Despite Overall Growth, Free Information Sources Pose a Serious Threat to Wireline Directory Assistance Services

Business Wire, April 12, 2005

PALO ALTO, Calif. -- One of the biggest challenges facing the wireline (phone) directory assistance (DA) segment is the onslaught of free alternative sources of DA. Besides the Internet, other emerging mediums such as toll free DA and text message DA provide such service free or at a nominal charge.

Amidst a healthy overall growth in demand for DA services, wireline DA operators are responding by offering enhanced features, innovative pricing models, and are gaining operational efficiency through automation and outsourcing.

New analysis from Frost & Sullivan (www.telecom.frost.com), North American Directory Assistance Markets, reveals that revenues for the U.S. and Canadian markets in 2004 totaled $6.3 billion and CAN $578 million respectively. The revenues project to grow to $7.8 billion and CAN $615 million in 2011.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of the North American Directory Assistance Markets -- then send an e-mail to Mireya Castilla -- Corporate Communications at mireya.castilla@frost.com with the following information: your full name, company name, title, telephone number, fax number and e-mail. Upon receipt of the above information, an overview will be sent to you via e-mail.

The DA market splits among different mediums such as wireline, wireless, and the Internet. The market is seeing an overall growth in demand for DA services, but the demand splits among the various competing media.

"Wireless and the Internet continue to grow as the popular mediums of choice, while wireline usage experiences a gradual decline," notes Frost & Sullivan Industry Analyst Piyush Arora. "This is reflected in the declining demand and revenues for wireline DA and steadily growing demand and revenues for wireless (and Internet) DA."

The Internet is gaining popularity as a source of free information. People not only go to free Internet DA sites to get the required listing information, but also visit the Web sites of businesses whose phone numbers they seek. Toll free providers allow callers to get the DA listing by dialing a toll-free number. The advantage of such a service to the caller is that the DA service is free. In addition, the caller exposed to relevant sponsor advertisements.

However, in many toll free DA services, there is no one number that provides a national listing, and operators do not offer call completion and other enhanced DA services that phone companies provide. One of the unique selling points for telephonic DA compared to alternatives such as print directories, CD-ROM directories and the Internet directory assistance (IDA) is that telephonic DA offers more up-to-date listings.

In a bid to create product differentiation, more DA providers are offering enhanced concierge type services such as movie listings and stock quotes. Providing such services will be expensive, and while such services help increase call volumes through repeat usage, it is unclear if they can provide substantial revenue increment. Moreover, data accuracy remains the biggest challenge for IDA providers. While up-to-date listing will draw more free users and paid subscribers, the massive volume of the database update makes it a costly proposition.

With double-digit growth in the mobile subscribers' base, most wireless carriers may participate in the wireless directory listing anticipates to launch soon. This will enable subscribers to list their mobile phone numbers in DA listings free and on an opt-in basis. However, many consumers may be wary of joining in because of possible compromise of privacy by telemarketers and unwanted callers. Nevertheless, conservative estimates point to 45 million new additions to the wireless directory listing, thus providing a massive boost to wireless DA demand.

"Among major trends in the market, automation of DA using new technologies such as speech recognition is at the forefront, and most carriers are striving to deploy and improve their automated DA solutions," says Arora. "Cost savings and better quality controls are also motivating carriers to outsource their entire DA operations to DA and call center specialists including overseas operators."

The DA industry faces various challenges, but at the same time, there are opportunities for growth as wireless and the Internet continue to grow. While people become busier and look for convenience, changing habits will not be easy and they will continue to use the conventional telephone based DA until other mediums become more convenient. Despite the emergence of new technologies such as voice over Internet protocol (VoIP) and WiMax, wireless DA expects to be the driver of growth in the DA industry in North America.

North American Directory Assistance Market, part of the F029 subscription, examines the challenges that telecom carriers and DA providers face in developing strategies for revenue growth and sustaining profitability in the evolving DA market. It also discusses the driving and restraining factors for revenue generation and gives recommendations on how to proceed in this market. Executive summaries and interviews are available to the press.