Personalized Ringback Tones Ring with Revenue Potential

Wireless carriers such as South Korea's SK Telecom are discovering that big money can be made from tiny audio clips. Custom ringback tones--which treat callers to song clips, sound effects, film dialog, or personalized messages and can be customized according to wireless subscribers' whims--could eventually account for $2.4 billion in annual revenue worldwide, becoming as popular as or even surpassing the popularity of downloadable ring tones. An end-to-end solution from Sun Microsystems and Alcatel lets carriers quickly deploy, manage, and expand ringback tone services.

Mobile phones are practical gadgets, allowing users to stay in touch wherever they are. But judging by the success of downloadable ring tones, mobile games, and other such services, users want more from their handsets than a voice connection.

Customized ringback tones—hailed by many as the "next big thing" in wireless—offer these customers exactly that: mostly fun, with the option of practicality.

Ringback tones allow users to replace the familiar ringing sound callers hear after dialing with a snippet of a song, a sound effect, a bit of film dialog, or a recorded voice message. Ringback tone subscribers can customize greetings for caller groups or individuals—opting, say, to respond to a call from a significant other with a sample of Echo and the Bunnymen's "Lips Like Sugar" or the Rolling Stones' "Heartbreaker," depending on the current state of the relationship.

Alternatively, subscribers can set up custom voice greetings for each caller, letting co-workers and colleagues know that they are on vacation, for example, or asking a family member to pick up a carton of milk on the way home.

Ringbacks Boost Revenue

Analysts are betting that ringback tones will soon become a must-have for mobile subscribers—and that revenue from the service will eventually outpace that of downloadable ring tones.

In 2003, ring tone revenue topped $2.3 billion worldwide, according to telecom consultancy Ovum, as cited in a recent BusinessWeek article. Ovum predicts that worldwide ringback tone revenue could skyrocket from $148 million in 2003 to $2.4 billion by 2008.

South Korea's SK Telecom, the first carrier to launch ringback tones, in spring 2002, is already reporting revenue that exceeds that from its ring tone offerings, according to the Yankee Group. The carrier attracted 6 million ringback subscribers in just nine months. BusinessWeek reports that SK Telecom now has more than 8 million ringback users out of 30 million customers, and that the service generates more than $9 million in revenue per month.

Service providers typically bill users a monthly subscription fee of $2.50 or less, plus $1 to $2 for each ringback tone. Factor in that users often order different ringbacks for various contacts—spouses or significant others, children, friends, co-workers—and the profit potential is clear.

"Riding on the success of ring tones, carriers should adopt ringback tone services as the next logical value-added service to boost ARPU (average revenue per unit)," writes Yankee Group analyst X.J. Wang in a recent report. "Customized sound or information not only delivers entertainment services to the broader consumer market, but also offers value-added services to corporate users, who can leverage the feature to support marketing strategies."

Easy Adoption, Sophisticated Service

Ringback tones are housed on the carrier's server. When ringback service subscribers receive a call, the provider's content management application checks to see if the subscriber has assigned that caller a ringback tone. If so, the software sends a command to the server, which activates the selected audio clip instead of a standard ring.

Any caller can hear ringback tones, regardless of a phone's make or model, or whether the call is placed from a mobile or landline number. Better yet, wireless customers who subscribe to the service do not need to upgrade their handsets. And ringback tones have no learning curve because neither callers nor subscribers need to do anything different when placing or receiving a call.

Since they reside on the carrier's network, ringback tones are easy to deploy, notes Yankee Group analyst Matthew Hatton in a recent report on their potential in Europe. Digital copyrights are protected because users are not downloading content to their handsets, eliminating the risk of piracy. And word-of-mouth stands to be a highly effective way to market the service, easing promotional budgets.

But Hatton warns that as ringback tones become more sophisticated—which they must in order to achieve long-term success—carriers will need equally sophisticated solutions to manage ringback tone offerings.

The chosen solution will allow providers to respond quickly to customers' needs and market demands, as well as ensure that the service provides maximum profit while minimizing back-end management requirements. Delays in serving up selected ringback tones, limited customization options, unintuitive billing or user interfaces, or data mix-ups—imagine an employer hearing a mushy love song intended for a spouse—can all impact the success of the service.

Sun and Alcatel Offer Music to Carriers' Ears

Sun Microsystems and industry leader Alcatel are working together to offer a comprehensive end-to-end solution that enables telecommunications companies to deploy, manage, and easily expand ringback tone service.

"Alcatel's Personalized Ring Back Tone service running on Sun systems offers wireless service providers a flexible solution that can adapt to many kinds of network topology, allowing them to quickly deploy this promising service offering," says Bertrand Farabet, solution architect at Sun. "There are no special system prerequisites—the solution can easily integrate with any existing infrastructure.

"And the nightmare of a platform unable to cope with the rapid success of a new service is over because the Alcatel service running on Sun's servers offers unprecedented scalability at the performance level as well as at the functional level, offering wireless carriers a solid solution that enables them to fulfill their customers' requirements."

Modular Solution Allows Network Flexibility

Alcatel's Personalized Ring Back Tone solution incorporates three building blocks. The first is a sophisticated content management system that enables service providers to manage relationships with content providers and subscribers. It includes service provisioning and personalization features, allowing users to preview new ringback tones on the Web, upload their own voice clips, update their profiles, and perform other self-service activities. A notification feature lets providers send targeted alerts to subscribers informing them when new ringback tone content that suits their profiles becomes available.

The second piece is a sound management system, which executes the sound clips and ensures the audio quality of ringback tones offered by an array of content providers. The Alcatel solution guarantees that ringback tone playback is clear, crisp, and properly modulated.

The third building block is a flexible network adaptation architecture. This allows the solution to integrate with intelligent distributed networks and service node- or switch-based infrastructures, sparing telecommunications providers the need to alter their existing setup. The solution can be implemented according to the operator's legacy network and customer base size, easily scaling up as the customer base grows. And it is modular, so new features can be added as they are developed, giving wireless carriers the peace of mind that their technology investment can evolve along with market trends and customer demand.

"Alcatel's Personalized Ring Back Tone solution is delivered through the integrated, industrialized process that is defined between Alcatel and Sun," says Nicolas Mercouroff, global alliance director for Sun at Alcatel. "This process uses Sun's Customer Ready System program, which offers the end user quicker delivery time, smoother integration, best-in-class IT equipment, and comprehensive support of the end-to-end solution."

"Running on Sun's servers, the Alcatel Personalized Ring Back Tone solution provides high performance and a highly scalable environment that is ready to sustain the traffic growth that one can expect from the success of this service," Farabet concludes.