Subject: [NEXTEL-1] Push-To-Talk Tries To Walk The Walk In Europe

From: Marcelrf <[email-masked]>
Date: Wed, 24 Mar 2004 09:28:47 -0500

BERLIN (Dow Jones)--Push-to-talk technology is walking the walk in the
U.S., but can it talk the talk in Europe?
The technology essentially turns a mobile phone into a walkie-talkie. By
pressing a button, users can quickly connect to a person or a group of
people and bark a message on a phone that has a louder speaker than
normal handsets.

Manufacturers like Nokia Corp. (NOK) and Siemens AG (SI) are whipping up
publicity for a product they say has huge potential. France Telecom SA's
(FTE) wireless arm, Orange SA (7919.FR), in January became the first
major European operator to unveil push-to-talk, targeting a million
users within a year of its introduction in the second quarter.

But amid all the brouhaha, many observers question whether there's
immediate demand in Europe. What's more, they note, the region's
operators have enough on their plate with the launch of third-generation
wireless services without bombarding consumers with yet another
technology.  "It's a victim of the usual wireless hype," said Sarah
Harris, an analyst at technology consultants Strategy Analytics in
Milton Keynes, England. "It's another thing that will be much more hyped
than used." "It won't be a killer application," says a senior executive
at one of Europe's largest network operators.

A hit in the U.S., where it was pioneered by Nextel Communications Inc.
(NXTL), push-to-talk won't necessarily translate to success in Europe,
particularly given the difference in mobile usage here. Phone makers and
operators also face the same problems - largely self-induced - that have
dogged picture messaging and high-speed 3G services.  European operators
see push-to-talk generating new revenue by building on the popularity of
text messaging. An on-screen contact list will show who is available,
and there will be a range of functions, such as the ability to record a
conference call and send it to those who were unavailable.  MmO2 PLC
(OOM) will start a service by year-end, Vodafone Group PLC (VOD) is
testing but has no firm plans, while Deutsche Telekom AG's (DT) T-Mobile
International AG (TMO.YY) is monitoring the situation.  To be sure, most
analysts expect the service to boost sales, but only incrementally.

For now, the biggest obstacle is the lack of a wide-ranging agreement on
technical standards. This means there's no way as yet of ensuring that
the different makes of phones can communicate with one another.  Nokia
is forging ahead and aims to have a handset on the market in the second
quarter, with a raft of other models to follow during the year. The
Finnish handset maker has shunned an industry group that was formed to
develop common standards, though it says it will ensure compatibility.
Meanwhile, Orange's service, dubbed Talk Now, will run on technology
from Kodiak Networks over the operator's global system for mobile
communications, or GSM, network.

Orange picked Kodiak over the likes of Nokia, saying it offered the best
functionality and speed of service. The operator stipulated the Kodiak
system be interoperable with rival services that are in the pipeline.
"Whoever tries to create their own standards can cause a problem for the
customer," says Clemens Jargon, a senior vice president at global
product management for Siemens Mobile. "We have to align our
activities." Siemens will introduce a handset in Europe in the second
half, he said.  Siemens, Motorola Inc. (MOT) and Telefon AB LM Ericsson
(ERICY) last week said they're working on joint interoperability tests
to help network operators provide a simple, uniform service.

Keep On Trucking

Proponents of push-to-talk point to Nextel and the 90% of its 12.9
million subscribers who use the sixth-largest U.S. wireless operator's
Direct Connect service.

Nextel has higher revenues per user - with almost 30% stemming from
push-to-talk - and sees a lower percentage of customers cancel their
contracts than rivals, and analysts attribute this is to the success of
push-to-talk.
Nextel, though, built its whole business case around walkie-talkie
services, targeting blue-collar workers like truck drivers or builders
and developing its own iDen technology with Motorola Inc. (MOT).  "The
success of (push-to-talk) services has only been proved over iDen," said
Rosie Secchi, an analyst at London technology consultancy IDC.  "No one
has proved it works on" Europe's general package radio service, or GPRS
technology, Secchi said.

European operators must iron out quality glitches and ensure that spikes
in data usage from specific areas - for example, a building site - don't
overload networks.

Nextel's service has a time lag of less than a second between calls. By
contrast, the technology being tested in Europe has connect times of two
to three seconds, consultants say.

"It doesn't sound like much, but it could be very annoying," said
Patrick Zerbib, a vice president at consultants Adventis. The lag is
important because only one person can talk at a time.

As with 3G, handset availability could be a problem. Zerbib doubts Nokia
will be able to stick to its goal of having a push-to-talk function in
all its phones next year.

Another issue, often ignored when extrapolating Nextel's success to
Europe, is the different wireless culture.
Text messaging is much more popular in Europe than the U.S., where
paging was a much bigger phenomenon than here; and push-to-talk isn't as
private as text messaging.

"It's very intrusive. Phones just ring, these ones shout," said Strategy
Analytics' Harris. "It's so annoying."
The challenge, says Adventis' Zerbib, will be to meld walkie-talkie
services with other functions like speedy picture messaging. Deciding
what to incorporate is a fine balancing act, though. "There are only so
many things you can push at the same time," he said.

While investment is relatively low, operators will have to spend on
networks, software, interfaces for the different technologies, billing
and marketing, and this comes as they try to sell skeptical consumers on
their 3G dream.

"That's a lot to do at the same time," said Zerbib.  Most analysts
reckon the service will remain a niche product for businesses that use
walkie-talkies now and want the convenience of only having to carry one
device, or for teenagers who like the novelty value.  Push-to-talk won't
take off in 2004, analysts say. Strategy Analytics' Harris sees less
than 5% of consumers using it five years from now.  "As with most
proposed wireless data services, there is considerable uncertainty among
the vendor and operator community as to where the demand is going to
come from," Jeremy Green of London-based telecoms consultants Ovum said
in a recent e-mail.

There is also a risk the service takes away revenue from current voice
or messaging products. "Operators will have to play their hand on
quality, service functionality and tariffing very carefully," Green
said.

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