Paging's Billboard Partner

A new partner may be in the cards for paging in the form of a company that hopes to use pagers to change advertising messages dynamically on everything from billboards to baseball hats. One of the well-researched offspring of the fertile MIT Media Lab, E Ink plans to go commercial with its "electronic ink" technology next year in a move that could be a boon for paging companies.

E Ink was established in 1997 and received a $15.8 million round of venture capital in May 1998 from a host of strategic partners including Motorola, Hearst and advertising giant Interpublic.

E Ink initially will offer signage with low information content -- in-store displays or outdoor billboards for retail chains, banks and other businesses that want to broadcast a unified message across multiple locations in the United States -- using signs filled with tiny balloons of electric particles and backed by electric circuitry that controls the movement of the particles. The prototype has a pager attached to the back of the sign that sends the signal to change the display.

Aside from its ability to alter a display dynamically in fractions of a second, E Ink's more powerful draw is its potential cost savings. E Ink President & CEO Jim Iuliano said a 4-foot by 4-foot sign created using plasma liquid crystal technology would run in the neighborhood of $10,000 to $20,000. He said a sign of the same dimensions using electronic ink would cost $2,000 to $3,000.

Perfect Partner? As they put the finishing touches on their business model, E Ink executives hope to pin down E Ink's distribution method of choice during the next several months. Options range from cable wires to Internet or wireless Internet to satellite-based communications. But a paging carrier would seem a natural partner given the flexible, remote nature of the advertising and E Ink's long-term plans to disseminate information to a rainbow of mobile displays.

"From a wireless standpoint, the big challenge is what lies ahead of us, when we are broadcasting not just low-information content displays but for higher-resolution content displays," Iuliano said. "We ultimately plan to have books and newspapers behave like an electronic display but look and feel like a printed page. The transmission requirement of a newspaper is much greater than what may go on a sign. We will need a much more flexible, larger distribution capability, and everything we evaluate today we do with an eye toward enabling for ultimate fulfillment of that vision. Paging is extremely logical because it is a highly competitive, mobile technology, and it is fairly straightforward to work with."

Iain Gillott, IDC/Link vice president of worldwide small business and consumer telecommunications, said an E Ink-type partnership is a boon for paging carriers. At least a chunk of the transactions likely would take place during hours when the networks are not in heavy use. If most of the work would be done during the night when there is low traffic on the networks, then the carriers can grant those requests more easily, Gillott said. It would be efficient use of their networks. He also said the relationship would get the carriers away from a per-message revenue model.

Strategic Issues Because coverage will be a key issue for E Ink or other companies that seek to allow businesses to broadcast messages anywhere in the country, Gillott said paging carriers may well be sitting in the catbird seat and can parlay that into a monetary windfall.

"The best bet for E Ink is to partner with all the paging companies because they are going to need pretty localized coverage," he said.

Carriers should go after a revenue model that positions them as revenue-sharing partners.

"I'm not sure the best thing for the paging carrier is to charge per message," Gillott said. "The paging companies can approach E Ink and say, 'I have access to these major cities, so why don't we go to a JCPenney together.' The revenue, based on the value of the transaction, would be shared between E Ink and the paging company, and maybe the ad agency."

This model of partnership with the carriers ultimately bodes best for E Ink as well, Gillott said. Although a given carrier cannot guarantee a given message will get through in, say, five seconds, it is certainly more likely to prioritize the electronic ink message if it has a vested interest in the message getting through.

"It is up to the paging company to make sure the traffic gets through, so if they are partners rather than just selling access on their network, and if they see the business as a continual, high-value revenue stream, they would be more likely to make sure that message gets through," he said.

Peter Garand, an Ernst & Young Management Consultants principal, noted that "all wireless carriers are looking forward to the development of new applications that will drive wireless bandwidth, and this application is a good candidate."

But he cautioned carriers not to put too many eggs in the basket of an as-yet-unproven business. "They need to wait and see if there is a value proposition to customers once all the costs are factored in," he said.

Garand suggested that carriers experiment less with pricing structures, keeping charges on a wholesale price per message while they determine how much interest exists in the advertising community.