Free Information, Please

Google is the latest to offer directory assistance, as phone companies squirm

Ma Bell has yet another reason to be wary of Google Inc. (GOOG ) The Web search leader is testing a free service that lets callers search for business listings from a landline or mobile phone by dialing 1-800-GOOG-411. Google will even connect the call and text the number to the user's cell phone--all for no charge.

Google, which already was dabbling in citywide Wi-Fi services, is one of several tech players that are swarming the $8 billion-a-year directory assistance business. In March, Microsoft Corp. (MSFT ) acquired Tellme Networks Inc., which provides automated directory assistance services to telcos like Cingular/AT&T (T ). Tellme is testing a free 411 service of its own (1-800-555-TELL). Ultimately, says Daniel Phibbs, an analyst at the Pierz Group, free 411 may expand the market, pulling in callers who now resist paying an average of $1.28 per 411 call over a regular phone line and $1.57 via cell phone.

Free information services are made possible by short paid advertisements. At some point in the call, you may hear an ad to get McDonald Corp.'s (MCD ) latest happy meal or to check out CBS's (CBS ) latest episode of CSI. Advertisers see this as a chance to grab consumers at the point they're contemplating a purchase.

One of the more successful services, Jingle Networks Inc. (1-800-FREE-411), has nabbed 5% of the directory assistance market in just a year and a half of operating. Its advertisers include McDonald's, 1-800-FLOWERS (FLWS ), and CBS (CBS ). Jingle says it has handled more than 200 million calls. The Menlo Park (Calif.) company has yet to turn a profit, but has had no apparent trouble raising funds from such investors as Goldman, Sachs & Co. (GS ) and Comcast Interactive Capital (CMCSA ), an investing arm of Comcast Corp. (CMCSA ), the largest U.S. cable provider.

Directory assistance is just one of many ways search engines like Google can bring the Web to mobile phones. Once they've served up a number, why not also shoot over directions? To keep costs low, though, there can be trade-offs in quality. Some free 411 services, such as Google's, rely only on voice-recognition software rather than live operators and sometimes fail to complete calls, says Phibbs. Google's service hung up on a reporter requesting a number for a coffee shop in Portland, Ore.


Still, big phone companies see the writing on the wall. In December, AT&T (T )began testing its own free 411 calling (1-800-935-5697) in three markets: Bakersfield, Calif., Oklahoma City, and Columbus, Ohio. Callers get listings for free in exchange for listening to two 15-second ads, one at the beginning and one toward the end of their call. In coming months, the phone giant plans to expand the trial to other metropolitan areas, says AT&T spokesman Fletcher Cook.

By Olga Kharif

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