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JUNE 14, 2004
By Olga Kharif Coming Soon: Wireless Directory Assistance It won't initially be as comprehensive as land-line directories. Analysts, however, see huge demand -- and a new profit stream Susie Danner, a realtor in Danville, Ill., is always on the go, so she conducts most of her business on a cell phone. She lists her wireless phone number on signs, in newspaper ads, on her business cards. But Danner also wishes she could list the number in a directory. "It would make everything so much easier," she says. Yet for Danner and other businesspeople, wireless directories remain a dream. Sure, you can find out a land-line phone number for a residence or business by calling your wireless carrier's 411 directory operator. But what about getting a wireless number? It's practically impossible. That could change as wireless service providers prepare to take on local-phone companies in the business of listings and directory-assistance services. "If I'm signing into a hotel or listing my emergency contact, the number I put down is wireless," says Mark Plakias, an analyst with interactive services consultancy Zelos Group in San Francisco. "The industry has matured, and people recognize that a wireless number is must-have information." By 2006, 25% of Americans will use their cell phone as their primary phone, estimates Craig Mathias, founder of wireless consultancy Farpoint Group in Ashland, Mass. 4.7 BILLION CALLS. Having spent billions of dollars on expensive new networks, wireless carriers are desperately looking for ways to maximize returns. Their core business -- forwarding calls -- is under huge price pressure, so they see directory assistance as a potentially significant source of profits. Until recently, the market for wireless 411 services has been puny, so most wireless service providers outsourced directory assistance to specialists like Metro One (INFO ) and INFOnxx. But as cell phones morph from devices used only in emergencies to most-used phones, wireless providers are seeing an opportunity in directory services as well, analysts say. In 2003, 2.14 billion wireless 411 calls were placed in the U.S. Within three years, that should more than double, to 4.72 billion, figures Tom Miezejeski, vice-president for research at market consultancy Pelorus Group in Raritan, N.J. Some analysts figure that at some point in 2007, wireless 411 will finally equal the volume of traditional directory-assistance calls -- and then surpass it. Wireless directory-assistance revenue is expected to more than triple over the same period, analysts say, from $2.4 billion to $7.3 billion. While that will still represent a relatively small percentage of wireless service providers' overall sales -- expected to push past $100 billion by 2007 -- 411 service promises profit margins of between 80% and 90%, making it potentially one of the most lucrative revenue streams. GROWTH CATALYST? Those sort of margins -- five times higher than for long-distance calls -- have been the norm for land-line outfits, says Pete Wilson, CEO of telecom consultancy Telwares. Even today, 411 calls cost customers at least 50 cents more per call than do comparable requests to land-line operators. Little wonder the telcos aren't all that happy about the possibility of wireless carriers entering this market. Verizon (VZ ) has recently told customer-service reps to accept White Pages listings for wireless phones at a cost of $1.85 per month. While that seems pretty steep, considering that land-line customers get their listings for free, competition from wireless carriers could still change the directory marketplace's dynamics. Don't expect it to happen overnight, however. The Cellular Telecommunications & Internet Assn. (CTIA), an industry trade group, is working on a directory database that would allow users from different carriers to list their cell-phone numbers. The project could be ready for launch by late 2004, when it's likely to serve as a catalyst for further growth in the wireless-directory market.
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