Subject: [NEXTEL-1] US gets set for a walkie-talkie revival

From: Marcel <[email-masked]>
Date: Tue, 18 Mar 2003 08:28:57 -0500

http://biz.yahoo.com/ft/030318/1045511765350_1.html
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US gets set for a walkie-talkie revival
Tuesday March 18, 1:55 am ET

By Jonathan Moules

The meteoric rise of the mobile telephone was supposed to mark the death of the humble walkie-talkie. But this is not the case in America.
The race to build handsets that can connect instantly to another phone will be hotly debated at the US wireless industry's annual conference, which was launched in New Orleans yesterday.

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Nextel Communications, which is backed by US cellphone pioneer Craig McCaw, sparked the walkie-talkie revival with its Direct Connect technology. Competitors initially sneered at the large handsets that were needed and at the popularity of the service among construction workers and taxi drivers.
But that was before Nextel became the first publicly traded US carrier to generate positive free cashflow, and the fastest growing, while stealing rivals' most profitable customers. Nextel has proved walkie-talkie is a cash cow, attracting everyone from chief executives to teenagers.
"People are starting to understand that this is a hell of a product that is really designed to go after the best customer," says Tim Donaghue, Nextel chief executive. "Our customers get addicted to Direct Connect because it is so reliable and so fast."
Some 93 per cent of Nextel's 10m subscribers use its Direct Connect function, which, in turn, accounts for about 30 per cent of monthly calls. Moreover, Nextel subscribers are more loyal and ring up higher bills than customers of other US carriers.
Verizon Wireless and Sprint PCS, the nation's largest and fourth-largest carriers, respectively, aim to begin marketing walkie-talkies by the end of the year. AT&T Wireless, Cingular and T-Mobile, which make up the rest of the national carriers, are further behind in development, but plan to create a similar service on their GSM networks.
Buoyed by its success, Nextel is developing its service to work nationally, enabling a customer on Wall Street to connect directly with a friend on the Golden Gate Bridge, with a launch planned for the second half of this year.
At present, users can only connect directly with others in the same market region - large metropolitan areas, or states.
America's success with walkie-talkies might seem one flashback too far for the European market, where an attempt to launch a push-to-talk service during the telecoms boom ended with the provider Dolphin Telecom filing for bankruptcy protection with just 50,000 subscribers.
However, Europe's disappointment might have had more to do with timing, according to Liam Mahoney, former chief technology officer at Dolphin.
Mr Mahoney says, "We were behind the curve in Europe. Although there was greater functionality [in the Dolphin handset], there was a penalty if you had to use a bigger phone with a shorter battery life."
In the US, the view is that walkie-talkies can actually be a productivity enhancing tool. Many of Nextel's corporate users are similar to Microsoft, whose development teams have substituted the use of the walkie-talkie for walking to their colleagues across the office.
Mike Mullagh, chief executive of Telephia, the wireless research group, says walkie-talkie service is to mobile phones what instant messaging has been to e-mail. Mr Mullagh says: "What wireless does is emulate a local wireline call, where you have to dial the number. Walkie-talkie capability connects you at the push of a number to get an instant response."
Any increase in US mobile phone sales would be welcomed in a market that has struggled to attract 50 per cent of the population and looks with envy at the near saturation penetration rates achieved in several European and Asian countries.
Poor networks, perverse pricing (where users pay to receive as well as make calls) and the failure of carriers to agree on common standards have left the US lagging behind its international peers in the adoption of paid-for services, such as text messaging and data services.
However, the potential rewards of new applications are greater in the US since those Americans who have gone wireless spend far longer on their phones, clocking up some of the highest average revenues per user in the world.
Motorola last year sold 10m basic walkie-talkie devices, showing a considerable demand for the old technology.
While the US wireless industry may have found in walkie-talkies a hot new application, they must be careful not to talk people out of buying mobile phones.

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