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AT&T and Sprint herald a renaissance for PTT? More like a last gasp

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Mike Dano

Two of the nation's four major wireless carriers have recently updated their push-to-talk offerings, an indication that the service still has a loyal group of core users who prefer walkie-talkie-type conversations to plain old phone calls. But it's clear that PTT is no longer the hot-button topic it had been in the past.

"In terms of the overall market, there is much less demand for PTT than there was during its heyday around 2005 when it was being played up as a consumer service with lots of potential," wrote Current Analysis analyst Weston Henderek. "Now it is very business centric and focused on specific verticals."

Today, AT&T Mobility (NYSE:T) announced it will launch its Enhanced Push-To-Talk service powered by Kodiak Networks nationwide in November. The carrier said its new service will offer a number of features, including support for up to 250 contacts; presence indicators; and the use of mobile applications, GPS or cameras during PTT calls. AT&T said it has received interest in its new PTT offering from "dozens" of Fortune 500 companies.

AT&T's renewed PTT offering is an attempt by AT&T to tap into the market for Private Mobile Radio. The carrier said there are 24 million PMR users who are looking for an alternative due to an upcoming FCC Narrowbanding Mandate. AT&T cited market research by Ericsson (NASDAQ:ERIC) showing 58 percent of these PMR systems will be replaced within the next five years.

But perhaps more importantly, AT&T is also trying to capture Sprint Nextel's (NYSE:S) iDEN subscribers. Sprint is planning to shut down its iDEN network next year, and AT&T has made no secret of its desire to move those subscribers onto its network.

But Sprint too is working to retain those customers. Sprint last year introduced a new Direct Connect PTT service on its CDMA network powered by Qualcomm (NASDAQ:QCOM). Sprint said its new Direct Connect service features many of the same functions as its iDEN service with a larger coverage area.

It's unclear exactly how big the market for PTT service is in the United States, but analysts generally estimate it has shrunk since the heyday of Nextel's Direct Connect PTT service. Direct Connect was a linchpin of Nextel's iDEN network when Sprint acquired Nextel in 2005, and was used by construction workers, public-safety agencies and other business-minded users.

Shortly after Sprint's acquisition of Nextel, most of the nation's major wireless players--from carriers to handset makers to wireless network providers--discussed PTT as a major growth opportunity. The theory was that groups of users, like families at a ski area or friends at a mall, would want to stay in touch with each other without having to place phone calls.

As a result, a number of startups and major players, from Kodiak Networks to Motorola, jumped into the area with products promising sub-second communications and "push-to-anything" technologies that could transmit voice, pictures, video and other content. Wireless carriers like AT&T, Verizon Wireless (NYSE:VZ) and Alltel duly launched PTT services to test out the market's demand.

But that demand never came to fruition. Moreover, iPhone and Android smartphones burst onto the scene at about the same time and changed the dynamics of the market. Suddenly push-to-talk services seemed outdated when compared with iMessage and Facebook Messenger.

Further, a number of third-party services have arrived on the scene, offering PTT functions similar to those available from wireless carriers. For example, Voxer, Zello and others offer iOS and Android PTT services that are free or at least significantly cheaper than wireless carrier PTT offerings.

Nonetheless, at least some believe there is still a market for carrier-based PTT services: "We absolutely see PTT as being a customer satisfier," said Doug Carroll, Verizon's product manager for PTT. "It's going to be around for the foreseeable future. We'll continue to enhance product offers to meet customer needs."

Carroll said Verizon's PTT service, powered by Motorola and launched in 2005, is popular among construction workers and public agencies. He also said the service appears to be expanding to other business verticals such as manufacturing and utilities. Carroll declined to say how many PTT subscribers Verizon has.

Although there is clearly a market for PTT services among some business customers, I expect PTT to slowly fade into the industry's history alongside other wireless operator services like SMS, location tracking, mobile TV and 411. +Mike Dano