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Paging in Latin America and other alphanumeric-intensive markets

What's Going to Happen?

Paging in Latin America for many years was primarily Tone and Voice. It was a popular service but it became necessary to phase this type of pager out of the market. With dramatic market growth came the need for a faster type of pager. With analog Tone and Voice paging, it was only possible to fit 1,500 to 2,000 customers on one radio channel. This was not enough to make a wide-area paging system profitable. The cost of the paging infrastructure to transmit the radio signal (simulcast) over a large geographic area was too high. The paging business would lose money, or the monthly charge to the customer would be so high that no one would be willing to pay it. Either way, Tone and Voice paging was fine for a hospital, a factory, or a hotel -- but not so fine for a subscriber paging business.

The Switch to Digital
A new type of paging protocol was developed using digital methods of transmission. With digital paging, the maximum number of customers or subscribers on one radio channel increased to a point that it became a very profitable business. Numeric display paging was immediately the most popular format in countries where there were many Touch Tone™ telephones, but in Latin America Alphanumeric paging quickly became the dominant offering. Since there are few Touch Tone™ telephones in most Latin American countries, it became necessary to set up operator dispatching services. The operators answer incoming telephone calls, ask for the customer's code number (called PIN or Personal Identification Number), and then the message. They type this information into the system that transmits it by radio to the subscriber. Of course, it is possible to send numeric paging, or telephone number paging using operators, but it does not make much sense. After going to all the expense and trouble of setting up operator-dispatch bureaus, everyone went ahead and offered complete text (alphanumeric) messaging. This is, also, a superior type of communication. It is "value added." A telephone number that appears on a pager's screen really does not tell us very much. We do not always know who is calling, why they are calling, or even if the call is urgent. Worse yet, it might even be a wrong number. A complete text message tells us all the facts: Who, what, when, where, why, etc., and usually it does not require a return telephone call for more information. So alphanumeric paging is generally better than numeric paging, although it is more costly.

The Market Matures
The market rapidly shifted from Tone and Voice to Alphanumeric paging. The growth curve has been dramatic. Everyone is happy. Everyone is making money. The average penetration rate (a country's population divided by total number of pagers in use) in Latin America is still less than 1 percent. Manufacturers have been diligent in developing faster and faster paging codes to keep up with market growth. Faster codes mean more subscribers. Alphanumeric paging currently accounts for 98 percent of the market. In its first 35 years, the Latin American market produced 500,000 paging subscribers. Then it took another five years to arrive at one million subscribers. In another year we will probably arrive at two million subscribers. Great! Less than 1 percent penetration, and other parts of the world are producing 5, 10, 15, and even 20 percent penetrations. What an opportunity! There are almost 500 million people in Latin America and the Caribbean -- so this is a big business opportunity. The plan is to put more Alphanumeric pagers on the paging channels by increasing the speed of the transmission and migrating to the new Motorola FLEX™ paging protocol. Is this the right thing to do? Maybe. . . and maybe not!

The Problem
Anyone experienced in managing a business knows that it is important to limit overhead very carefully, especially the "headcount" or the number of employees. As Alphanumeric paging subscription grows, so does the number of operators required to process all the paging messages. For example, it takes about 15 telephone operators on-duty during the busiest hour of the day to type in and process the message for 10,000 subscribers. OK, not so bad . . . When a paging business gets a little bigger, say 15 to 20 thousand subscribers, the requirement is about 30 operators during the peak hours of the day. To have three shifts, and to allow for rotating weekends and vacation time this requires about 100 people. So a paging company of this size will typically have about 200 employees with one-half of them answering telephone calls. So what happens if an Alphanumeric service suddenly grows to 340,000 subscribers? Well, that would require 360 operators during the busy time and a total operator staff approaching 1,000. Now, this is starting to get serious. The sum of operator salaries, benefits, and the overhead associated with each, gets to be a major expense. Not so bad because with 300,000 customers there will be excellent cash flow to cover the expense. So everything will be OK right? Maybe. . . and maybe not!

