Has 2-Way Paging Turned the Corner?

The narrowband PCS (NPCS) story sounds a little like a broken record: NPCS is going to save the paging industry. Although carriers and analysts have been optimistic about the potential of NPCS, the growth had stayed just that -- potential. However, that projected growth soon may become a reality as NPCS turns the corner on applications.

Completing the turn will not be an easy task in the current competitive environment. Many carriers are offering a dizzying array of services. Nextel is offering its dispatch/cellular/paging service, and RAM Mobile Data is offering mobile data, including paging service, over its network. Not to mention all of the PCS and cellular operators, which are pro-actively offering more value-added services, including single-number service and short message service. If NPCS carriers plan to compete, they need to focus on their strengths and look beyond their paging pasts.

"The paging companies have missed the boat in that they continue to position (their service) as paging as opposed to more generally messaging," said Stuart Lipoff, Arthur D. Little Consulting vice president & director of communication information technology.

Lipoff distinguishes the two by saying that paging lets the person receiving the page know that somebody has a message for him, but not what that message is. The loop is still open.

Messaging, on the other hand, closes the loop. Not only does the person receiving the page know that somebody has a message for him, he also knows what that message is.

NPCS carriers remain steadfast in the conviction that they offer significant differences and advantages over other wireless services. They claim that 1-way's benefits still hold true for 2-way: smaller, lighter weight, longer battery life and better in-building coverage.

If NPCS is to compete with other wireless services, however, carriers must educate end users about the advantages. But in order to educate the consumer, the salespeople themselves must first be educated.

"As you get into NPCS and advanced messaging, a lot of it is application selling and truly understanding the benefits," said Kerry McKelvey, Mtel vice president of marketing. (Mtel is the parent company of SkyTel.) He said the company conducted a 2-week training session for its top salespeople in every aspect of the company's narrowband messaging services and applications. McKelvey said the team then visited Fortune 1000 companies to educate them about the applications and messaging's power.

Carriers also need to know their target audience. Who are the likely candidates for 2-way service? The answer varies from carrier to carrier. Scott Baradell, PageNet director of corporate communication, said that his company believes that paging's audience is shifting to include the consumer market.

"We've reached a lot of consumers despite the fact that our current sales channels are very business-to-business oriented," Baradell said. "In the past, we have been in a commodity-oriented business where the competition was basically on price, and it was basically a one-size-fits-all type of service. We're moving away from that model to one where we're targeting our services to different classes of users -- different niches within the business community and different niches within the consumer market."

PageMart, on the other hand, is targeting businesses for applications where the reliability, ease of accessing the computer for messaging, coverage and battery life have utility. As far as the consumer market goes, Wayne Stargardt, PageMart vice president of marketing, said, "The consumer today does not buy, for the most part, alphanumeric paging or word messaging. Businesses buy it, and NPCS services are price performance upgrades over word messaging. So why would consumers buy that if they are not already buying word messaging?"

Lipoff agreed with both carriers, to a point. He said that 2-way service initially targets the business user, while the consumer aspect follows once the infrastructure is paid for and the carrier has made money off the business user.

"I see business usage as being something you can create an opportunity for in the short term that will pay for the license cost, keep the business profitable and have a longer-term target of supporting the heavy load of consumers that will be coming 10 to 15 years down the road," Lipoff said. "Business usage, just as it did with cellular, leads to consumer usage."

Differentiation is the key to survival. Those that don't carve their own niche in the market won't survive.

In an effort to distinguish itself from other carriers, PageMart is building its own central messaging server for the paging network called AXIS. Stargardt said that previously providers bought all of the equipment that they used to deploy their networks, never actually building any components. Because everybody was buying practically the same equipment, differentiation was difficult.

"We decided with 2-way that we really wanted to control more of our destiny," Stargardt said. "We wanted to beable to add features that customers requested faster on our time and be more responsive in bringing new services to market."

SkyTel uses a variety of sales channels to get its service out to the customers. One is the direct sales channel, which targets the Fortune 1000 companies. Another is the inbound telemarketing crew, which takes calls from people responding to ads. The third is the resell channel, and the fourth is a prepaid paging product.

McKelvey said that SkyTel's focused approach to messaging helps the company stay on track. "All of the applications and all of the training we do is to help a company understand how to use messaging in their business and become more productive," he said.

PageNet is planning on taking advantage of information services to differentiate itself from competitors. Baradell said the company plans to develop relationships with particular content providers for information on different subjects.

"That's something you wouldn't be able to get from a different provider, whether it be another paging company or another PCS company," Baradell said. "If your product is differentiated so that only you offer it, it doesn't matter what technology somebody else is using because only you offer it."

Baradell added that PageNet sees the Internet as a vehicle for differentiating service.

Lipoff said that in order for 2-way paging to grow to the extent that carriers are hoping and expecting, carriers need to make users aware of the benefits. He said they should target somebody other than paging users with a variety of services that would be called messaging and information services.

"I think that to get people's attention, you have to offer more than a marginal benefit, like you're not going to miss the messages," Lipoff said.

He said allowing a traveler to rearrange his airline schedule or reconfirm hotel reservations while on the road, or allowing a professional to respond to an urgent request while in a meeting, adds value to the service, making it worth a little extra money.

Peering into the Crystal Ball Last September, The Yankee Group projected that 3.1 million people will be 2-way subscribers by 2001. Although the number seems like quite a stretch, carriers are optimistic, saying they think the number is in reach.

Lipoff, on the other hand, is more conservative. He said that predicting the early growth phases of a major telecommunications service such as 2-way paging is filled with imprecision. All new services, even those that fail, go through a period of introduction followed by a rapid spurt of growth, then slow down again, Lipoff added.

"It's difficult and not very productive to talk about how many there will be at the end of the decade," Lipoff said. "It's much more effective to ask whether this is going to be a major portion of the paging industry. Is a large percentage of what are today 1-way going to switch to 2-way, and will there be a whole new class of users that don't consider themselves paging users but instead consider themselves wireless information messaging users, which maybe is equal in size to paging? The answer is yes, and I don't think The Yankee Group would disagree with me."

Lipoff said that he had been a pager user for 10 years, and just recently he and 19 other employees at his company switched from 1-way to 2-way paging service.

"I couldn't really appreciate how terrific it is until (I started) to use it," Lipoff said.

If more consumers find the same benefits, 2-way messaging can't help but pick up speed.