Paging's Spring Has Sprung

The first time pundits predicted the demise of paging was in the early 1980s. Back then, experts believed the new cellular phone service would render paging superfluous. They were wrong.

Paging benefited from cellular's early success. Cellular helped make businesses even more dependent on mobile communications. But because cellular subscribers were charged for all airtime, many turned to the pager as a tool for screening incoming calls. For the first several years, the cellular subscriber's only portable option was a bulky "bag phone." Pocket-size pagers remained the favorite of frequent air travelers.

Now, PCS operators, eager to differentiate themselves from cellular carriers, offer the first minute of incoming calls for free. Today's cellular and PCS handsets easily fit in pockets. And both digital cellular and PCS offer short message service.

The bad news for paging gets worse. At one time, the pager was a status symbol. The average subscriber was a doctor or executive; the typical venue for use was a golf course or opera house. Today, pagers are electronic dog whistles, helping bosses keep in touch with their employees and parents keep in touch with their children. The person who carries a pager is not untethered -- he is merely on an extra long leash.

You may argue that while paging's role may have changed, that hardly proves it is going away. You should be aware that, financially speaking, the leading paging carriers are bleeding to death. And they face formidable competition in the emerging advanced messaging market.

Motorola recently reported lower sales and operating profit for its messaging, information and media group. And no wonder: PageNet, the nation's largest paging operator, lost more than $150 million in 1997; Mtel (now Skytel), which pioneered both nationwide and 2-way paging, lost more than $80 million; and another forward-looking carrier, PageMart, lost more than $40 million.

It seems that the more subscribers a paging operator has, the more money it loses. Yet carriers shamelessly try to distract investors by trumpeting "cash flow" as a more useful barometer of performance. Investing in a paging carrier is like sending your blank letterhead and bank account number to a Nigerian petroleum corporation official who promises to cut you in on an illegal, multimillion dollar funds transfer.

I am not saying there is no market for paging's traditional strength -- 1-way, numeric messaging. What I am saying is that it is almost impossible to make any money at it. Conventional paging, which costs about $10 per month, now must compete with cellular and PCS services starting at about $20 per month. Because the purpose of sending a numeric page is to receive a phone call in response, it makes more sense to just give the mobile user a cellular phone. Even more ludicrous is the paging industry's foray into voice paging. The voice pager was supposed to be a "pocket answering machine. " That, it turns out, is like a car that drives only in reverse.

FROM BAD TO WORSE The paging industry is in even worse straits in the advanced messaging market. It faces competition from not only cellular and PCS, but terrestrial mobile data and low-earth-orbit satellite (LEOS) networks as well. Cellular and PCS operators can leverage infrastructure built to serve the much larger mobile voice market. Mobile data network operators have years of experience serving 2-way messaging applications. LEOS operators, such as Orbcomm, will be able to offer worldwide messaging plus tracking services.

In fact, paging operators may be at a distinct disadvantage as they migrate toward enhanced services. Their networks were designed to provide 1-way service. And they were very good at it. Using a few, high-power transmitters with overlapping coverage, they flooded the service area with their signals, ensuring reliable reception even deep inside buildings. But trying to pick up faint signals from battery-powered, 2-way pagers is a different proposition. Paging operators must add thousands of receive sites, many more than anticipated, blowing initial cost estimates.

Meanwhile, players such as ARDIS and BellSouth Mobile Data operated networks built for 2-way messaging from Day One. Today, these operators mainly serve computer-aided dispatch applications. But they are well aware of the 2-way paging industry's false start and have repositioned themselves to exploit the opportunity -- should person-to-person messaging take off.

The biggest 2-way opportunity may be communicating with things rather than people. LEOS operator Orbcomm is focusing on applications such as vehicle tracking, container tracking, meter reading and sensor monitoring. Unlike paging and terrestrial mobile data operators, which tend to be national in scope, Orbcomm is creating a global footprint. Although Orbcomm does not pretend to offer indoor coverage, it is a store-and-forward service that does not need indoor coverage. Orbcomm's network (and subscriber devices) will hold messages until communication is possible. With the entire planet as its market and a veritable galaxy of things with which to communicate, Orbcomm has a bright future.

Is there hope for existing paging operators? The best thing to do when the going gets tough is focus on your core competency. Unfortunately, the paging industry's core competency is delivering 1-way, numeric messages -- a capability the market simply has outgrown.

Fifteen years ago pundits predicted paging would go away. They were not wrong. They were just early.

Call the doctor, not the mortician: Not everyone agrees that paging is in its terminal stage, a sentiment that, if nothing else, indicates the industry refuses to go down without a fight.

Representatives from the paging industry report that while a growing segment of traditional subscribers is increasingly using other wireless services, pagers continue to be an important medium for a number of clients.

Perhaps these figures are particularly true in the under-30 category, where greater numbers of young children and 20-somethings are turning to the devices every day to reassure parents and family members and to stay in touch with one another.

"We found that paging is alive and well and has excellent growth potential," said Iain Gillott, International Data vice president of Worldwide Consumer and Small Business Telecommunications. He added that 50% of all pagers are used by people in this age category.

Operators of a number of business occupations also enjoy the security that pagers can offer compared with other wireless devices. While still offering required communications options to workers, pagers can allay fears of receiving a $5,000 (often uncollectable) phone bill run up by a former employee.

Service providers continue to take steps to expand and improve services to make paging more attractive to their clients. PageNet recently announced a partnership with Forbes, which will provide more than 10.3 million customers wireless information services covering business, financial and technology news.

PageMart has introduced Scout guaranteed messaging service in San Antonio and Austin, TX. The service sends the message repeatedly until it reaches the subscriber. When a pager is out of coverage or turned off, messages are stored for up to 96 hours and forwarded when the pager is available again.