U.S. Wireless Industry Gets Ready for Disposable Phones
By Rick Burnham, The Press-Enterprise, Riverside, Calif.
Nov 29, 2001 12:18 PM
Nov. 29--The already highly competitive cellular phone industry may be
about to ramp it up another notch.
Inexpensive throwaway cell phones -- offering a set number of calling
minutes and requiring no contracts -- are about to go on sale in the
U.S.
The phones are expected to rival the prepaid wireless plans of cellular
phone companies, as well as prepaid calling cards and pay phones.
While they have been popular in Europe and Japan for some time,
disposable phones haven't been marketed in the U.S. -- until now.
Garden Grove-based Hop-On Communications is offering its disposable
phone in a partnership with Universal Studios. Beginning Dec. 11,
Universal will be promoting the phones as part of a bonus giveaway to
buyers of the DVD, "Jurassic Park III." Some of the DVDs --
approximately one in five -- will contain a coupon which can be sent in
to receive the disposable phone, said Hop-On spokesman David Pasquale.
Hop-On expects to begin rolling out the phones for general sale at a
variety of convenience stores and other retailers by late December,
Pasquale said.
The phone -- which only works for outgoing calls and uses voice
recognition technology instead of a dial pad -- will cost $29.95, with
60 minutes of air time included. The phone also comes with a combination
earpiece and microphone allowing for hands-free use and a built-in
battery pack that will last up to two years.
The prepaid air time is good for six months after first activated. There
also is a $3 to $5 deposit, credited when the user brings the phone back
for recycling.
To call, users push one of the two buttons on the phone. Hop-On uses
voice recognition software, requiring users to say the phone number they
want to call. Talk time begins when the phone number given is connected.
To end the call, users push the phone's other button.
Hop-On's initial model will only work for outgoing calls, but a model
coming out next year will allow customers to receive calls.
Another company -- Dieceland Technologies of New Jersey -- will offer a
disposable phone next year that operates much like the Hop-On phone.
Dieceland's phones likely will cost $10 to $30, depending on the amount
of talk time purchased.
Both Hop-On and Dieceland plan to utilize a number of cellular carriers.
Hop-On will initially partner with Cingular Wireless (formerly Pacific
Bell Wireless), spokesman Jim Olecki said.
Telespree Communications of San Francisco is in talks with a number of
cellular carriers on its semi-disposable cell phone, a spokeswoman said.
How and when that phone will be marketed is up to the carriers, the
spokeswoman said. The phones might be sold from vending machines and at
grocery stores.
Selling for less than $30, Telespree's phones are activated with a
battery pack that also contains prepaid minutes. Users can either toss
the phone away when the air time is spent, or keep the phone and buy a
new battery/prepaid minutes pack.
Throwaway phones are being aimed primarily at "glovebox" users -- those
who would only use a cell phone in an emergency or when their car breaks
down.
"This would be ideal for me," said Ed Doucette of Riverside, who likes
to have a cell phone for his wife, Ruby, to keep in the glovebox of her
car for emergencies.
Doucette has had a pre-paid phone offered by one of the major cell phone
carriers. But the charges for the phone increased from $30 for six
months (or 35 cents a minute during peak time) to $30 for two months (or
35 cents a minute, peak), he said.
"This (a disposable phone) would be cheaper," Doucette said.
Indeed, the throwaway phones may rob sales from carriers' prepaid
wireless phone plans, said Jack Bell, a wireless industry analyst for
San Diego-based Mission Ventures, a venture capital firm.
"The cool thing about it is, this attacks the low end of the (cellular)
market," said Bell.
Hop-On's $30 phone would cost buyers 50 cents a minute for air time.
While Verizon Wireless, Cingular Wireless and AT&T Wireless offer
prepaid mobile plans at 35 cents a minute for peak use, the pre-paid
packages -- which include a phone -- sell for about $100 and may require
an activation fee.
For the holidays, Verizon Wireless is offering its pre-paid phone,
called Freeup, for $69.99 after a $30 rebate.
While throwaway phones may impact pre-paid mobile plans, they aren't
likely to hurt the cellular industry's contract call plans, Bell said.
The contract plans generally offer a fixed number of minutes of air time
monthly and come bundled with a host of other services tied to more
sophisticated phones.
Customers of contract plans generally want phones that will allow
messaging, links to the Internet, games and other features, Bell said.
At least one major Inland area wireless carrier doesn't believe
throwaway phones will impact its bread-and-butter contract plans.
"The idea (of disposable phones) is intriguing, but I don't know if the
product is quite there yet," said Jim Naughton, associate director of
marketing for Verizon Wireless.
The company believes its array of phones and plans meet the needs of its
segmented market, which include security users, high-end users and the
youth market, Naughton said.
Rates, plans, and plan features change constantly among the big three
cellular carriers, Verizon, Cingular and AT&T Wireless. But all offer a
basic contract plan between $20 and $25 a month.
Verizon Wireless has a basic one-year contract plan that costs customers
$25 a month for 100 anytime minutes, plus $29 for a low-end handset,
Naughton said. A current promotion adds 1,900 night and weekend minutes.
There also is a $35 activation fee, but that is waived if customers sign
a two-year contract.
Cingular Wireless -- which declined comment on the introduction of
disposable phones -- has a basic contract plan for $19.99 a month for 50
anytime minutes, and unlimited calling at night and on weekends. It
offers a phone for $19.99, with a second phone for free if customers
sign a two-year contract. On a one-year contract, the phone costs
$59.99. There also is a $36 activation fee under the plan.
AT&T Wireless has a similar one-year contract costing $19.99 a month for
60 anytime minutes. A phone costs $49.99 and there is a $35 activation
fee.
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(c) 2001, The Press-Enterprise, Riverside, Calif. Distributed by Knight
Ridder/Tribune Business News.
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