Paging: Phoenix or Dodo?

Jesse Ventura's transition from wrestler to politician is proof that in America, you can reinvent yourself. That's good news for paging, which remains a sort of Jesse Ventura of the wireless industry: A lot of people are receiving their messages, but they have a lot of work to do to convince people to invest in their ideas for the long haul.

Many industry analysts say paging's woes -- some of the largest carriers trade at less than $1 a share -- stem from a preoccupation with cash flows generated from the "cheap beep." Failing to recognize the direction the wireless-data market was headed also didn't help.

"The window shut on (paging companies) to a certain extent, and now they have to retrench and figure out what their market opportunities are," said Eric Zimits, Hambrecht and Quist managing director. "But there was definitely a time before the widespread roll-out of digital technology on the cellular/PCS side where they had a very unique proposition. It was kind of poor financial planning on the part of the paging service providers and an inability to grasp the market direction."

But paging companies say they've now grasped the wireless-data market and intend to wring it for all they can. They tout 2-way devices, personalized Internet content, advanced messaging and telemetry as keys to their strategy for retaining customers and driving high-end sales.

Some analysts agree that convergence with the Internet just might be paging's saving grace. For example, although advanced-messaging subscribers will account for only 23% of the total subscriber base by 2004, revenues are expected to top $3.1 billion, representing more than 50% of total industry revenues, according to The Strategis Group. The firm also anticipates monthly average revenue per user will jump $2 to $10.16 by 2004.

PageMart is so determined to identify itself with the Internet that last month it changed its name to WebLink Wireless. The company has invested in advanced messaging and a 2-way paging network that covers 90% of the country and cost three times the amount it took to start the paging industry itself. Its new Enterprise Solutions Partner Program partners WebLink with application developers to develop 2-way paging solutions for businesses, said John Beletic, WebLink Wireless chairman & CEO.

The upgrades will allow Web-Link to offer 2-way short-message service (SMS) and Internet content and let paging devices communicate with handsets and PDAs on other networks. That makes phones with advanced-messaging capabilities more facilitators than competitors, Beletic said.

"If anything, we wish that they could all have 2-way capability right away," Beletic said. "The way we look at it, there's going to be this phenomena of SMS (and) device-to-device (messaging). What we want is a bigger population of devices out there. So we don't care that phones have this capability because that increases the utility of our customers."

PageNet is taking a similar approach. Its massive restructuring, upgrading and merger with rival Arch Communications often overshadows its Vast Solutions subsidiary, which turns one year old this month and projects sales in double-digit millions by year's end.

Vast's market is the wireless Internet, delivered to any device, via any network. Vast Wireless Solutions develops customized hardware and software integration solutions for companies to link employees to intranets, databases and even remote industrial assets. That just may do the trick.

"The interest at an enterprise level in extending their applications wirelessly is enormous, and that's the solution that Vast brings," said Hambrecht and Quist's Zimits.

Vast Gateway, meanwhile, simplifies data transfer by managing complex protocols for different types of users, and Vast Online offers carriers the ability to customize the Internet for customers using any wirelessdevice.

Like WebLink Wireless, Vast welcomes competition from handsets that offer many of the same capabilities as pagers because of the innovation it fosters, said Mark Knickrehm, Vast Solutions president.

"You've got more complexity because you've got multiple WAP phones with different capabilities and standards (and), hence, a greater need for a middle man."

Paging also should get a boost both from a PCIA-led national television campaign promoting 2-way paging and from non-telecom players eager to grab a share of the growing market for wireless connectivity. Dell Computer, for example, will sell Research In Motion's popular 2-way pagers, which will include many PDA functions, such as calendar and contact lists. The pagers will be able to talk to wireless-ready Dell desktop devices.

Vendors continue to develop tools to help paging benefit from the convergence of wireless and the Internet. For example, Motorola's ReFlex 25 upgrade to its ReFlex 50 2-way paging protocol will allow virtually all of the major paging carriers' networks to "talk" to one another using a single air interface. It's what the carriers want, said Vic Jensen, Motorola Flex and ReFlex technologies engineering director.

"Obviously there's competition between the carriers, but by and large they understand that there is a bigger picture to this," Jensen said. "Everyone is looking at (convergence) in terms of how it will help the industry (and) how we drive the device costs down and provide interoperability."