Subject: [NEXTEL-1] Doing the walkie-talkie

From: [email-masked]
Date: Tue, 22 Jul 2003 15:27:17 -0400

Mobile telecoms
Doing the walkie-talkie
Jul 10th 2003 | SAN FRANCISCO
From The Economist

Are “push-to-talk” calls the next big thing in wireless?

FEW people have anything good to say about America's fragmented mobile-telecoms
industry. Coverage is, by European standards, atrocious, despite boasts from
operators about the quality and reach of their networks. Customers have to contend
with complicated roaming arrangements, baffling billing terms, and bulky
handsets.  Text-messaging is still a rarity. But in one area, America leads the
world.

In 1996 the country's fifth-largest carrier, Nextel, launched an obscure network
technology, called iDEN, made by Motorola. It has a unique feature: a
“walkie-talkie” mode that allows Nextel subscribers to talk to each other
instantly merely by holding down a special button and speaking into the phone.
For years, this “push-to-talk” (PTT)
feature, used mostly by builders,
maintenance technicians and safety
workers, was seen as an anomaly. Nextel
was derided for going down a technological
dead end with its choice of network
technology, which is outside the two main
global standards, GSM and CDMA. But now
the tables have turned. As it searches for
new services to attract customers and
boost revenues, the mobile-telecoms
industry has decided that PTT is the next
big thing.

Subscribers like PTT because they can get
through to somebody straight away.
Operators like it because they can charge
a premium for it. Other American
mobile-phone companies envy Nextel's
average revenue per user, an important
industry metric, of $67 per month, way
above the average of $54. Subscribers are
also less likely to defect to other operators
once they have become dependent on
PTT. Nextel's churn rate is 1.9%, compared
with a national average of 2.4%. No wonder rival American operators are now racing
to add PTT to their existing networks.
First to launch a rival service is expected to be Verizon Wireless, America's
leading wireless operator. Its PTT service is now being tested, and could go live
this month.  AT&T Wireless is expected to start testing soon, with other American
operators to follow. Rising to the challenge, Nextel is upgrading its service to
provide nationwide (rather than just regional) PTT calling, backed by an
aggressive advertising campaign. It has also trademarked the terms “push-to-talk”
and “PTT” and says it will go to court to stop other operators using them.
Verizon, meanwhile, has launched a lawsuit against Nextel, accusing it of
unlawfully obtaining a prototype Verizon PTT handset and engaging in “corporate
espionage” by making test calls.

In the short run, at least, Nextel has little to worry about. Adding PTT to an
existing GSM or CDMA network is fiddly. Most subscribers will require new
handsets, and operators must ensure they have sufficient data capacity on their
networks since PTT calls are handled as packets of data, not as traditional voice
calls. And compared with Nextel's service, which connects users almost instantly,
it can take two seconds to establish a PTT connection over a GSM network, and four
to six seconds over CDMA, says Bob Plaschke of Sonim, a firm selling PTT upgrades
to operators.

But although operators' original motive for adopting PTT was just a desire to
imitate Nextel, says Phil Marshall of Yankee Group, a consultancy, it is now seen
as a service that will appeal to teenagers and expand the market. “Nextel's
solution is wonderful for plumbers who say ‘Harry, bring me the pipe' a hundred
times a day, but that's 10% of the market,” says Mr Plaschke. He claims his firm's
PTT system, which works on GSM and CDMA, has several advantages over Nextel's,
including the ability to see if somebody is available before trying to talk to
them. To appeal to teenagers, PTT will probably be marketed as “voice
instant-messaging”, or “voice texting”, says Jason Chapman, an analyst at Gartner,
a research firm.

Will PTT end up being used in America in the way that text-messaging is elsewhere,
further widening the gulf between America and the rest of the world in wireless
use?  PTT advocates insist that it will take off in text-loving Europe and Asia as
well, because there are times (such as while driving or walking) when texting is
impractical. Several European operators are already looking at PTT. Nokia, the
world's leading handset maker, says interest in the technology is widespread. Then
again, it could all just be more hype from the mobile industry, which is always
looking for something new to revive its fortunes. It may be able to talk the talk,
but can PTT walk the walk?

http://www.economist.com/research/articlesBySubject/displayStory.cfm?subjectid=349005&story_id=1914979

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