• by Mark Walsh  @markfwal, February 6, 2008

Move over, Ma Bell. Free directory assistance services such as 1-800-Free411 will ultimately overtake traditional paid assistance among mobile consumers once they become more aware of them, according to a new study.

For now, most mobile users still rely on standard directory assistance because of its familiarity. But with customer satisfaction ratings for free alternatives on par with traditional directory help, Local Mobile Search, a unit of Opus Research, expects that to change.

"Traditional service providers, to the extent they continue to rely on user ignorance, will have to change their product offering because free 411 services will eventually cannibalize the pay services," said Greg Sterling, a senior analyst at Local Mobile Search, who authored the report on mobile directory assistance.

With 3.1 billion of the 5 billion annual U.S. directory assistance calls now made on cell phones, the mobile market has become critical for providers. One of the factors benefiting traditional directory services is that most mobile consumers believe DA charges are cheaper than they actually are. About 70% estimate charges at $1 or less when they're actually closer to $2 a call.

"People are ignorant of how much they're paying for traditional directory assistance," Sterling said. Even so, mobile customers typically use directory assistance only once every three months because they know they know it's costing them something, according to the study.

That price sensitivity should play into the hands of the free services. But so far, only 24% of mobile users have tried one of the free 411 competitors. The biggest and best-known of these is Jingle Networks' 1-800-Free411, which requires users to listen to short audio ads in return for free assistance. Others include Google's 1-800-Goog411, AT&T's 1-800-YellowPages, and Microsoft's 1-800-Call411.

But aside from 1-800-Free411, most of these services haven't been promoted aggressively yet. The study also suggests that free providers can do more to improve the quality and relevance of their audio ads to boost the overall consumer experience.

At the same time, the mobile carriers will have to take steps to offset the rise of free 411 rivals. That effort includes better marketing of enhanced carrier services tied to directory assistance such as movie showtimes, maps and sports updates. It may also mean experimenting with flat-fee pricing or other payment options. "If (carriers) can offer a better product and price it more aggressively, they might have a better outlook because of the inertia of dialing traditional "411," Sterling said.

The ad-supported 411 services should be aware that mobile users most often call directory assistance while going by car to do some type of business. Trying to reach a business for their location, hours of operation, or information about a product or service were among the most common reasons for using directory assistance. "The central point here is that mobile directory assistance users are very qualified prospects on their way to do something, often conduct a transaction, and looking for information," Sterling said.

Reaching that audience with the right audio ad at the right time will help make the free services that much more useful.

The Local Mobile search study was conducted on behalf of V-enable and based on a survey which had 671 respondents. Most fell within the 25 to 54 age range, and 61% were women.