USE of the ubiquitous bleeping pager is quickly ebbing, as the cost of cellular phones continues to drop. Research shows that the number of pager subscribers is expected to drop by a further 11 per cent to 12 per cent this year, while mobile phone usage increases. MeesPierson Securities (Asia) said in its latest research report that it expected the number of pager users to drop to 790,000 by 1999, from a peak of over 1.3 million users in 1986. A separate study shows that the number of mobile phone users stood at 1.2 million by the end of last year, almost one subscriber for every six Hong Kong residents. It showed the number of mobile phone users increased by about 500,000 alone last year. Survey Research Hongkong (SRH) said, in its annual Mobile Phone User Survey, that if the current growth rate persisted, there would be almost two million users by the end of this year. 'While we do not expect pagers to go away entirely,' MeesPierson utilities analyst James Ng said. 'Paging subscribers will decline as the cost of owning a cellular phone continues to drop.' As usage falls off, prospects for the leading pager makers and pager service companies look mixed. 'If you look at the breakdown, the top three companies, Hutchison Paging, ABC Communications and Star Paging, command 64 per cent of the market and the top 10 account for 85 per cent of the total paging market,' he said. 'We don't expect any of the listed companies to fold their operations any time soon.' A figure of about 750,000 pager subscribers is recognised as a stable base but a shake-out is not anticipated as the companies look for new markets. 'Chevalier is trying to sell pagers elsewhere and Champion Technology has just spun off Cantone. So what they're trying to do is tap other markets. But no matter what, the margins are still going to be very thin,' Mr Ng said. The going will still be tough. In China and Taiwan, licences have already been allocated. 'In terms of other telecommunications businesses, I don't think there's much room for the small companies,' Mr Ng said. 'There have already been mergers. ABC is already providing services for a smaller company but won't disclose who. Smaller ones are not going to give up their licences as long as they are making a small profit and they're not looking for profit growth. As long as they've got a steady income, they're happy.' People are not expected to entirely relinquish the pager. ABC and Star Paging provide financial news via the pager, multi-line displays and Chinese characters, which are still in demand. 'People also like to differentiate the costs. A lot of corporations have PCS [Personal Communications Services] but they like to page people,' Mr Ng said. 'So I don't think that technology will be totally replaced.' In its mobile phone survey, SRH found Ericsson to be the market leader for handsets. 'Not only has it sprung from near obscurity in 1994 to compete neck-and-neck with the long-established market leader Motorola this year, but it is also the most favoured handset among potential buyers,' SRH said. The survey revealed most cellular phone users are males between the age of 25 and 44.