Next 'killer application' faces obstacles in Hong Kong

PUBLISHED : Monday, 06 September, 2004, 12:00am
UPDATED : Monday, 06 September, 2004, 12:00am
 

For the past several months, all six mobile operators in Hong Kong have been testing a new 'killer application', one that has the potential to stem the haemorrhage on their voice revenues.

Push-to-talk (PTT), or instant, two-way, walkie-talkie service is coming to many mobile phones near you. The service saw phenomenal growth last year when several United States operators launched it with new phones.

But Nextel Communications has been offering the same service for about a decade.

The company's success prompted mobile phone giants such as Nokia, Samsung and LG to embed the PTT function on their latest mobile phones.

New World Mobility will be the first in Hong Kong to launch the city-wide service this month, but sources have indicated that at least two of the larger operators - possibly CSL and SmarTone - will be offering the service this year or early next year.

Push-to-talk technology enables callers to connect to other mobile phones with just the push of a button, similar to a walkie-talkie. Only one person can talk at a time, and there is no need to dial a number.

The radio technology, frequently used by police officers, rescue workers and taxi drivers, is by no means new. What is new is consumer behaviour, from children using radio to to get picked up from school to rescue workers who no longer need to carry two separate devices - a mobile phone and a walkie-talkie.

The appeal of push-to-talk over a voice call is being able to talk to a group instantly without waiting for an answer. Such a service would be particularly useful for close-knit groups that need to stay in touch often.

Another beauty about PTT is you are not geographically limited to Hong Kong, as you can talk to members of your group in London, Germany and Australia - wherever the service is available.

However, bitten by experience, Hong Kong's mobile operators are surprisingly lukewarm towards a technology that could potentially rejuvenate their diminishing voice revenue.

A local operator we spoke to said it was in two minds about the service because voice calls were already cheap in Hong Kong and people would prefer to talk over a clear, reliable line.

For anyone that has used a walkie-talkie before, this is a valid point. Why would anyone want to use a disruptive service plagued by latency (latency being the time it takes for the voice path to travel through the system before a response can be given)? The answer is cost.

In the US where voice calls from mobile phones are expensive, PTT tariffs are significantly cheaper at just US$4 to $5 a month for unlimited worldwide service. The choice is obvious.

In Hong Kong where the cost of making voice calls over mobile phones is already the lowest in the world, operators would need to pitch PTT harder to its customers. A report from research firm International Data Corp (IDC) lists PTT inhibitors: 'Existing mobile phone handsets do not support PTT functionality, forcing customers to upgrade their handsets. And early PTT adopters are bound to be using the technology in a 'walled garden', only allowing them to communicate with other PTT users on the same network.'

In Britain, where PTT has been available for several months through Orange, consumers have not been rushing to sign up for the service because of the lack of PTT handsets and compatibility issues.

Only Orange customers can talk to other Orange customers using PTT phones. PTT through Orange is also expensive, so consumers are sticking to SMS and voice.

An Orange spokesman said there was a lot of pent up demand and the operator expected to attract corporate customers once its PTT service covered a large portion of Europe by the end of the year.

Senior IDC analyst Warren Chaisatien, based in Sydney where Australia's Telstra launched PTT in May, believes that PTT could take the pressure off third-generation (3G) cellular operations in markets where the two services are available.

According to the International Data Corp report: 'Should PTT prove successful as it has with Nextel [a US telecoms firm now having success with PTT], voice revenue will be rejuvenated and existing 2.5G networks extended, and carriers will be in less of a hurry to scramble for mobile multimedia revenue from 3G technology.'

Most importantly, in order for PTT to succeed in Hong Kong, mobile operators would have to work together first to resolve network and service compatibility issues as they did before introducing mobile multimedia services.

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