Business Proposition for Push-to-Talk

David J. Sinkula

Cellcom Markets

Pops.• Brown County (Green Bay) 230K• WI 4 (Shawano County) 125K• WI 10 (Door County) 131K• Wausau 125K• Appleton 102K• Total Pops. Served 713K

Demographics

• Wisconsin is a state that encourages small business and fosters an entrepreneurial climate

• Small Business Development supported by University of Wisconsin– Eleven SBDC throughout Wisconsin– Provide consulting services and management education

• Northeast Wisconsin heavy in paper industry– Service industry to support paper manufacturing– Small manufacturing innovation is prevalent

• Heavy service industry is within Cellcom geographies

Timing

• Cellcom business customers were asking about PTT feature for their wireless programs.

• Longstanding Cellcom customers began carrying two plans:– Cellcom CDMA voice– Nextel IDEN PTT

• 2003 market research showed a growing share of wireless market was moving to PTT

• Two way radios are a significant part of business communications market.

Target Market

• Brown County Homebuilders Association– Cellcom is official BCHA provider of wireless service– 1,200 members

• Manufacturing support to paper industry • Beverage distributors• Cleaning companies• College maintenance staffs• HVAC service providers

Product

• Kodiak Networks Platform– PTT – One way, half duplex real-time voice

application– Uses existing wireless voice networks– Fastest call set-up time (Non IDEN)– Lowest intra-call latency in the industry

• Kyocera 3250 – Bar phone– First phone available on Kodiak platform

Price

• Handset– Kyocera 3250 bar phone $99.95

• Monthly Access– PTT 200 $10.00 (Additional calls $.15)

– PTT Unlimited $20.00

Requirements for Success

• PTT service comparable to Nextel– Call setup latency of 1.5 seconds or less– Ease of programming PTT contacts– Handset that was perceived as rugged

• Pricing comparable to Nextel• Handset price• Promotion• Sales/service support

Experience - - Year One

• 1,000 subscribers in BCMSA in first 6 months• PTT Access Breakdown

– 200 calls / month 30%– Unlimited 70%

• Incremental ARPU - - $17 per PTT user

Challenges - - Year One

• Handset – Kyocera 3250 Phantom– Durability in harsh environments– Chirp volume limitations: Did not know they were getting a

call.– Market demand for clam shell form factor and more rugged

• Kyocera PTT Slider– Slow sell through due to small size

• SMSC– Did not have SMS roaming/roaming gateway – SMS traffic from text messaging & PTT SMS overloaded the

SMSC.

• Inability to Roam– Could not sell to customers on fringe of Cellcom network– Could not sell to customers that covered large geographies

Kyocera Slider

Year Two - - Relaunch

• Handsets– Kyocera 440 Phantom

• More Durable & Rugged• Louder chirp

– Clamshell form factor still a challenge

• Installed roaming gateway (now can originate PTT call off network)

• Launched SMS Roaming

• Switched to digitally optimized PRL – ubiquitous SMS coverage

• SMSC upgrades, includes redundancy and scale improvements.

Year Two – Projected

• Grow subscriber base 200% with new users• Bring back subscribers lost to SMS and

handset inadequacies • Growth will continue based upon existing

Kyocera bar phones• Explore consumer proposition• Anticipate decline in PTT ARPU due to

competitive pressures