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Posted by The Old Bear on July 26, 2008, 7:27 am
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Newsweek
Monday, July 21, 2008
THE TECHNOLOGIST
Daniel McGinn
THE LAST AMERICAN (WIRELESS) VIRGIN
It's becoming a rite of summer: as the mercury rises, Apple
introduces a new version of its iPhone. And as the new-and-improved
device went on sale last week, campers once again lined the sidewalk
in midtown Manhattan. The new iPhone features faster Web browsing,
clearer audio and basic GPS functions; so far, reviews have been
mostly positive. But as early adopters clamor for this latest
high-tech status symbol, let us consider the group at the other end of
the wireless bell curve: the one in seven Americans who still don't
have a cell phone.
According to the latest data, the U.S. "adoption rate" for mobile
phones stands at 85 percent. That's higher than the percentage of
Americans who have DVD players (84 percent), home PCs (80 percent),
digital cameras (69 percent) or MP3 players (40 percent), according to
the Nielsen Co. "The concept that within my lifetime we'd have the
kind of penetration we have today is unimaginable," says Martin
Cooper, 79, the former Motorola researcher who invented the portable
cell phone in 1973.
But for wireless providers, it's a mixed blessing. With fewer
virgin customers to bring online, the industry's subscriber base grew
by just 8.8 percent in 2007. To keep revenues rising, the big carriers
are focused mostly on stealing each others' existing customers and
getting mobile users to spend more on ringtones, streaming music and
other add-ons.
But a handful of start-ups are aggressively pursing wireless
holdouts. The bulk of the un-mobile fall into three groups, says
senior analyst Chris Collins of Yankee Group: children, the elderly
and the credit-challenged. (There's actually a fourth group, prison
inmates, but companies haven't yet found a way to target that elusive
niche.)
[1] Kids. Lots of parents have mixed feelings about kids' having
phones, but they're showing up in school backpacks at earlier ages.
By some estimates, half the country's 28 million 8- to 14-year-olds
already have handsets of their own. To attract these youngsters, big
carriers all offer discounted "family plans," but lately smaller
companies have tried to sell phones and service plans designed
specifically for kids. Among the latest entries is one from a company
called kajeet. Its phones allow parents to set limits on calls or
texts; remotely turn off the device during school hours, or block
calls or texts from bullies. To prevent surprise $300 monthly bills,
kajeet features a pay-in-advance system, with a basic charge of $10 a
month and 10 cents per minute. CEO Daniel Neal says consumers are
becoming more averse to the "hidden gotchas" -- cancellation fees,
service fees and random charges -- found in typical wireless plans.
Neal believes 80 percent of the 8-to-14 crowd will have a phone
within three years.
[2] The Elderly. Fear of runaway bills is a hurdle for elderly
consumers, too. But more of them (and their adult children) are
becoming convinced it's good to have a phone handy for emergencies.
To appeal to this crowd, last year Jitterbug began selling a $147
phone with an uncluttered keyboard, a huge display and other
elder-friendly features (including a $15-per-month, 30-minute rate
plan). It has no camera or text messaging, and if a user gets
confused while making a call, he can hit zero and ask an operator to
connect him to someone on his contact list. Jitterbug hopes the
phones may have appeal beyond the elderly: in a May survey it
commissioned, 32 percent of mobile subscribers said their current
phone has more features than they know how to use. "Simplicity is
really the cornerstone of our business," says co-founder Arlene
Harris.
[3] The Credit Impaired. For consumers without bank accounts or
credit scores -- the third big group of cell-phone holdouts -- prepaid
phones have long offered an alternative to traditional wireless
contracts. Lately, per-minute charges have come down from 35 cents to
10 cents, and companies have offered a better variety of phones; as a
result, prepaid phones have been the fastest-growing segment of the
cell business. Even so, companies are trying new ways to make them
appealing. Trumpet Mobile, which began selling prepaid phones in
Radio Shack stores last year, gives customers a phone, a prepaid debit
card and the ability to send money via mobile phone using Western
Union. Trumpet hopes its service becomes popular among Latino
immigrants, who are already using it to send money to relatives
overseas.
While these start-ups are long on imagination, so far none will
say exactly how many customers they've signed up. That leads
observers to believe their numbers are low and their odds of survival
are unclear. Indeed, one reason big wireless companies haven't chased
the holdouts more aggressively is that they aren't likely to spend $49
per month -- the amount of the average U.S. mobile customer's bill --
making them only marginally profitable (if not unprofitable). And
while parts of Europe and Asia feature wireless penetration rates
above 100 percent (thanks to people who carry multiple phones), no one
is ready to bet when America may hit the magic number, partly because
our country still has rural areas with poor coverage.
"There is some argument that it will never get there -- that it
will never be cost-effective," says Richard Siber, a veteran industry
consultant. So even as the early adopters keep buying phones full of
new tricks, there will remain at least a smattering of folks who can't
be blamed for the obnoxious ringtones that have become so much a part
of life in our wireless age.
***** Moderator's Note *****
Here's another, albeit more minor, quibble: when submitting articles,
please don't use HTML or "Rich Text" or any kind of markup language.
The anti-spam software strips it out anyway, but it's not perfect and
I have to edit a lot of posts that have, for example, "[]" where I
expect to see [1]. It is sometimes a PITA, I know, but please
set your software to send only Plain Text when submitting posts.
Thank you.
Bill Horne
Temporary Moderator
Please put [Telecom] at the end of your subject line, or I may never
see your post! Thanks!
We have a new address for email submissions: telecomdigestmoderator
atsign telecom-digest.org. This is only for those who submit posts via
email: if you use a newsreader or a web interface to contribute to the
digest, you don't need to change anything.
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