The Association of U S West Retirees



Free breeds of 411 "cash cow" arrive
By Fred A. Bernstein, The New York Times
Denver Post
Monday, March 13, 2006

Calling 411 for directory assistance can be maddeningly expensive.  Carriers like Sprint and Verizon charge more than $1 and sometimes as much as $2 a call from a cellphone.

And much of that is profit.  Directory assistance "truly is a 'cash cow,"' said Saroja Girishankar, a vice president at the Pelorus Group, a telecommunications market-research firm based in Raritan, N.J.  She and other industry analysts said that the carriers paid wholesalers -- who actually provide the 411 service -- from 25 to 50 cents a call.

Naturally, the wireless carriers and directory assistance companies want to keep the cash cow in their barn, but increasingly, customers have access to free alternatives to 411.

And as cellphones become more sophisticated, the options for avoiding paid directory assistance are multiplying.

Already, two new services -- 800-FREE-411 and 800-411-METRO -- offer directory assistance free of charge, although users have to listen to advertisements.

Other companies, including Google, offer free directory assistance via text message.

Soon, voice-activated search engines may make it possible to bypass directory assistance entirely.  One contender, the Maestro system, a voice-activated search engine being developed at Ben-Gurion University in Israel, will allow users to surf the Web just by speaking and listening.

To keep users calling their paid 411 services, the major wireless carriers have added features like horoscopes, sports scores and stock prices.  As cellular bandwidth increases, those offerings will go from voice to text to multimedia, said Tom Moran, executive director of product management and development for Verizon LiveSource.

(LiveSource, owned by Verizon Communications, handles about 1 billion 411 calls a year for customers not only of Verizon Wireless, but of T-Mobile, Cingular and Alltel.)

"Pretty soon, if you ask for the number of a movie theater, we'll send the movie trailer to your cellphone," Moran said.

Some new directory services will rely on Global Positioning System technology, which is mandatory on most new cellphones.

"You may not know where you are, but we will, and we can give you the number of the nearest Italian restaurant," Moran said.

(Under current law, the company would be able to track your location only with your permission.)

Sprint is already offering one location-based service:  driving directions with your current location as the starting point.  An operator will stay on the line until you reach your destination, said Bill Elliott, director of marketing, voice and integrated services at Sprint.

Elliott said that Sprint 411, at $1.40 a call, is a bargain because a caller can get up to three pieces of information, like a phone number, a sport score and directions.

Despite all the enhanced services, 95 percent of customers are simply looking for a phone number when they dial 411, Girishankar of the Pelorus Group and others said.  So the phone companies are determined to make "ordinary" 411 calls appealing, which is why Sprint and Verizon continue to use live operators.

"When you call 411, you want to speak to a person," Moran said.

Since last year, Verizon Wireless and Sprint have offered 411 callers the option of receiving a backup text message, generally for a small additional charge.

So far, despite the free alternatives, the number of 411 calls from cellphones has been "increasing by leaps and bounds," according to Paul Ciotta, a spokesman for Infonxx, a company based in Bethlehem, Pa., that handles about 500 million directory assistance calls each year.  At the same time, the number of 411 calls from conventional telephones has been decreasing, several analysts said.

Fees for traditional directory assistance calls from wired phones vary from region to region and company to company.  Some states require phone companies to provide a certain number of free information calls, but beyond that, fees typically are about $1.50 a call.

If overall revenue from 411 calls (now about $8 billion a year) falters, cellphone companies may try to make up the difference with advertising revenue, following the lead of the free services.

If you ask for the number of a restaurant, "you might get a menu or a $10-off coupon sent to your phone," Moran said of a possible future service.

The restaurant would pay the company a fee.  That would alter the nature of directory assistance, but "the listing always has to be relevant to the customer's request," said James Albert Smith, a spokesman for Verizon LiveSource.

"The search result should not be driven by ad dollars alone."