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In the mobile telecom business, the commonly accepted wisdom is that the future is all about wireless data. Voice plans are a commodity facing ceaseless pricing pressures, and the only way to backstop average-revenue-per-user (ARPU, a key wireless industry metric) is to get subscribers doing more: surf the web, download music and games, e-mail, get directions with GPS. This is why 3G networks are necessary, to handle the growing demands on data usage, and why carriers, like Rogers in Canada, are pushing the Apple iPhone and Research in Motion's new BlackBerry Bold with pricey data plans. And it's why Telus and Bell are rumoured to be jointly investing $1 billion dollars to upgrade to a next-generation network. Get subscribers hooked on using mobile devices like they do the personal computer-based Internet and they'll cough up big bucks every month — right?
Christina Domecq has a different perspective. She thinks voice could be a killer app, if monetized in new ways. She's the CEO of SpinVox, a UK-based company that offers a voice-to-text message service: instead of having to dial into a mailbox, subscribers automatically receive SMS messages with the spoken words converted to text. And right there at the end of the message are options to either call back the original sender, reply with a text message, or even voice-activate an SMS.
In other words, SpinVox leverages two things all mobile phones now do well — voice calls and short text messages — that on their own are still somewhat cumbersome for many people.
So, just another neat little service, right? Well, Domecq thinks there might be more to voice conversion technology, which she claims has 97% accuracy. First, she contends that SpinVox drives higher usage. "People naturally make more phone calls and send more text messages," says Domecq, because it's easier to respond immediately. But the bigger picture is this: "When voice gets converted into text," she argues, "you start changing it into content." Verbally post to a blog, Facebook, or other social networking sites. Or embed contextual advertising links into voice-recorded text messages.
These are still-nascent business models, but it's an interesting way to rethink voice, and Domecq hopes it's compelling enough that carriers will make SpinVox a more intrinsic part of their mobile service.
Canada, it turns out, could be an important proving ground. Domecq was in Toronto recently to meet with Rogers and Telus, who carry the SpinVox service (as does SaskTel), albeit under different branding. Initially, it was a $15-per-month add-on for business subscribers, but the carriers have now dropped pricing to between $4 and $7.50 in order to tempt mass-market consumers.
The challenge, of course, has been that she has to convince the carriers every step of the way — a common problem for entrepreneurs in the wireless industry. SpinVox started four-and-a-half years ago in England as a business-to-consumer play, and did manage to sign up 150,000 subscribers. But in order to scale globally, Domecq, a co-founder of the business, realized she had to take the long road to market through carriers — on average, an 18-month process from first contact to market launches, which began late last year. It has quickly racked up some 6 million subscribers, and Domecq is confident they'll reach 30 million by the end of the year.
Curiously, though, she's only convinced three American regional wireless carriers to use the service as its own. "We found the U.S. market challenging, mostly because we were seen as a small, foreign company," she says. Never mind that the youthful Spanish-born Domecq has an American accent from being schooled there since the age of 13, and that the company has US$200 million in venture capital backing from the likes of Goldman Sachs, even if it is the European arm. "They kept looking at us and saying, 'You're based in the U.K., you've just got this little business,' and pat you on the head. Whereas in Canada, the carriers were more receptive, it was easier to build a bridge." (Of course, not yet with Bell Canada. "Some carriers are faster than others, and have a little less bureaucracy," she says with a shrug.)
By her analysis, Canada is an ideal target market because subscribers here are already conditioned to pay for voicemail. "Canadians pay an unusually high amount for voicemail, actually," she says. But she hopes that once SpinVox hits a 15% market penetration tipping point (4% is a target for this year), it will become free to consumers, as it is in Spain, where the economics of voice calls and text messages are such that the higher usage provides a decent return. "It's a trade-off of a value-add service for a million customers versus increased revenue off your entire base of 8 million," says Domecq. "When do the carriers begin to trust enough, when does that tipping point happen? I think we'll start re-evaluating it after Christmas."
The other reason Canada is attractive is the wireless carriers are triple- and quad-play providers, and Domecq would like to see the voice-conversion technology used by landline customers to send text messages to mobile phones, or television sets. "In the U.S., cable operators are introducing this concept of your social network is your family," she says. "We want to play into the fabric of that by voice-powering any of their applications or services."
Could converting voice messages to text be a killer app? Perhaps. But Domecq needs the carriers to believe — and subsidize the vision with 30-day free trials and low subscription prices, in order to drive adoption. Although the service is very convenient — SpinVox touts 80% conversion rates from free trials — marketing it is an uphill slog. "Voicemail is just not sexy," says Domecq. "If I was to put a big banner ad out that said, 'Get your voicemail as text,' the reaction would be, So what? Voicemail is not something most of us really think about." But maybe the carriers should.
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