The Threat
Everything is fine! The paging companies just keep growing and making more money. Granted, the operator overhead grows considerably, but this is just an unavoidable cost of doing business. Who cares since the industry is making more money and growing? The threat is that the first carrier in a market to offer a type of paging that is superior to Alphanumeric paging and one that does not require telephone operators, will quickly dominate the market. This could be the new voice paging service. Voice allows for absolute speaker identification, and conveys subtle meanings of emotion, like sincerity and urgency, that are difficult for alphanumeric text to do.

The Future
Narrow-Band PCS Voice paging will be the next major shift in the paging market. [In this new service the voice message is in a digital state in the paging terminal and again stored in a digital state in the pager, but not digital when it is transmitted over the air. It is really compressed analog. A lot of us mistakenly referred to it as "Digital Voice" at first. What we should have said was Analog Voice with digital signaling.]

Wait a minute! We just got rid of Tone and Voice pagers, so they were bad, right? No they were great; our customers loved them. So we had to eliminate analog Tone and Voice pagers because they were too slow and used too much time on the radio channel. They kept paging businesses from being profitable and they limited growth. New advancements in technology with voice compression, and frequency reuse, mean that we can transmit voice very rapidly on a paging channel. Now we can serve many thousands of subscribers on one radio channel. Voice paging is coming back. The problem is that it comes back to find a paging industry burdened with a major overhead -- the telephone operator dispatch center. While voice paging was away, many telephone companies upgraded their equipment so they can now offer technical features like D.I.D. trunks. This means that automatic paging is now a practical reality. With D.I.D. trunks and voice paging, we do not need the telephone operators. Although the cost of the voice paging infrastructure may be much higher than a conventional one-way Alphanumeric paging system, the greatly decreased cost of operations makes this an attractive option.

What does it take to make it happen?
As already mentioned, voice paging, to be really effective and automatic, needs to have D.I.D. trunk availability from the local telephone company. This new voice paging requires special radio frequency assignments from the local government. This means two frequencies instead of one because "digital" voice pagers need to be two-way devices that send back short codes to the paging system showing their location and confirming their receipt of messages. One of these radio frequencies needs to be wider than most normal paging channels to be able to transmit the voice message. (Note: the higher speeds require more bandwidth, or wider channels, or 50 to 100 kHz going out to the pager, and 12.5 to 25 kHz going from the pager back to the system.)

What will "Digital" Voice paging service be like?
Remember the first time you called someone on the telephone and you got an answering machine? You probably did not even leave a message did you? Yet today when we call someone who is not at home and there is no answering machine to take the message, it surprises us that they could be so inconsiderate as to not have a telephone answering machine. Our tastes and perceptions change with time. Imagine what a "digital" voice paging service would be like if subscribers used call forwarding to redirect their telephone calls to the paging system. The person calling would receive the now accepted voice greeting of a telephone answering machine, but that answering machine has now become a "digital" voice pager, or a Wireless Telephone Answering Machine. The message gets to the subscriber quickly, and at a lower cost than Alphanumeric paging could offer. (Hopefully!)

Any potential problems?
Well, maybe. . . It may take MANY more fixed radio receivers in the infrastructure, to make this all work, than what we first believed. We may be in the same mess that we were in with the old Tone and Voice paging service. The infrastructure to support this new voice paging service may be so expensive that you can't make a profit. Some serious financial modeling needs to be done with real numbers of the maximum number of subscribers the system will really support.

Note: Voice paging, unfortunately, has failed miserably. I knew there were serious risks, but I thought it might be successful in some markets -- especially in alpha-intensive markets where the cost of the dispatch operators is a major portion of the total overhead. Sorry ! It seems to me that all those, so called, digital voice paging schemes have failed for the same reason that analog voice paging failed, the cost of the infrastructure was too high for the revenue produced by the pagers.


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