Americans discover 'texting' and wireless firms capitalize.

To vote for her favorite contestant on the Fox television network's "American Idol" talent-search show, Heidi Schnupp didn't call the toll-free number. Instead, she tapped her preference on her mobile phone.

"I wasn't going to sit on the phone and deal with a busy signal," the 32-year-old Bethel Park, Penn. resident said. "I sent a message, and that was it."

In addition to her $40-a-month bill, Schnupp pays AT&T Wireless Services Inc. $4.99 to be able to send 100 text messages. For her, the added cost is worth it because she can get answers quickly without being dragged into a conversation.

For AT&T Wireless and competitors such as Cingular Wireless LLC and Verizon Wireless Inc., the biggest U.S. mobile-phone companies, Schnupp and the 6 million others who voted for their American idol by sending a text message represent the future. To offset falling prices and slowing growth, the companies seek to entice Americans to use their phones for more than making calls.

Text messaging generated. A about $300 million in revenue in the United States last year, a fraction of Europe's $10 billion market. Just 11 percent of the U.S.'s 135.5 million wireless customers sent messages by phone, while more than half of Europe's 308.6 million subscribers did, according to the Yankee Group, a Boston-based market research firm.

'Voice-driven society'

"We are very much a voice-driven society: you pick up the phone and make the call," said Andre Dahan, the head of mobile multimedia at Redmond, Wash.-based AT&T Wireless. "Our overall objective is to get people to use text messaging the way they use voice."

The fight for customers has driven fees for mobile-phone calls down by as much as half. While that's helped win new subscribers, allowing the United States to catch up to Europe in terms of market penetration, the amount people spend each month on wireless services has barely changed.

The average monthly bill at AT&T Wireless inched up less than 1 percent in the second quarter to $60.60 from $60.40 a year earlier. The company added 446,000 subscribers in the quarter and now has 21.5 million customers.

At Cingular, a joint venture owned by U.S. local-phone providers SBC Communications Inc. and BellSouth Corp., the average bill rose to $48.87, up from $48.71 a year earlier,

Cingular added 540,000 subscribers in the second quarter after losing subscribers for two straight quarters last year.

In the second half of 2002, U.S. wireless companies added 6.2 million customers--a 4.6 percent growth rate that ranks as the slowest six-month increase ever.

"The pressure is on for all these carriers to come up with a new revenue stream," said Albert Lin, an analyst at American Technology Research Inc. who advises investors to buy Verizon Communications Inc. shares and sell AT&T Wireless shares. "The traditional voice business has just become so cutthroat."

The question is whether the new services will do anything to lift sales and profit, said Craig Nedbalski, managing director at Victory Capital Management Inc. His company owns 11.5 million AT&T Wireless shares and 9 million shares of Verizon. Growth in wireless sales in the U.S. with the market becoming saturated.

In contrast to the U.S., mobile-phone users in Europe and Asia have embraced text messaging as a way of life. Four years ago, already about half of cell phone calls in Finland were text messages. So many students used them to cheat on exams at the time that teachers searched bags for mobile phones before administering tests.

In Ireland, where mobile-phone users send an average of 78 text messages a month, the Vatican last month began sending text messages with Pope John Paul II's "Papal Thought of the Day," with excerpts of the pontiff's homilies and speeches.

"I use my mobile almost only for texting because calls are more expensive," said Eileen Hanbidge, a 39-year-old full-time mother who lives outside Cork in southern Ireland. "The beauty of it is that if you are running late and you don't have time for a call, you can text the person you're meeting."

In China, the world's biggest mobile-phone market with more than 235 million users, subscribers sent a record 7 billion text messages to greet each other during the weeklong Lunar New Year holidays in February.

Behind the curve

"The U.S., comparatively, is at June 1998 levels," said Mike Short, chairman of the Mobile Data Association, a British mobile-phone industry group.

Lagging technology has a lot to do with why text messaging hasn't caught on as quickly in the U.S., said Linda Barrabee, an analyst at the Yankee Group. Until last year, customers from one U.S. mobile-phone company couldn't exchange messages with the customers of another company.

Another barrier has been the oversized "buckets" of call minutes that companies sell to their customers each month, discouraging users from communicating in other ways. "With all those voice minutes, there's no incentive to send a text message," Barrabee said. "It's going to cost you extra."

U.S. wireless carriers have spent an estimated $15 billion upgrading their networks so customers can use their phones to send messages, consult the Interact and tap other services.

To pique interest in the U.S., carriers are tying text messaging in with sports and cultural events. Cingular has promoted its text messaging service by allowing users to vote for the Women's National Basketball Association all-star team. T-Mobile is using text messaging as a way for users to access trivia on Metro-Goldwyn-Mayer Inc.'s film "Legally Blonde 2: Red, White & Blonde." T-Mobile's Web site offers a glossary of shorthand for text messaging (i12 cu = "I want to see you" and LMHO = "Laughing my head off").

AT&T Wireless's sponsorship of "American Idol" allowed the carrier to showcase text messaging and give consumers who had never used the service before a chance to try it out. Of the 6 million people who voted via text message through AT&T Wireless for their favorite contestant on the show, one-third had never sent a text message before, the company said.