Bad news for BCGI ? I see the risk of this company now!!!
yahoo.cnet.com
Prepaid patent portends wireless battle
By Corey Grice
Staff Writer, CNET News.com
December 19, 2000, 12:10 p.m. PT
A new wireless technology patent could set the stage for a battle over low-income
subscribers, teenagers and other prepaid cellular customers.
Freedom Wireless, a privately held Phoenix, Ariz.-based wireless technology company, was
granted a U.S. patent earlier this month for its methods of completing prepaid wireless
phone calls, a service that allows a customer to pay a certain amount in advance then make
wireless calls until the amount of credit is used up.
The patent--and a pending lawsuit--could have implications for
wireless carriers, such as AT&T Wireless, Verizon Wireless,
Cingular Wireless, Alltel Communications and Western
Wireless, and for Boston Communications Group, a prepaid
technology provider that serves many carriers.
The prepaid market, although a small percentage of most
carriers' subscriber totals, has grown in popularity in recent
years. Prepaid wireless plans are particularly popular with
parents of teens, customers with poor credit histories, and other
subscribers who want to ensure they are not surprised by a
larger-than-expected monthly bill.
Analysts said that carriers hope to use prepaid plans to expand
their business.
"Only about 10 percent of the market is on a prepaid plan or
some sort of hybrid spending limit plan. But we do see it
growing," said Eugene Signorini, a wireless industry analyst at
The Yankee Group, a market research firm.
About 12 million of roughly 104 million U.S. wireless customers
use a prepaid service, but that is expected to increase to 27
percent by 2005, according to The Yankee Group.
"Primarily the wireless operators use prepaid
as a means of targeting the credit-challenged
segment," Signorini said. "As much as 30
percent of potential customers fail their credit
screening."
The number of youth wireless subscribers
between the ages of 10 and 24 will reach 43
million in 2004, up dramatically from 11 million
today, according to a new study by Cahners
In-Stat Group, a market research firm. "This
age group, usually lacking a credit history,
represents a credit risk for carriers," Becky
Diercks, director of wireless for Cahners, said
in the report.
Freedom Wireless has filed a lawsuit in U.S.
District Court for Massachusetts seeking
damages and an injunction preventing most of
the major wireless carriers from infringing upon its patents. The company also is seeking
licensing deals with the carriers and Boston Communications.
Freedom Wireless representatives said they are "confident" of their position, but declined to
comment further. Representatives for Verizon Wireless, Alltel and Boston Communications
could not immediately be reached for comment.
AT&T Wireless representatives declined to comment because of the pending litigation. But
representatives for the carrier said the company believes prepaid wireless services will
continue to gain in popularity.
"It's a growing market, and it's really just starting to take off in the United States," said
AT&T Wireless spokesman Ritch Blasi. "You don't have to prequalify as you do with other
plans, and it makes a good gift. It's something that we think is going to be a real big seller."
Freedom Wireless says it developed a simple system for completing prepaid wireless calls
in the mid-1990s when it operated as a cellular service reseller. The company first sought a
patent in December 1994.
Previously, cellular customers had to dial toll-free 800 numbers or enter Personal
Identification Numbers (PINs) for the carriers to check their account balances. But those
methods were undesirable for many customers.
In documents from the U.S. Patent and Trademark Office, Freedom Wireless outlines its
patented method for checking a database of prepaid subscribers when a call is made or
received to determine whether there is enough credit in the account to connect the call.
Freedom Wireless also details a variety of additional features, including periodically
checking the accounts of prepaid subscribers while they are on the phone to ensure
customers don't overdraw their accounts.
The company's federal lawsuit, filed last week, is not expected to go to trial for about 12 to
18 months. |
