Payphone 2.0: Re-Imagining an Obsolete Technology of Yonder-Year

HomeInternational Marketing + AdvertisingPayphone 2.0: Re-Imagining an Obsolete Technology of Yonder-Year

This post is a little break from the type of content we normally feature here on MBlog. It was inspired by a recent article published in VentureBeat about Mayor Bloomberg’s call to arms directed at the New York City tech community. In a nutshell, it went like this:

Make payphones awesome.

When economies of scale brought down the price of mobile devices and service plans, the payphone became an endangered species. Traverse any of the world’s major cities, and it becomes increasingly unlikely that you’ll find a payphone without an exhausting search.

And why would you want or need a payphone? The majority of people carry a cellular phone. Last year, there were enough active mobile devices to service 87% of the world’s population. In some countries, there are more mobile devices in service than there are people registered on the national census. Here in Canada, roughly 74% of the population owns and uses a mobile device (not accounting for multiple-device owners, of course). When compared to other nations, this is on the low end of the spectrum.

In light of these numbers, is the payphone in danger of extinction?

Absolutely.

In order for it to survive, it’s time for a radical shift in thought about what a payphone is and what it can become.

This post refers to the efforts of New York City and is written through that lens. But, the same principles could be applied to Ottawa. Have a chat with Mayor Jim Watson (@JimWatsonOTTAWA) if you like the idea of giving new life to a stalwart technology.

Read on.

User Experience that Owns the Audience

There are just a boatload of exceptional UX people in New York City’s tech community, so I won’t belabour the importance of user experience to product success.

Good technology UX makes a product easier to use, which encourages more rapid progression on the innovation adoption curve, contributes to product loyalty, and reduces purchase friction.

A chat I had recently with a chum at IBM sums up technology UX pretty well, in my humble opinion. He said:

It’s the Fisher-Price design philosophy: big, bright, shiny, and simple to use

And I added:

… with some whimsy thrown in for colouring.

To build a killer technology UX, consider the following elements:

  • Big, friendly looking buttons (think those oversized lego blocks for toddlers);
  • Plenty of negative (white) space;
  • High-contrast colour palettes;
  • Subtle animations (<selector>:hover on buttons with an inverse gradient, for instance);
  • Brevity with the words. Seriously, get to the point right away.

 

Value Added to Keep ‘Em Coming Back

All I have to say here is one thing: don’t compete with the smartphone experience. Enhance the smartphone experience by doing what that form factor (small, palm-sized) makes difficult or tedious. That’s the formula for winning in this space within the current competitive landscape.

Throw Out the Established Technology Model

Toss the notion that the 21st century payphone will have a dialing pad with physical buttons, a handset, a cord, and a 300-page manifesto (60% of which is coloured yellow and contains advertising that you’ll never look at).

Also throw out the notion that the payphone can in any way, shape, or form compete with the mobile device for the hearts and minds (and usage time) that consumers will afford to communicating with their personal network of friends and family. Nor people communicating with their network of business contacts. The current crop of consumer mobile devices has too large an ecosystem, infrastructure, and user experience lead for the payphone to catch up.

To become relevant again, the payphone must enhance and complement the smartphone, and offer consumers a value-added based on experiential factors. In my opinion, the experiential portion must be hyperlocalized to be a continuing success. Down to the neighbourhood or square block, wherever possible.

‘Booth’ Form Factor

I’m very partial to the red telephone booths that dotted London, England in the first half of the 20th century. But that’s just me. The essential features of the finished product should support three benefits to the end-user: comfort, privacy, and ease of use.

Hardware that should be included:

  • A high-resolution touchscreen.
  • Assistive Access technologies, such as a screenreader or braille input device.
  • NFC-enabled payment hardware.
  • A wide-angle webcam, or similar videoconferencing capability.
  • Audio speakers capable of reproducing the majority of frequencies that humans can hear (skewed towards the higher frequencies).
  • Secure, wireless access point (Bluetooth, 802.11a*, or an alternative with wide-scale adoption).
  • A comfortable armrest to lean on (low tech is still tech).
  • Physical connection to the city’s communications infrastructure (not wireless).

*Why 802.11a? The signal wouldn’t penetrate the walls of the booth, restricting access and minimizing the ability of nefarious parties to intercept wireless data while a user is inside.

Hardware that should not be included:

  • A universal charger for mobile devices (this would be a nice experiential perk, but do we want to encourage users to spend hours in the booth? It’s not a coffee shop).
  • Custom-designed or custom-engineered hardware (the replacement cost for hardware would go through the roof, as would installation and maintenance costs).
  • A vending machine.
  • A credit or debit card reader (a-la your ATM).

Why not include a credit or debit card reader? Security. We want to be able to keep maintenance costs down for these booths, so we should apply thoughtful industrial design to eliminate the need to regularly check and replace card readers that are compromised by organized criminal elements. Remember that grey-label ATM in the corner of the convenience store? Don’t use it. Ever. Here’s why.

Should we still accept credit or debit? Absolutely. For mobile devices without NFC, or users not comfortable with the technology, any payments in the booth can be applied via a secure online payment page accessed through the touchscreen. Heck, even accept PayPal and/or Gowalla. The incremental and transactional costs associated with these payment services are far lower than traditional credit card processors anyway. Quite frankly, the interchange rates charged to merchants on credit card transactions are stifling the small business owner’s cashflow.

