Innovation Boosts Pagers’ Signal
For busy consumers, just finding time to pick up a jug of milk or a bag of cat litter can be a hassle. In North and South Carolina, pager customers will have a chance to test a service this winter that will allow them to order such necessities while they wait for a bus or stand in line at the post office.
The nation’s paging industry is betting that new two-way paging services such as these will help it survive in a wireless communications market that is increasingly dominated by mobile phones and personal electronics devices, such as the Palm VII.
Pagers, once a status symbol carried mostly by doctors and lawyers, have become ubiquitous, with an estimated 60 million users today. And while they may now be taken for granted, don’t count them out just yet.
In the last year, advanced paging services that allow users to do everything from receiving e-mail to sending faxes have become the fastest-growing part of the paging industry. Today, about a third of new customers signing on with No. 1 carrier Paging Network Inc. subscribe to such services, said Doug Ritter, senior vice president of sales at PageNet.
And the number of people using these advanced pager services is expected to skyrocket from 2.17 million in 1999, about 3% of the overall paging market, to 16.3 million, or about 20% of the market, in 2002, according to projections by Yankee Group, a Boston-based market research firm.
These new services have single-handedly silenced the death knell of the $4-billion paging industry. Instead, the debate now focuses on whether people will want to lug around both a two-way pager and a mobile phone.
“We see a lot of concurrent pager and cell-phone use here--more so than any other country,” said Cynthia Hswe, a consultant with Strategis Group, a Washington-based market research firm. “A lot of people like the fact that pagers are unobtrusive.”
But with ever-increasing wireless communications choices, the pager’s advantages of smaller size and lower prices may be less relevant. “It doesn’t make a whole lot of sense to carry a pager if you carry a wireless phone,” said Ken Hyers, an analyst at Newton, Mass.-based Cahner’s In-Stat Group.
After growing pell-mell in the last decade from 10 million subscribers in 1990 to 60 million today, paging industry growth has slowed markedly--in large part because of cutthroat competition and increasing use of digital mobile phones.
The industry has also become increasingly consolidated as paging companies try to beef up their subscriber base and boost sagging profits. PageNet, facing the prospect of having to file for Chapter 11 bankruptcy protection, announced this week that it is being acquired by the No. 2 paging firm, Arch Communications Group Inc.
But consolidation and forays into new services may not be enough to solve the industry’s financial woes. Paging operators have been unable to keep pace with cellular firms, which are adding subscribers at a furious clip.
Alphanumeric services--which provide word messages instead of just phone numbers--failed to attract a widespread audience, largely because paging subscribers still need a phone to respond to messages. Some providers tried without success to offer services that would allow callers to leave voice messages on pagers.
Consequently, about four out of five of today’s paging customers still rely on cheap numeric services.
Two-way paging networks may be the industry’s last chance for survival. They allow a pager--which comes equipped with a mini-keyboard--to “talk” to another pager, or with a telephone, e-mail address or fax machine. Some two-way hybrids, such as 1.5 and 1.75 paging, allow consumers to reply to messages with predetermined responses.
The industry is hoping to use these services to grab a piece of the wireless data market, which is expected to grow to $20 billion by 2007. But these services face tough competition from cellular carriers, which are adding wireless data services such as customized information feeds, e-mail and Internet access to their offerings.
Still, pagers do have some advantages over mobile phones, analyst Hyers said. For example, paging networks provide better coverage and can receive signals in buildings and subway stations. In addition, charges for low-end paging services run as little as $3 a month, while cell-phone service averages $30.
But the hefty price tag for advanced paging could impede its expansion from business users into the broader consumer market. It also remains to be seen whether consumers will want to compose e-mail messages or play games on the Lilliputian screens used by both pagers and mobile phones.
“We’ve done partnerships with Yahoo, CNN, ESPN and Bloomberg to allow people to do on their pager the same type of things they would do on their desktop” PC, said PageNet’s Ritter.
Paging companies are also exploring other ways to broaden their customer base. Consumers soon will be able to choose from among a range of devices that offer paging services. Companies are also developing ways to use paging technology to monitor and repair machines. These systems might allow technicians to monitor heating equipment or vending machines, or help police track stolen cars.
Industry executives say that once consumers use a two-way pager, they are loath to go back to numeric service or to rely solely on their mobile phones.
“People on the interactive level are using it four times as much as we thought they would,” said William F. Lenahan, chief executive of BellSouth Wireless Data, whose network is being used for the wireless grocery-ordering trial.
Times staff writer Jennifer Oldham can be reached at jennifer.oldham@latimes.com.
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The Word on Pagers
Pagers aren’t just about numbers anymore. Services that let consumers send messages from a pager to another pager or to a telephone, e-mail address or fax machine are the fastest-growing segment of the paging industry. Market share for networks that allow pager users to respond to messages using their pager is expected to grow sixfold in the next three years. The market for paging services in 1999 and 2002:
Market Share
1999
Voice: 1.9%
Other: 5.9%
Numeric: 72.5%
Two-way or 1.5: 3.5%
Alphanumeric: 16.2%
Market Share
2002*
Two-way or 1.5: 19.3%
Voice: 9.9%
Numeric: 61.4%
Alphanumeric: 9.8%
Note: Figures may not add up to 100% because of rounding.
Sources: Personal Communications Industry Assn., Yankee Group
*Projected
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Paging All Shoppers
Paging companies are trying to steer customers away from cheap numeric service and toward data-intensive services, such as alphanumeric and two-way paging. Remember that shopping for a pager is similar to shopping for a mobile phone. For instance, prices fluctuate because of seasonal specials. Pagers also carry activation fees. Here’s a look at how paging services differ:
What paging services do:
Numeric: Caller dials pager number from touch-tone phone and types in phone number where he or she can be reached. The number appears on the pager.
Alphanumeric: Callers can send a word message to a pager over the Internet, by calling an operator or by downloading software that lets a caller type in a message. Pager users can receive customized information, such as stock quotes, weather and sports scores.
1.5/1.75: These services allow customers who receive a page to send predetermined responses. They also guarantee that a page is sent and held for the user if they are out of range or if their device is turned off.
Two-way paging: These systems allow pager users to send messages to another pager, a fax machine, a telephone or an e-mail address.
Features offered by these services and their approximate cost:
Numeric
Average monthly service cost*
Under $10 for local service
About $30 for nationwide service
Average unit cost**
$40-$75
Examples of available services***
Personalized greetings, voicemail notification, personalized toll-free number
Alphanumeric
Average montly service cost*
About $12 for local service
About $50 for national service
Average unit cost**
$75-$160
Examples of available services***
Personalized greetings, voicemail notification, e-mail address, personalized toll-free number
1.5-1.75
Average montly service cost*
$10-$60 for local service
$20-$100 for national service
Average unit cost**
$150-$200
Examples of available services***
Pre-programmed responses, voicemail notification, e-mail address, automatic storing and forwarding of messages
Two-way paging
Average monthly service cost*
$25-$130 for national service
Average unit cost**
$200-$400
Examples of available services***
Pre-programmed responses, voicemail notification, e-mail address, automatic storing and forwarwarding of messages.
*Service costs fluctuate according to the geographic area. Service costs for 1.5 and 1.75 paging and two-way paging are based on the number of characters sent each month.
**Most companies also rent pagers for a monthly fee. Carriers may subsidize the pager cost if a customer signs a long-term service contract with the company.
*** Some carriers may not offer all services in all areas. Some services carry an extra monthly fee.
Source: Company reports
