Subject: [NEXTEL-1] PTT Revenue: To Be Or Not To Be

From: [email-masked]
Date: Fri, 01 Aug 2003 16:22:13 -0400

PTT Revenue: To Be Or Not To Be

Clearly, operators are on the push-to-talk bandwagon, but whether they reap great
benefits from untapped markets remains to be seen.
BY NANCY GOHRING
AUGUST 1, 2003

While it's certain that push to talk is coming–and from most, if not all, of the
operators–a number of uncertainties follow. Perhaps the most significant wild card
is which customer segments carriers will target for the offering.

Because Nextel Communications Inc. was the only operator offering PTT and it
focused on the business market, a common perception reigns that business users
make up the most attractive base for the service. "Nextel has carved out its
marketplace with field force so that's how we understand it," says Dana Tardelli,
research director at the Aberdeen Group.

But that doesn't mean business users are the only potentially profitable customer
base, say some industry observers who expect to see operators, including Nextel,
aggressively chase consumer markets.

Nextel has stuck with the business market for nearly 11 years, racking up 12
million customers, until recently when it cut a deal with Boost Mobile, which
markets Nextel's service to the youth market. From November through the first
quarter, Boost attracted 60,000 customers in select Nevada and California markets.

Because push to talk hasn't yet significantly entered the consumer market, some
say that's where operators will focus initially. "I assume the first market
they'll go after is the untapped market, which is youth," says Peter Adderton, CEO
of Boost Mobile.
Push to talk requires a community of users for it to work. Tardelli says it could
become very popular with consumer markets. "I think it starts off virally and
becomes a business service similar to IM," he says. Instant message service on
computers began as an attractive consumer offering, but as it grew in popularity
business users recognized the value. Tardelli expects to see a similar evolution
with push to talk.

In fact, even when Nextel first launched service, it knew that a significant
potential consumer market existed, says Wade Vesey, 11th employee of Nextel and
current chief marketing officer for Sonim Technologies, a company building PTT
solutions for operators. After conducting more than $1 million in market research
while at Nextel, Vesey found that PTT could be pervasive across consumer and
business markets. "The key, though, was that Nextel had to start somewhere and
their base was SMR and business so that's where they spent most of their time,"
Vesey says.

Although Nextel concedes the bulk of its customers sign up for the service as
business users, those same users may buy phones for family members as they
recognize the value of the service outside of work, notes a Nextel spokeswoman.

Vesey expects to see operators chase the business market, based on Nextel's
experience, but also focus on the market that each one traditionally targets.
Regardless of which market operators chase, the numbers show exactly why they're
excited about push to talk. It accounts for 25 percent of Boost's ARPU, Adderton
says. While he wouldn't give an exact figure, Adderton says the number of Boost
customers using PTT is closer to 90 percent than 70 percent.

Also, Vesey estimates PTT garners on average $22 per customer per month for
Nextel, although Nextel couldn't confirm that figure. However, he predicts that
once competition hits, prices will drop and that figure will decrease at least by
half for business customers and even more for consumers using it.

Even though some of the numbers add up to a potentially lucrative service, it may
not prove as exciting as some operators hope, at least initially. "I tend to
believe that they'll be disappointed," says the Aberdeen Group's Tardelli. That's
because operators will need to educate potential new users, especially
non-traditional markets, on why they will like the service, he says.
http://www.wirelessweek.com/index.asp?layout=article&articleid=CA314144&spacedesc=Departments&stt=000

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Free shipping on all inkjet cartridge & refill kit orders to US & Canada. Low prices up to 80% off. We have your brand: HP, Epson, Lexmark & more.
http://www.c1tracking.com/l.asp?cid=5510
http://us.click.yahoo.com/GHXcIA/n.WGAA/ySSFAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/