The benefit of using NFC to accept payments is that these readers can be embedded in a flat, seamless surface. This makes it more difficult for scammers to swap out the readers and incorporate a skimmer. Keep in mind that the range of an NFC reader can be dialed down to a half centimeter or so (‘place your mobile device on the pad to authorize payment’). We can then use industrial design processes to minimize the risk of this transactional data being intercepted.

Integrate with Existing City Assets

The original role of the phone booth was to foster easy and open communication within expanding urban areas. Though it was a technology which generated revenue for telcos, it also served a purpose for society and was centric to the connectedness of the city. This should remain unchanged (both parts).

including an emergency services function seems only natural, since the booths will be connected via hardline. Anyone who has visited a university or community college campus has likely noticed the emergency call boxes that dot the landscape at precisely calculated intervals. These call boxes offer one-touch access to emergency personnel (normally campus security).

Another natural fit with city services is with its tourism assets. Tourism is a big deal for New York City, with millions of visitors dropping in every year. Imagine being able to teleconference with a tourism information centre, at the touch of a button, in your own native language. The language part isn’t a big deal for us English-speaking folks, of course, but would be a big draw to those who speak languages from the South-East Asian diaspora. This could be easily successful, as the human resources assets are mostly in place already at the city’s tourism centres.

As a tourist to New York City (or citizen in an unfamiliar part of town), would you pay out a few sheckles to interact with a virtual concierge (of sorts) in your own language in a new place? I would.

Monetization + Revenue Model

Make no mistake, the services offered by such a phone booth would be premium in nature – and command a premium price. In order to combat price shock amongst users, the majority of services should be priced at a flat rate (including contact time with the city’s tourism service agents). By-the-minute pricing of telco past and present contributes to angst and annoyance amongst consumers; which would inhibit their ability to enjoy the premium experiential aspects of using the booth.

There are three basic user groups for this technology: tourists (the biggest group), locals/occasional, and locals/power users. Providing an experience that balances the needs of these user groups should be a big focus of the User Experience design; it will be essential to success.

Sample Services and Pricing By User Group

Tourists

Sample Service Unit Pricing Market Captured Annual  Revenue
Download detailed, hyperlocal map to smartphone. $2/download 2% (B)  $1.818M
Video chat with virtual concierge (tourism officer) $5/session 2% (A)  $5.05M
Watch guided tour of area $3/view (in-booth) + $2/take it with you (optional; 24hr access token to mobile device) 2%/0.5% (A/B)  $3.485M
Local deals (special offers for local merchants; hyperlocalized) $1/download 6% (B)  $2.727M
Local Telephone Call (VOIP) $0.50 / 10min (a loss leader/courtesy) 25%/0.5% (C/B) $0.745M

Sources: Data from the OECD, Wikipedia, City of New York [NYC & Co.]
Market share estimates came from my caffeinated grey matter.

Total Annual Estimated Revenue: $13.825M

Cocktail Napkin Revenue Forecast: Assumptions

  • A | 50.5 million annual tourists (2011)
  • B | 45.45 million tourists with smartphones (based on 90% estimated usage among tourists)
  • C | 5.05 million tourists without smartphones

Locals/Occasional

Sample Service Unit Pricing Market Captured Annual Revenue
911 Access / Emergency Call Box
Secure Wi-Fi Access (for mobile device) $5/30 mins 4% x 4 uses (B) $6.792M
Internet Browsing Access $5/30 mins 4% x 4 uses (A) $6.595M
Local deals (special offers for local merchants; hyperlocalized) $1/download 10% x 2 uses (A) $1.649M
Local Telephone Call (VOIP) $0.50 / 10min (a loss leader/courtesy) 1% x 1 (A) $0.041M

Sources: Data from the OECD, Wikipedia, City of New York [NYC & Co.]
Market share estimates came from my caffeinated grey matter.

Total Annual Estimated Revenue: $15.077M

Cocktail Napkin Revenue Forecast: Assumptions

  • A | 8.244 million New Yorkers (2011 est.)
  • B | 8.491 million mobile devices owned by New Yorkers (based on 103% national penetration rate)


Locals/Power Users

Sample Service Unit Pricing Market Captured Annual Revenue
911 Access / Emergency Call Box
Secure Wi-Fi Access (for mobile device) $5/30 mins 10% x 4 uses (B) $16.982M
Internet Browsing Access $5/30 mins 10% x 4 uses (A) $16.488M
Local deals (special offers for local merchants; hyperlocalized) $1/download 30% x 2 uses (A) $2.473M
Local Telephone Call (VOIP) $0.50 / 10min (a loss leader/courtesy) 0.25% x 1 (A) $0.021M

Sources: Data from the OECD, Wikipedia, City of New York [NYC & Co.]
Market share estimates came from my caffeinated grey matter.

Total Annual Estimated Revenue: $35.964M

Cocktail Napkin Revenue Forecast: Assumptions

  • A | 8.244 million New Yorkers (2011 est.)
  • B | 8.491 million mobile devices owned by New Yorkers (based on 103% national penetration rate)

 

Total forecast for all three user groups on an annual basis adds up to $64.866M. Note that this is a very loose estimate and assumes a deployment of the new booths sufficient to cover the entire city (proper, not CMA). A more realistic strategy would be to pilot prototypes in a small area to better gauge market potential before deploying to the entire city (Chelsea, or perhaps the financial district surrounding Wall St).

This demonstrates a rough market potential (based on the revenue streams in each category; these could, and should be expanded). This initiative is awesome; personally, I’m looking forward to seeing what the entrants come up with in the spring.

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