in a little extra revenue,” he said.