The days of some pager companies in Ukraine may be numbered.
The widening accessibility of mobile phones, coupled with the text message technology modern cell phone networks can accommodate, has the potential to make beepers obsolete.
And as Ukrainians dump their old pagers for flashy new mobile phones, pager operators are struggling just to retain their current subscriber numbers. Forget expansion.
Radiocom is the undisputed leader in Ukraine's paging industry. The company's network covers most of Ukraine's regional centers, and it claims to hold a 40 percent market share in Kyiv.
But that's mostly thanks to the boom Radiocom experienced two years ago when beepers were still a novelty in Ukraine.
Radiocom, however, has recently seen its growth halt. Andry Pervushyn, Radiocom's technical director, said his company is now working flat out to hook up new subscribers to replace those who leave each month.
The only consolation for Radiocom, as Pervushyn said, is that the company's competitors are even worse off.
'Before 1997, we were doubling the number of our subscribers every year,' he said. 'Now we consider it good if we manage to keep the figure the same.'
UkrPage, another major beeper company, is also feeling the pinch.
The company now has slightly more than 20,000 clients, but is reluctant to say how the figure has changed over the last two years. UkrPage, however, admits that its growth rate now is two to three times lower than that it experienced every year from 1995 to 1997.
UkrPage's marketing director Maryna Akopova said new clients fail to renew their subscriptions two or three times more often than before. Akopova pointed to the Ukrainians' dwindling purchasing power and contracting middle class as a major impediment to the company's development.
Statistics, however, suggest that competition from another market is to blame.
Analysts believe the number of beeper users in Ukraine – estimated now at about 80,000 – has remained virtually unchanged over the last two years. The real reason behind the sudden halt in the paging industry's development, they say, is the dynamic growth of Ukraine's cellular phone companies – particularly those employing modern digital networks that support text message sending.
Mobile phone operators have pumped more than $500 million in Ukraine since 1991, about a sixth of total foreign investment the country has attracted so far. Network coverage has reached most of Ukraine's cities and towns. Services are also improving and prices plummeting as five industry players fight for market share.
Once only a plaything of the rich, the cost of a startup cell phone package has fallen to around $120 – and that's winning the mobile phone providers subscribers.
Ukrainian Mobile Communications (UMC), the country's largest mobile phone company, now has more than 200,000 subscribers, almost four times the 55,000 clients the company boasted in 1997. Kyivstar, UMC's nearest rival, launched its GSM 900 network in 1997. The company has since then netted more than 90,000 clients.
Cell phone market growth picked up speed last year as three operators launched prepaid packages, which drove down the cost of obtaining and operating a mobile phone even further.
And since GSM – the network standard these three operators use – supports short message services (SMS), the mobile providers have started to compete directly with the pager companies. SMS allows mobile phone users to send and receive short text messages, making a mobile phone functionally equivalent to a pager.
As UMC spokesman Andry Hunder sees it, the shift from pagers to mobile phones is inevitable.
'It's a rather similar situation to the one we saw a few years ago with typewriters and computers,' Hunder said. 'A computer can do everything that a typewriter can, plus much more.'
Pager companies deny their service is obsolete. Radiocom's Pervushyn is confident there is a niche for pager services in the market of the future. According to recent surveys of phone use, some 70 percent of all phone calls involve not a conversation but the relaying of a simple piece of information – a function that can just as easily be performed by a pager.
Pervushyn said the cell phone market benefits from the mobile's image as a symbol of wealth. But that symbol becomes more and more tarnished as more people get cell phones, he said. And with the rise in popularity of cell phones, the number of unwanted incoming calls, which users have to pay for, is also increasing.
Even though some doubt there is a future for pager services, the beeper companies are still investing in the market.
The largest companies have upgraded their infrastructure and have been tempting new subscribers with novelties such as internet access. The struggle for clients has also improved the general level of service.
Radiocom, for instance, has installed costly equipment to allow it respond more quickly to phone calls. Now, said Radiocom's Pervushyn, a caller will have to wait no more than two rings before an operator takes their call.
And of course, prices are way down too. Monthly subscription fees have halved, and the price of terminals, the pagers themselves, has plummeted. A beeper now costs on average $50, down from as much as $350 when the industry started to take off in Ukraine in 1995, said UkrPage's Akopova. Her company has now kept its monthly subscription fee of Hr 99 ($17) unchanged in hryvna terms for two years, despite the national currency's rapid fall in value, in order to shore up the company's client base.
UkrPage's market is increasingly among the young – the percentage of subscribers under 25 years old has soared from 15 percent a few years ago to 30 percent now.
Meanwhile, the beeper companies have slashed their charges and ad budgets, said Pervushyn. Radiocom offers subscribers pagers for a symbolic Hr 0.69 to attract new clients to replace the ones that have left. Radiocom, already having cut its tariffs heavily, plans another 10 percent cut soon, said Pervushyn. 'I think harder times are still ahead,' he said.
