Wednesday, March 12, 1997

Industry answering the page to offer beeper features, services to consumers

By KATIE FAIRBANK

Associated Press

DALLAS - Beepers are not just for doctors and drug dealers anymore.

The chunks of plastic and circuitry have been emitting their demanding tones since the 1940s, although their use had been limited the last 20 years to doctors and plumbers alerted to call their offices. Then, as pagers became more available, the industry was amazed to see a seedier side emerge when drug dealers found they could be used to easily contact one another.

"Many of the management teams still shake their heads over that. They'd like not to be associated with it," laughed Jeanine Oburchay, associate managing director at Bear Stearns in New York.

Although still popular with original customers, the pager industry has gone mainstream, experiencing exploding growth as new products and services capture the business world and reach out to Middle America.

Paging services was one of the top-growth industries in 1996, according to American Business Information Inc.

Analysts estimate the number of people carrying a beeper has jumped from 27 million in 1994 to more than 40 million today.

"I don't know if it will be everyone, but I do think that we can get to a point in the year 2000 where 72 million people are using pagers," Ms. Oburchay said.

As the industry has grown and consolidated, the increase in usage has been driven by several factors including, declining consumer costs and increased distribution.

There also have been some technological advancements due to a development by Motorola Inc., which increased system capacity, as well as the addition of radio spectrum licenses auctioned by the Federal Communications Commission.

The changes mean individual companies are determined to gain market share by reaching customers with more than the basic beeper service.

Plano, Texas-based Paging Network Inc. has introduced what is being called a major innovation. The voice-oriented product, called VoiceNow, allows callers to leave a voice message, similar to a portable answering machine.

VoiceNow was introduced at the end of February and the company expects it to be in 50 cities by the end of the year.

"We think the real killer market for voice paging will be the consumer," said PageNet spokesman Scott Naradell. "It's a combination of pager and answering message. We foresee people forwarding their home answering machines to their VoiceNow pager when they're not at home."

PageNet, the nation's largest paging service, said the voice pagers are expected to be as popular as the numeric and alphanumeric pagers.

Both those types of beepers have their devotees. The somewhat-limited numeric beeper, which allows the caller to punch in a telephone number, is the least expensive.

Many users have learned to get around its limitations by developing personal number codes to use as messages, such as typing in 911 to call home as soon as possible.

Insiders say the type is popular with teen-agers who have gone on to create an entire "beeper language."

"A kid isn't likely to have an alphanumeric pager, but they've found innovative ways to get messages to one another," said Oburchay.

The alphanumeric pager, a recent innovation which includes small screens that can portray short text messages, has opened up many service options.

In September, PageNet decided to deliver news headlines through an arrangement with CNN. The news service allows beeper users to get up-to-date news, stock quotes and sports scores.

Also in February, travel company Sabre Group introduced a flight paging service. The service, which is initially being offered free, will allow alphanumeric pager users to register with the company and be notified in case of changes in flight times or plans. Nearly all of the major airlines are participating in the service.

"In working with paging companies, we found that the alphanumeric pager is used by executives and that was the market we really wanted to communicate with," said George Lynch, director of marketing communications for Fort Worth-based Sabre. "If you've got an alphanumeric pager, you can even register grandma and we'll send a message about her flight numbers."

All of the options have created alphanumeric fans.

"I like the alpha pages. You can get an informational type page instead of just a phone number where when you call then ask what kind of salad dressing you want," said David Randolph, a director information systems at Presbyterian Hospital.

Randolph, who is paged about four times a day, said beepers have been a part of his life as long as he can remember.

"In our function in life we treat a beep as an emergency situation. It's not another tool to reach someone all the time," he said.

The next change on the horizon is a two-way paging method where the system will not only let users receive phone numbers and simple text messages, but for the first time they will be able to reply. Several companies have a product in the works with MTel Corp.'s SkyTel subsidiary in the lead.

All of the options will continue to mutate as the industry grows, insiders say.

"In the past, paging was largely bought on getting the lowest price. What we're moving toward are lots of neat new services that reach different segments of the market," said Naradell.

That maturing of the market may soon mean long-awaited profits in the industry which has been dealing with multimillion-dollar upfront costs to create and run their systems.

Despite the millions of subscribers, the only real moneymaker in the paging industry has been Motorola, the primary maker of pagers. The service operators, most of whom lease the paging devices to customers, are still not making money.

"Probably in 1998 these companies will not only be able to cover their capital payments, but also their interest payments," said Ms. Oburchay.

They'll have to wait for a big shareholder return though.

"Bottom-line profits will probably not be made until around 2000," she said.