Subject: [NEXTEL-1] PTT: Is It The New SMS?

From: [email-masked]
Date: Wed, 17 Dec 2003 18:51:11 -0500

PTT: Is It The New SMS?
Dec 17, 2003
It's amazing how the wireless industry has followed the public
safety/blue-collar-to-white-collar path, with two-way technology segueing from
the construction site to the boardroom. Push-to-talk (PTT) technology has become
so popular during the past year that it made the big time with its own lawsuit
last summer between first-to-market Nextel [NasdaqNM: NXTL] and new entrant
Verizon Wireless [NYSE: VZ]. But the question is: Why are wireless users
flocking to this less-than- private communications mode in droves? Apparently,
the herd mentality is alive and well.

In the past few months, non-Nextel subscribers have discovered the carrier's
not-too-closely-held secret: If you want to gather a group together in seconds,
nothing beats a push button. PTT had cut a wide swath across traditional work
groups, families and the teen demographic. Callers can contact at least five
people and as many as 25 in less time than it takes to dial a regular cellphone
call.

"The take rate has exceeded our expectations," says Bill Stone, executive
director of technology management at Verizon Wireless. "There is market demand."

As of the end of the third quarter, the Gartner Group says Nextel - which built
its reputation on business-radio services that included PTT from the get-go -
was serving a select 12.3 million subscribers, owning 90 percent of the PTT
marketplace. As of August, Verizon Wireless had 100,000 PTT users, "subscribers
that used to go to Nextel," says Jeffrey Nelson, executive director/corporate
communications for Verizon Wireless. Sprint PCS [NYSE: PCS] introduced the
service just last month, so no hard numbers are available yet.

"PTT isn't for everyone, but it could garner 30 percent of the market," adds
Tole Hart, Gartner's principal analyst/Mobile & Wireless.

According to WinterGreen Research in Lexington, Mass., PTT cellular revenue by
year's end is expected to be $84 million, with that number ramping up to $10.1
billion by 2008. New PTT subscribership should surpass 2.3 million this year,
with projections for 340 million by 2008.

Besides voice, some say PTT could emerge as a major application for wireless
data because the technology uses voice over packet data for CDMA 1X and
GSM-based GPRS and IP transport (however, T-Mobile [NYSE: DT] here in the States
hasn't joined the PTT bandwagon to date.)

The New SMS

"Think of it as voice SMS," says Dave Readman of Ericsson's [NasdaqNM: ERICY]
CDMA Strategic Marketing division. "It's just a simpler version. "I do SMS a
lot, and if I have to address a group of people, it takes effort to sit and type
a message and then go through the convoluted steps of sending that message. For
PTT, all you need to do is push to talk and say your message. It's a one-to-many
kind of communications that can be done cost-effectively because I don't have to
pay for 10 phone calls."

And don't worry about missing someone in your group if they're not available for
the all-call. Readman tells Wireless Data News applications can be deployed that
allow the call to go into voice mail for pickup later on, there are options to
opt out of certain calls and have them default to email, and both Verizon
Wireless and Sprint PCS allows users to see who is available and who isn't.

Part of the reason for PTT's popularity is the cost, which ranges from less than
$10 per month on top of usual contract prices to as much as $20 per month.
Caveat emptor, however. PTT only works between subscribers to the same carrier,
although this may be later on as intercarrier agreements are forged.

PTT-enabled phones are pricey, though. Motorola [NYSE: MOT] models cost close to
$150, followed by those by Nokia [NYSE: NOK], which cost a bit more. Nokia
recently introduced its first GSM PTT handset, the 5140, and it comes with all
the bells and whistles including a digital compass, a Fitness Coach application
and a built-in VGA camera; by 2005, all Nokia phones will be PTT-enabled.
Siemens [NYSE: SI], which exited the U.S. handset market for awhile and then
came back with a vengeance earlier this year, is expected to introduce PTT
phones next year, and Sony [NYSE: SNE] Ericsson, while keeping its PTT cards
close to the vest, knows it must come up with something soon to stay
competitive. Look for something from Samsung [PNK:SSNGY.PK] as well.

One of the most aggressive PTT handset maker is Kyocera Wireless Corp. [PNK:
KYOCF.PK], which is working with BREW-master Qualcomm [Nasdaq: QCOM] to unveil
the industry's first BREWChat phone early next year. Reports say the phones
initially will be sold in North and South America and in South Korea, although
no carrier information is available yet. The manufacturers also have an
agreement with wireless software infrastructure provider Togabi Technologies to
outfit selected future Kyocera phones with Togabi's PTT and real-time wireless
media functionality.

Outside the United States, PTT is catching on in Jordan, where Motorola says
carrier Fastlink will be the first in the Europe, Middle East and Africa (EMEA)
region to offer the service based on iDEN technology. In Mexico, Nextel
subsidiary NII Holdings [NasdaqNM: NIHD] is readying PTT for Tijuana and in Baja
California, Mexico. India's carriers are getting ready to launch PTT on GSM/GPRS
networks, and Finland's Radiolinja began testing a PTT program from fastmobile's
that combines instant messaging, picture messaging and voice messaging in one
application. According to fastmobile, its fastchat application is a global,
multi-modal instant communications service that allows compatible phones to act
as both multimedia messengers and walkie-talkies.

There is one market where PTT just isn't going to fly. "In the Americas, PTT is
in high fever, but I don't see it in Japan," says Dr. Hideo Okinaka, vice
president and general manager of Tokyo-based KDDI's [9433.T] Strategic "au"
Business Development Division. Speaking at last week's CDMA Americas Congress in
Miami, Dr. Okinaka said, "iDEN failed in Japan because of our culture. We like
to use email. We don't want to make such a large noise."
>>David Readman, [email-masked]; Hideo Okinaka, 011 81 33347 5711<<

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