Motorola Inc’s gamble on hiring Italian clothing design specialist Benetton SpA to design pagers for a youth market that would breathe new life into a dormant European pager business appears to be paying off. In the markets where the colourful units are being sold, Germany and the UK, they are doing precisely what the telecommunications equipment giant hoped they would, that is build awareness of the Motorola name in the consumer market where Benetton’s name and design reputation are more well known. Greg Nelson, vice-president and general manager for Motorola’s European paging subscriber division, said When you see how Benetton uses the colours for contrast, how they blend them, you know why they are in the business they are in. We are pleased with progress in the UK and a lot of markets that have seen them are asking for them, such as Portugal. There is a marketing campaign about to start in Portugal, and Ireland is expected to offer the products by the end of the year as well. But the three models introduce more than just vibrant Benetton colours to the largely unimaginative world of pagers; they are designed to use only the consumer-oriented caller party pays service rather than Europe’s standard monthly subscription service. And therein lies a certain problem for further pay-off to the Benetton project.
Paging business to languish
Unlike the US and Asia, where subscription-based pager services have done tremendously well, the same formula in Europe has caused its paging business to languish. Although several countries, including Sweden, the UK and Germany, have introduced caller party pays service, regulatory restrictions prevent its introduction in others. Ironically, Benetton’s home country of Italy is among the nay-sayers, as is Spain, although for slightly different reasons. In Italy, the obstacle arises from Telecom Italia SpA’s reluctance to introduce a service that requires no monthly subscription. Nelson said We are eager to introduce it there, it would be a great market for this. We’re hoping it will be early next year. Spain, which has three major pager operators and mumerous regional and smaller operators, is blocking the change because the smaller operators feel threatened with loss of revenue. Also ironically, these countries’ operators are ignoring the fact that caller party pays service is not necessarily a replacement for subscription-based services. Rather, it can attract a new set of customers. It was for that reason that Motorola chose this payment method for its attack on the youthful consumer market. Nelson said Young consumers who cannot in the first place afford cellular phones are put off by the notion of having to pay a fixed sum every month for paging. Neither do they want to be required to fill out lots of subscriber forms and agreements or go to a specialist reseller to buy a pager. But, he explained, they will buy one in a consumer electronics store that will cost them only the price of the unit, because the caller to the pager will pay an extra premium. Indeed, this service is diametrically opposed to the concept of paging sought by the business user, who has historically supported subscription-based pager services. Business users buy a paging service in order to be at the beck and call of their customers. Their full-service telecommunications resellers also can provide paging systems with little effort. A business user is highly unlikely to opt for a paging service that would transfer the cost of the page to the customer being served! Nelson said. In fact, he suggested, the operators that have introduced caller party pays service have found it complementary to their subscription paging. Further evidence that it is complementary is seen in the fact that operators in the US and Asia, which have had no problem growing subscription-based services, are now expressing interest in adopting caller party pays in their panoply of services, he added.
