GartnerGroup's Dataquest Says Calling Party Pays Offering to Spur Revenue from Low-Usage U.S. Wireless Customers
Most Major Carriers to Offer Calling Party Pays Service by 2004
San Jose, Calif., September 21, 1999—As an alternative to consumers who have not used wireless technology extensively, calling party pays (CPP) is projected to increase U.S. wireless revenue by 15 percent by 2005, according to Dataquest Inc., a unit of Gartner Group, Inc. (NYSE: IT). CPP is a service offering whereby the party placing the call to a wireless customer pays the wireless airtime charges. Dataquest analysts expect most of the major carriers to offer CPP service by 2004. The service will be offered regionally in some areas by year-end 2001.
Dataquest analysts said CPP will boost usage at the low-usage end of the market, and it will increase carrier revenue. Dataquest said the low end of the market is the majority of the prepaid market and subscribers using less than 300 minutes a month.
"CPP will make wireless services more affordable to low-end customers and increase airtime in both the prepaid and the postpaid low-usage end of the market," said Tole Hart, industry analyst for Dataquest's Mobile Communications Services and Infrastructure North America program. "CPP will encourage subscribers to leave their handsets on for receiving calls on a usage-sensitive basis. This service will also get people to give out their mobile phone number more and make the mobile phone a more accessible point of contact."
Mr. Hart said in the near term there will be resistance by some wireline carriers to invest the necessary dollars in networks, in billing systems, and in support systems to offer CPP, since there is little perceived demand right now. CPP will require a buy-in from incumbent local exchange carriers (ILECs) to work the billing because CPP calls will be through landline carrier's bills. Landline carriers will charge for database checks and billing and an interconnection charge, and wireless carriers will expect revenue from airtime usage.
"Consumers will be attracted to CPP because of the price and perceived value for all their telecommunication needs," Mr. Hart said. "As more competitors enter the telecommunications markets, consumers will become more discriminating. No provider will want to be in a position of having a limited menu of service offerings, and CPP will be among them."
Additional information on this market is available in the Dataquest Perspective "FCC’s Proposed CPP Rules: What Is the Impact?" The report assess CPP's impact on the mobile telecommunications market in the United States. The report also presents CPP usage and revenue by market segment and forecasts overall usage and revenue for CPP through 2008.
This report is produced by Dataquest's Mobile Communications Services and Infrastructure North America program. This program provides analysis of the mobile communications services markets and the networks on which they operate. Additional information on this program is available on Dataquest's Web site http://www.dataquest.com/public/static/home/ourservices/scopes/n05mobina.html.
To purchase these reports or subscribe to this program, please call 800-419-DATA, or 408-468-8009. More information about Dataquest's programs, descriptions of recent research reports, and full text of press releases can be found on the Internet at http://www.dataquest.com.
GartnerGroup analysts are taking a unique look at the wireless market during The Great Wireless Experiment. Bob Egan, GartnerGroup research director for wireless communications in North America, has put away his wireline-based technologies, and for 30 days his communications (both voice and data) are being conducted exclusively with wireless products. A special Web page has been developed to monitor Mr. Egan's activities with various wireless products. The site will also be updated with GartnerGroup research findings on the wireless industry. The Great Wireless Experiment Web site can be accessed at http://www.gartner.com/wireless.
GartnerGroup's Dataquest is the recognized leader in providing the high-technology and financial communities with market intelligence for the semiconductor, computer systems and peripherals, communications, document management, software, and services sectors of the global information technology industry.
As the world's leading authority on IT, GartnerGroup provides clients with a wide range of products and services in the areas of IT advisory services, measurement, research, decision support, analysis, and consulting. Founded in 1979, with headquarters in Stamford, Conn., GartnerGroup is at the center of a global community serving Fortune 1000 clients from 80 locations worldwide. Additional information about the company is available on the Internet at www.gartner.com.
CONTACT:
Tom McCall
(408) 468-8312
tom.mccall@gartner.com