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‘Ringback’ Tones May Be Next Big Thing

November 29, 2004

NEW YORK — Ring tones are so yesterday. If wireless companies have their way, the next multibillion-dollar surprise in the cellular business will be “Ringback” tones.

Instead of the usual dialing noise that people hear when phoning someone, callers to Verizon Wireless subscribers may soon find themselves listening to a song until the phone is answered.

The service, pioneered by SK Telecom of Korea, is debuting in the United States in California and is slated to be available nationally by mid-2005.

Verizon Wireless, a partnership between Verizon Communications Inc. and Vodafone Group PLC, is charging 99 cents per month plus an annual fee of $1.99 for each Ringback Tone chosen. Other U.S. carriers are said to be considering a similar service.

Verizon subscribers can assign specific tunes for different callers to hear, choosing among 2,200 songs from 13 music genres provided by Warner Music Group and Sony BMG Music Entertainment.

SK Telcom, which developed the technology being used by Verizon, introduced its “ColoRing” service in Korea two years ago and has since licensed it to carriers in Vietnam, Singapore, the Philippines and Indonesia.

About a third of SK Telecom’s 18 million customers were using the service after the first year, generating monthly revenues of $8 million, said Michele Mackenzie, an industry analyst for Ovum, a London-based technology consulting firm.

T-Mobile, a unit of Deutsche Telekom AG of Germany, led the way in Europe with the launch of “Caller Tunes” about a year ago. In June, T-Mobile reported 500,000 customers in Britain, Germany and the Czech Republic.

Although similar services have been introduced by Vodafone Germany, Telefonica Spain and Tele2 Sweden, ringback revenues for all of western Europe are expected to total just $16 million for 2004, Mackenzie estimates.

She and others are skeptical that ringback tones can duplicate the success of ring tones, noting that people who pay for them never get to actually hear them.

“Ringback tones are, essentially, a fashion statement. Their only real purpose is to show off to others who are calling you. The problem, then, is that fashion statements go out of fashion – sometimes very quickly,” he said.




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