Arch Wireless (formerly Arch Communications) has gone from being the second-largest independent paging company in the US to #1 by buying bankrupt Page Net, the former market leader. (Metrocall is now #2. ) Arch offers numeric and alphanumeric paging, interactive messaging, voice mail, and wireless e-mail. The company, which operates throughout the US and in the Caribbean, has more than 8. 5 million messaging units in service, including about 334,000 two-way units.
However, as the paging industry continues to struggle against competition from mobile phones, even the top companies have had trouble making money, and Arch is reorganizing under Chapter 11 bankruptcy protection. Many financial institutions are beginning to offer different types online financial services. Citibank is one of the top financial service institution offering online billing and other types of electronic bill payments. There services include e-banking, online bill payment, electronic deposits and withdrawals, and e- loans.
In order to gain market share, Citibank like other types of financial institutions merges to better serve the consumers. With nearly 2 million subscribers, WebLink Wireless (formerly PageMart Wireless) is one of the largest messaging service providers in the US, behind Arch Wireless and Metrocall. WebLink Wireless’ two-way wireless data network covers 90% of the US population, and the company offers service throughout the Americas through affiliations with other carriers.
WebLink Wireless hopes continued growth in its wireless data division, which has nearly 510,000 customers, would counteract the decline of its one-way paging business, which has 1 million customers. In 2001 Metrocall terminated a deal to merge with WebLink Wireless, who then filed for Chapter 11 bankruptcy protection. The key driver for usage in the wireless industry is price elasticity (Hubaux and Vetterli, 2000). The two main components of price in this industry are the fixed monthly charge (e.
g. the monthly fee). According to the Personal Communications Industry, “wireless airtime charges have dropped 40 percent since 1996, 30 percent of wireless (or two-way) subscribers use them only for security/safety calls despite the fact that 65 percent of users believe that wireless services are currently reasonably priced. ” The Personal Communication industry states the following: The Yankee Group concludes that wireless use is price-elastic.
With a drop of 20 percent in the price per-minute for wireless services in the last year, there has been a concurrent 20 percent increase in minutes of use. This price elasticity has been crucial in keeping the average revenues-per-wireless-unit at levels that can support network build outs and capacity increases. The flip side of this equation, however, is that increases in per minute charges will drive down demand for wireless as new costs are passed on to consumers.
Economic Factor Two – Increases in Government Taxation Rising governmental taxes places an increasing burden on online services. First Union and its competitors, and wireless industry in general could end up increasing their rates because of the issues related to safety usage on the Internet. In a white paper by FCC Chief Economist Michael Katz and John Hayes of the Tilden Group, the significant economic impact of government taxation includes the following.