Seybold on PTT--
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The Killer Application For Voice?
The wireless data world continues to search for "killer applications" that will attract millions of wireless users to data and thereby increase ARPU (Average Revenue Per User). But for some time now, Nextel has been providing the killer application for voicepush-to-talk service.
We are all familiar with the tell-tale beeps from a Nextel phone when it is in the push-to-talk mode. Looking at Nextel's numbers, we see that this feature is one of the reasons that its ARPU is the highest in the U.S. Now Qualcomm, Nextel and Motorola have formed a deal around QChat, which will enable CDMA systems to offer PTT (Push-to-Talk) services. But under the terms of the agreement, QChat systems cannot be installed where there is an existing Nextel system.
But that hasn't stopped other U.S. wireless operators from seeking push-to-talk services of their own and now pre-announcing that they, too, will offer PTT before the end of the year. Just last week, both Sprint PCS and Verizon Wireless stated that they will have their own version of push-to-talk services up and running "well before" the end of the year (according to Verizon Wireless Chief Executive Dennis Strigl).
Push-to-talk is also coming to AT&T Wireless and Cingular Wireless according to a company that is presently in trials with them, and my guess is that T-Mobile won't be left out of this form of instant voice communications services. There are many companies including FastMobile (fastmobile.com), Mobile Tornado (mobiletornado.com), Winphoria (winphoria.com) and Somin (sonimtech.com) in the business of enabling push-to-talk services over digital wireless voice-and-data networks. Most of these players are using voice over IP (VoIP) to provide push-to-talk services rather changing existing digital voice services.
The Issues
Nextel's system will become the benchmark against which all others are measured. New services will be compared to Nextel's service in terms of setup time required for the initial contact, response time from the called party and other essential timing issues. But just for the record, Nextel's system is slower than a standard police or fire push-to-talk radio system. Public safety systems are designed to provide PTT on a one-to-many basis, not one-to-one. A two-way radio network is a dedicated channel and there are no switches or other devices controlling the channel, so a pure two-way radio system is as instantaneous as it gets. Nextel customers who come from the two-way radio world complain about the delays in the system but those who have never experienced a "real" two-way radio system don't.
In any event, it will be interesting to see what develops as these new systems are rolled out. Will they be as good as or better than the Nextel system? Will they offer nationwide PTT as Nextel plans to do by the end of the year? Will they go beyond Nextel's capabilities and offer more types of PTT services?
There are many issues to be dealt with when adding push-to-talk to a network. If the system uses voice over IP, the IP address of the device has to be known (today it changes) or there has to be a lookup table. The quality of voice will be an issue, as will setup times, times between responses and latency delays. Some of the companies that say they have solved these problems are claiming that they will be able to best Nextel at its own game. Others are admitting that their setup time will be longer, thus wireless operators that use their systems will be looking for a different demographic of users.
One company that recently visited us and is trialing a system for several GPRS operators admits that its setup will require more than twice the time as Nextel's service, so the network operators will not be trying to rob Nextel's customer base. They will be going after other markets where PTT could be highly successful. One of these markets is families of users who want to be able to communicate with and/or leave messages for each other. I think this "wireless phone and family radio user group" could be a big market.
Another big market could be teens who might accept the longer setup times as long as there were other features and functions available. Such features could include the ability to set up new members of a group on the fly, having several different groups that they can easily access and perhaps being part of their own family group. Nextel's system has a lot of flexibility, so those going after the family market will have to offer additional services, most of which will focus on ease of adding and deleting users from groups and lists, and ease of holding a private (one-on-one) conversation without missing anything that the group is doing.
In other words, for PTT to take the teen world by storm it must provide this group of users with the same type of selective grouping and pairing as Instant Messaging on their computers. Just as two-way radio users are not as happy with Nextel's service as those who have never used dedicated two-way radios, teens accustomed to the flexibility of Instant Messaging will not be happy with these new voice offerings if they are not as flexible.
The push-to-talk wars are about to begin. For my part, I am waiting to see how good these new services are, how fast they are and how easy it is to use them. I will be watching each operator as it rolls out these services to see if they drive down the price of PTT (thereby negating the effects of increased ARPU) and what types of customers they seek. Will they try to outdo Nextel or will they try to entice different groups of users with different requirements?
The winners will be those that understand and properly market the differences between their PTT offering and that of Nextel. But if they start giving the service away, the result will be a continued slide in ARPU, which would turn this killer application into a potential network killer.
Andrew M. Seybold |
