breeds of 411 "cash cow" arrive
By Fred A. Bernstein, The New York Times
Monday, March 13, 2006
Calling 411 for directory assistance can be maddeningly
expensive. Carriers like Sprint and Verizon charge more
than $1 and sometimes as much as $2 a call from a cellphone.
And much of that is profit. Directory assistance "truly is
a 'cash cow,"' said Saroja Girishankar, a vice president at
the Pelorus Group, a telecommunications market-research firm
based in Raritan, N.J. She and other industry analysts said
that the carriers paid wholesalers -- who actually provide
the 411 service -- from 25 to 50 cents a call.
Naturally, the wireless carriers and directory assistance
companies want to keep the cash cow in their barn, but
increasingly, customers have access to free alternatives to
And as cellphones become more sophisticated, the options for
avoiding paid directory assistance are multiplying.
Already, two new services -- 800-FREE-411 and 800-411-METRO
-- offer directory assistance free of charge, although users
have to listen to advertisements.
Other companies, including Google, offer free directory
assistance via text message.
Soon, voice-activated search engines may make it possible to
bypass directory assistance entirely. One contender, the
Maestro system, a voice-activated search engine being
developed at Ben-Gurion University in Israel, will allow
users to surf the Web just by speaking and listening.
To keep users calling their paid 411 services, the major
wireless carriers have added features like horoscopes,
sports scores and stock prices. As cellular bandwidth
increases, those offerings will go from voice to text to
multimedia, said Tom Moran, executive director of product
management and development for Verizon LiveSource.
(LiveSource, owned by Verizon Communications, handles about
1 billion 411 calls a year for customers not only of Verizon
Wireless, but of T-Mobile, Cingular and Alltel.)
"Pretty soon, if you ask for the number of a movie theater,
we'll send the movie trailer to your cellphone," Moran said.
Some new directory services will rely on Global Positioning
System technology, which is mandatory on most new
"You may not know where you are, but we will, and we can
give you the number of the nearest Italian restaurant,"
(Under current law, the company would be able to track your
location only with your permission.)
Sprint is already offering one location-based service:
driving directions with your current location as the
starting point. An operator will stay on the line until you
reach your destination, said Bill Elliott, director of
marketing, voice and integrated services at Sprint.
Elliott said that Sprint 411, at $1.40 a call, is a bargain
because a caller can get up to three pieces of information,
like a phone number, a sport score and directions.
Despite all the enhanced services, 95 percent of customers
are simply looking for a phone number when they dial 411,
Girishankar of the Pelorus Group and others said. So the
phone companies are determined to make "ordinary" 411 calls
appealing, which is why Sprint and Verizon continue to use
"When you call 411, you want to speak to a person," Moran
Since last year, Verizon Wireless and Sprint have offered
411 callers the option of receiving a backup text message,
generally for a small additional charge.
So far, despite the free alternatives, the number of 411
calls from cellphones has been "increasing by leaps and
bounds," according to Paul Ciotta, a spokesman for Infonxx,
a company based in Bethlehem, Pa., that handles about 500
million directory assistance calls each year. At the same
time, the number of 411 calls from conventional telephones
has been decreasing, several analysts said.
Fees for traditional directory assistance calls from wired
phones vary from region to region and company to company.
Some states require phone companies to provide a certain
number of free information calls, but beyond that, fees
typically are about $1.50 a call.
If overall revenue from 411 calls (now about $8 billion a
year) falters, cellphone companies may try to make up the
difference with advertising revenue, following the lead of
the free services.
If you ask for the number of a restaurant, "you might get a
menu or a $10-off coupon sent to your phone," Moran said of
a possible future service.
The restaurant would pay the company a fee. That would
alter the nature of directory assistance, but "the listing
always has to be relevant to the customer's request," said
James Albert Smith, a spokesman for Verizon LiveSource.
"The search result should not be driven by ad dollars