Wireless long-distance service coming down in price

Staying connected with business partners and friends outside local calling areas has never been easy on the pocketbook, especially for those using cell phones. While competition in the landline long-distance (LD) market is well advanced and has reduced rates substantially, there are signs that greater competition is coming to the wireless LD services market. Canadian companies such as Mobilemiser and Yak Communications (recently acquired by Globalive Communications Corp.) are two examples of firms offering wireless subscribers an alternative to paying wireless LD rates that can sometimes be 30 cents per minute or more. "I get the feeling that cell phone companies are thinking, ‘hey, if you're stupid enough to call long distance on your cell phone, then pay for it,'" says Rasool Verjee, Mobilemiser's chief miser. Verjee, a telecom entrepreneur and co-founder of the phone and internet dating service Lavalife, unveiled Mobilemiser last year; the discount long distance provider allows mobile users to save up to 95% on long distance calls made with their cell phones. Customers register online for the pre-paid service (www.mobilemiser.com) and enter up to eight frequently called numbers. A unique "call back" number is then assigned to each listing. Customers call the "call back" number, where they get a busy signal and hang up. They then receive a call, which automatically connects them to the desired party. There is no subscription fee "and there won't ever be a subscription fee," says Verjee. The service capitalizes on the "unlimited incoming calls" packages offered by wireless carriers, so airtime charges don't always apply. Customers pay as low as 4.9 cents per minute for calls in North America. International callers can expect significant savings as well: 39 cents per minute for calls to Afghanistan (more than $2 with some carriers), 19 cents for calls to India (versus upwards of 75 cents) and nine cents for calls to Russia (nearly $2 with some carriers). While he won't disclose numbers of customers or company earnings, Verjee claims the company has "had a great response." Viral marketing has been the primary drive behind an increasing customer base, although Mobilemiser plans to launch an advertising campaign this year. With number portability on the horizon and the possibility of a price war among wireless carriers to keep customers, Verjee doesn't see the market for dial-around service having lasting power. "I believe it's a short-term opportunity," he says, noting that there might be a three or four-year window. Tony Lacavera, chair and CEO of Globalive, aims to not only maintain the market for dial around services, but to increase their presence by offering greater user convenience. Globalive lists Yak, Looney Call, Lucky Call and yakCell among its services. YakCell operates somewhat differently from Mobilemiser: customers register for the service online but needn't prepay, or list frequently called numbers. Instead, they dial a local access number followed by the number of their desired party, and charges appear on their monthly credit card bills. Discounts range from five cents for calls to the UK, 13 cents for calls to India and 35 cents for domestic calls. "It's a very popular service," Lacavera tells Report on Wireless, noting that yakCell has consistently attracted users and has approximately 50,000 customers. He acknowledges that the inability for wireless users to connect through a direct-dial service, such as 10-10-420, limits yakCell's appeal. "Right now there is no real penetration into the wireless market because it's very hard for customers to access our service," he says. "Once we are able to have our customers dial 10-10-Yak from their cell phones we expect a rapid penetration." Globalive has been working on gaining access to carrier networks and dealing with technical and interconnectivity issues between wireless and Yak networks. Although Lacavera wouldn't discuss details of these arrangements, he is confident yakCell will be available to customers directly through their cell phones in the near future. "I'm happy to say we're well down that path," says Lacavera, "and this year, certainly, we'll be in the marketplace with these offerings." Cellular LD, a division of Boston's MobileSphere, isn't banking on gaining access to carriers' networks. Instead, the privately held company is focusing on partnerships with mobile virtual network operators (MVNOs), enterprise and college/university markets, while maintaining direct consumer offerings. Much like yakCell customers, users register online and make their long-distance calls through access numbers. Calls placed to Canada, the UK and China cost as little as five cents a minute. Calls to India, including mobile phones, cost only 10 cents a minute.The service, not yet available to Canadians, started in 2001 and has "tens of thousands of users," according to Gavin Macomber, co-founder and executive vice-president of MobileSphere. The company has experienced significant growth over the past three years and has partnerships with 25 college campuses and 10 wireless carriers. "We partner with universities' telecom departments, like at MIT, Boston University or Purdue in Indiana, and they make our service available to their students," he explains. "Sometimes it's a private label, sometimes it's a co-branded offer. We handle the billing and provide them a revenue share on usage." Although some universities, such as Purdue, boast an impressive listing of international students, MVNOs like Virgin Mobile offer greater revenue potential for dial-around companies. "When you work with an MVNO that has several hundred thousand customers, through that partnership angle you can reach more customers than you would with a direct advertising campaign," says Macomber. With their GSM MVNO partners, Cellular LD is making the user experience more seamless, by providing direct dialing for customers. "We've done that by putting an application on the SIM card that essentially routes the phone calls over MobileSphere, versus the underlying wireless network," he says. MobileSphere's CarrierILD platform has been deployed successfully by several MVNOs, including Telispire and XE Mobile. The wireless long-distance market presents dial-around companies with countless opportunities for innovation and revenue. As wireless penetration and usage increases, the market may be even more lucrative. "I've not had a landline for years," says Verjee. "I believe more and more people will be doing the same in years to come." Despite the downward trend in LD revenues, the industry is still worth a substantial amount of money on an annual basis. According to a Frost & Sullivan study, the North American domestic and international long distance market was valued at US$66.64 billion in 2004. Macomber pegs the current US international long distance market is between US$20 billion and US$25 billion, 10% of which he attributes to wireless calls. According to the Frost & Sullivan study, the North American long distance market is expected to decrease to US$60.89 billion by 2011, as VoIP services gain popularity and more wireless and landline carriers offer calling plans with unlimited national long distance minutes. Although unlimited domestic calling is gaining traction with US wireless carriers, Canadian providers have been loath to follow suit to date.

Wireless long-distance service coming down in price

News | 01/11/2007 5:00 am EST

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us