It's wait and see with push-to-talk
As one operator takes the lead with walkie-talkie services, others are holding out for open standards
Several Hong Kong mobile-phone operators are eyeing push-to-talk services but are reluctant to follow New World Mobility's lead until the industry adopts open standards that will allow competing handsets to communicate with each other.
New World Mobility will be the first operator to launch the walkie-talkie service, which enables instant communication with one or more users at the touch of a button.
It hopes to unveil the service next month as its target market - teenagers who like to keep in touch via two-way radios - prepares to go back to school.
The company has chosen Nokia as its vendor and plans to introduce four handsets made by the Finnish phonemaker in the third quarter.
At present, Nokia handsets can talk only to other Nokia phones, raising concerns among operators who do not want to be locked into using a single vendor.
Rival Motorola also provides push-to-talk technology, but on a different standard.
'There are still some interoperability issues. In my personal opinion, it's still premature,' said Stephen Chau, chief technology officer at SmarTone Mobile Communications, one of the companies testing push-to-talk services.
New World Mobility believes the standards issue will be resolved next year, allowing it to broaden its handset range to other vendors.
The company expected the Open Mobile Alliance - a standards-setting group - to adopt a global push-to-talk technology by the fourth quarter, with all handset vendors on board by the second quarter next year. 'Once this standard is ready, we'll support this open standard,' a Nokia spokesman in Hong Kong said.
But this did not reassure Mr Chau. Although industry players were negotiating a common framework, the process could be bogged down as competitors vied to promote their own technology, he said.
CSL and China Resources Peoples Telephone also cited the standards issue in their reluctance to adopt push-to-talk.
The walkie-talkie service is being deployed gradually around the world as operators aim to duplicate the success of Nextel Communications in the United States.
Nextel launched the service about a decade ago using Motorola technology, initially targeting transport and logistics companies, frequent users of two-way radios. But push-to-talk has also found fans among office workers who use the service to keep readily connected with friends. Nextel has 12 million users of the service and the highest average revenue per user and lowest churn rate among US operators.
What is popular in the US, however, may not necessarily find a following here.
Charles Henshaw, chief executive at Peoples, noted that push-to-talk allowed US users to stay in contact with friends cheaply over vast distances. The services were priced at a discount to regular voice calls - another reason for their popularity. In Hong Kong, however, voice calls are already cheap.
'We have to see if it fits in the environment here,' he said, adding Peoples was studying push-to-talk and would launch services if there was a firm business case.
The challenge for New World Mobility, as the first market entrant, is to build a mass of users, which will give push-to-talk its value to customers.
The company is targeting the youth market, but the product will be of little use to teenagers if none of their friends are New World subscribers with push-to-talk-enabled handsets.
Potential subscribers must be convinced to dump their existing phones and buy new ones. New World Mobility chief executive Norman Wai Fung-man did not see this as a daunting challenge.
'Don't forget, in Hong Kong people tend to change their phone every three to six months,' he said. 'People are buying new phones all the time.'
The company plans to offer handset bundles. Customers who buy more than one will receive a discount. New World Mobility is also considering allowing subscribers to trade in their phones for push-to-talk enabled handsets.
The company hopes to have eight Nokia handsets available in Hong Kong by the end of the year. One model - the 5140 - is already on the market. Described as the Swiss Army Knife of phones, it comes with a built-in digital compass and stopwatch, a flashlight, an FM radio and a camera and retails for about $2,380.
At the end of the day, if New World Mobility is the only company to offer the service, it does not seem that push-to-talk will achieve the benefits of Metcalf's Law, which holds that a network's value increases with its users.
Should one of the five other operators join the market, negotiations will be necessary to work out interconnection charges.
Mr Wai said New World Mobility was open to discussions.
'We haven't talked to anyone else at this stage because no one else has indicated they want to launch the service,' he said.