Nextel Walkie-Talkie Calls Become All the Rage to Imitate.

By Jennifer Davies, The San Diego Union-Tribune Knight Ridder/Tribune Business News

Mar. 17--It used to be that walkie-talkies were a must-have gadget for kids.

Then Nextel added the feature to its cell phones to lure business customers who need to be in constant contact. It has been such a big hit that Nextel has built a large business customer base and has the highest average bills of any cell phone company.

Other wireless companies have taken notice of Nextel's success and are beginning to offer their own walkie-talkie service. But the competitors aren't just going after business customers. They are targeting the mass market especially teenagers and young adults.

It may well be that walkie-talkies again become a must-have gadget for kids.

Boost Mobile, which uses Nextel's network, is going after the youth market with particular zeal and sees the walkie-talkie function as a way to distinguish itself from other companies. Boost has signed up more than 405,000 customers in California and Nevada and said that more than half its customers' usage minutes are on the walkie-talkie service.

Verizon, Sprint PCS and regional wireless phone company Alltel also are offering a walkie-talkie service, also known as push-to-talk.

Walkie-talkie services like Nextel's allow users to have a special number they can give to friends, family and business associates. To make a walkie-talkie call, users dial the private number and then push a button on the side of the phone. Users hold down the button to talk and release it to listen.

"This could be a great way to communicate for families as well as a cool killer application for kids," said Don McGuire, vice president of global marketing for Kyocera Wireless, a San Diego cell phone maker that recently introduced a walkie-talkie handset. McGuire said Kyocera's new phone is the first low-cost model that will help walkie-talkie service take off with young people.

Other phone makers are ramping up to meet the demand. Motorola, the main supplier to Nextel, is branching out to offer phones with walkie-talkie capability to other carriers, as is Samsung, a South Korean phone maker.

Interest in the feature is being driven by Nextel's success, said Eddie Hold, a wireless industry analyst for Current Analysis, a market research firm with offices in Virginia and La Jolla. Nextel's average revenue per user is $69 monthly compared with the industry average of $50.

Nextel charges 15 cents a minute for walkie-talkie calls over a set time limit, or it provides unlimited push-to-talk service for an additional $20 a month.

"They are all looking at Nextel and they are all saying, 'Well, Nextel has this great monthly revenue. How do we get it?' " Hold said.

While there were some questions initially about whether walkie-talkie services would take revenue away from voice calls, most industry experts say Nextel proves that's not a concern.

Jason Kenagy, senior director of product management for Qualcomm's Internet Services, said that walkie-talkie and regular cell phone calls are analogous to instant messaging and e-mail in the Internet world. Whereas instant messaging, or IM, and push-to-talk service are for short bursts of information, actual wireless calls and e-mail are for more detailed exchanges.

Wireless phone companies would salivate at the chance to make walkie-talkie services as popular as the Internet's IM services, said Michael King, a wireless industry analyst for market research firm Gartner Group.

"If they can make it like IM and they can put that kind of cache on it, then walkie-talkie services could be pretty popular," King said.

But Hold isn't so sure that walkie-talkie services will be such a big hit.

While it could be popular with young people and in such industries as construction in which short exchanges of information are helpful, Hold said the push-to-talk service isn't for the average person. Even business users, which have long been Nextel's focus, might find the service not particularly useful and in some cases downright distracting.

"In business meetings, the walkie-talkie aspect can actually be very intrusive," he said.

For those who are irritated when having to listen to one side of a cell-phone conversation, two-way conversations that begin with a walkie-talkie chirp could create as many detractors as it does users, King said.

"There is a real possibility for backlash," he predicted.

Kenagy, who works on push-to-talk technology for Qualcomm, said it is important to have etiquette safeguards built-in so there isn't a negative response to the service. Those safeguards include being able to decline a call in a polite, quiet way.

"It is frankly quite obnoxious that you can just start yelling at someone," Kenagy said of the walkie-talkie service.

The fact that one party can control the conversation is also a potential pitfall, Hold said. With push-to-talk services, just one person can talk at a time. To talk, the caller holds down the walkie-talkie button, and the other person cannot respond until the first person releases the button.

"If I'm in charge of conversation until I push the button, it's just not that appealing," he said.

Mary Lowell, a spokeswoman for Nextel, said her company encourages users to put their phones on vibrate when in such places as restaurants and churches.

But it is not only etiquette that could slow the growth of push-to-talk services. Technology glitches could make the service not as user-friendly as consumers might demand. While the walkie-talkie service of Nextel and Boost work practically instantaneously, other services have a delay of three to five seconds.

"The whole purpose of the product is immediacy. To wait three to five seconds, why not just make a phone call?" said Andrew Colley, a spokesman for Boost Mobile.

Qualcomm and other companies are working on improving the technology so there is a shorter delay, Kenagy said. But he pointed out that there are a variety of companies using different technologies, which makes coordination difficult. He said the benefit of Qualcomm's approach is that it all works together.

McGuire said Kyocera has no preference when it comes to technology. In the next few months, Kyocera will have three different phones using three different technology platforms, he said.

Bob Egan, founder of Mobile Competency, a market research firm, said that for walkie-talkie services to become more than hype, the technology will have to work across all wireless phone companies so that someone with Nextel's service would be able to contact a Verizon customer. He pointed to the fact that short message service, in which users can type and send a quick text message on a cell phone, didn't become truly popular until it worked between wireless companies.

"The industry is still trying to wrestle with what the right approach is," he said.

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(c) 2004, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News.

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