- The Washington Times - Tuesday, August 20, 2002

The latest high-tech gadget is destined to end up in the garbage.
Disposable phones soon will hit the shelves, after years of research and development, missed deadlines and abandoned business plans.
Hop-On.com Inc., a small company in Garden Grove, Calif., is expected to be the first to debut a throwaway phone, perhaps as soon as this week. New Horizons Technologies International Inc. in Orlando, Fla., will market its disposable phone next month.
Both companies will sell phones for less than $40 that can be tossed into the garbage when their preprogrammed minutes expire.
The debut of disposable phones comes while the rest of the wireless industry is packing phones with more high-tech applications, leading analysts to question whether consumers will embrace low-tech devices.
But executives at New Horizons and Hop-On.com argue that disposable cell phones are a low-cost alternative for people who can't afford costly subscription plans for cell phones built to surf the Web or send text messages.
"All the phone companies want to do is get you to use their fancy applications so they can charge you a lot of money. I think a lot of people just want to make a phone call," Hop-On.com Chairman and Chief Executive Peter Michaels said.
The Federal Communications Commission has approved each company's phone for distribution.
Now both companies are preparing to market plastic, stripped-down wireless phones. The disposable models don't have liquid crystal display screens that more expensive phones use to display numbers. The New Horizons model has one-third the number of parts that standard cell phones have. Hop-On.com's phone doesn't have a microphone or earpiece. Consumers must use a hands-free device that comes with the phone to talk and listen.
New Horizons plans to make 1.2 million phones during the next 12 months. It hasn't said where the phones will be sold.
Mr. Michaels said Hop-On.com will distribute 1 million phones by the end of the year, beginning in Orange County, Calif., then in New York. After that, the company plans to introduce service in major metropolitan areas, including the Washington area, but it has no specific timetable.
Even though both companies expect some consumers to throw away the phones, which are made almost entirely of plastic and are recyclable, the devices can be reused. Consumers can add minutes to phones they already have purchased by buying "refresh" cards at retail outlets.
Or they can dump them in the trash.
"We don't see it as a disposable phone. We would prefer no one ever throw our phones away," New Horizons spokesman Steve Romeo said.
Hop-On.com assigns numbers locally. When consumers buy the devices, their phones are programmed to make local calls. Because the phones are designed for local use, making a call to another area code even in the Washington area will require paying additional charges.
New Horizons' single-rate plan will let consumers call anywhere in the United States for an equal number of minutes. Whether it's a three-minute call from the District to Bethesda or a three-minute call from the District to Seattle, three minutes are subtracted from a phone's airtime. Users will pay additional charges to make international calls.
New Horizons' least expensive model will cost $39.95 and have 10 minutes of calling time. Another model with 30 minutes of calling time will cost $44.99. Hop-On.com's phone will cost $39.95 and have 60 minutes of calling time. Neither company will charge a monthly fee or activation fee. The phones are equipped to receive calls.
"Instead of carrying a phone that costs $30 a month, this is a much more affordable solution. There are no barriers to entry," Mr. Michaels said.
Despite the benefits that each company sees in low-cost, disposable phones, analysts remain skeptical because there already are 135 million U.S. wireless customers, and subscriptions are slowing. People without cell phones may opt for a prepaid phone plan that would cost a little more than a disposable unit but would give consumers a higher-quality phone.
"There will be a lot of competition for disposable phones from the prepaid market," said Allen Nogee, senior analyst at In-Stat/MDR, a technology research firm.
Although prepaid plans are less expensive than the subscription plans that carriers promote, many people have enough money only for disposable phones, Mr. Michaels said.
Other consumers could use the phones to supplement the cell phones they already carry. Hop-On.com and New Horizons plan to market the devices to people who forget their phones, to parents who want to stuff one in a child's backpack and to foreign tourists who find it expensive to use their phones in the United States. They also will pursue cross-branding opportunities. Rental-car companies could buy them to stuff into glove boxes, for example.
Motorola Corp. won a disposable-phone patent in 1995 but hasn't developed a throwaway device. Others have fled the industry. Diceland Technology in Cliffside, N.J., received patents in 1999 for a cardboard phone. The company has been silent on plans for a disposable device since November 2000. Telespree Communications in San Francisco abandoned plans for a disposable phone in March. Now it develops telecommunications software.
"The fact that companies like Telespree picked up their ball and went home suggests there isn't a lot of money to be made," said Bryan Prohm, senior analyst at technology research firm Gartner Dataquest.

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