KGB GOES HEAD TO HEAD WITH CHA CHA ON US ELECTION INFORMATION

Because of intense national and international interest in the US presidential campaign, political information services such as Huffington Post and Politico have seen their traffic skyrocket during the campaign, and we have now seen kgb begin to compete directly with Cha Cha in the delivery of US election information. As is the case with voice directory assistance (DA), this battle pits a free service, from Cha Cha against a paid service, from kgb.

kgb has extensive experience in the voice DA battles in the US as a leading DA wholesaler, and in the UK through The Number and through other entities elsewhere in Europe. Discussions with kgb make it clear that kgb is a firm believer in a user-paid model. Cha Cha was not availalble for comment.

While the free versus paid battle hasn't been settled yet in the US, The Number's experience in the UK offers some insight into the impact of price. In the UK, The Number found itself competing against lower-cost--but not free--directory enquiry (DQ) provider Conduit when the UK market was opened to competition. The finding in the UK was that Conduit's lower price didn't attract enough additional traffic to offset the fact that The Number made significantly greater margins on each call than did Conduit. DQ calls, in some respects, are relatively price inelastic. The result was that The Number won the battle and ended up acquiring Conduit. Another key factor in The Number's success was their creative and intensive advertising which dominated the landscape. We haven't seen any advertising for kgb's new service--and the US election is of almost over so we may not see any--but the coming battle between kgb and Cha Cha is likely to involve heavy advertising--though access to capital today is far more limited than it was in the past so advertising dollars may be harder to come by.

We decided to test out kgb's new service, reached by texting to kgbkgb (542542), by sending kgb the same questions we recently sent Cha Cha.

We received a response almost immediately to our first question, asking us to reply "YES" to confirm our willingness to pay US$ 0.30 plus whatever other "std / othr" charges may apply. We dutifully complied, and after 30 minutes, we have these results to report:

Question: "What are the positions on climate change?"

Answer: none received.

Question: "What are the hours of absentee voting in Virginia?"

Answer: none received.

Question: "What are the odds, the line on the presidential race?"

Answer: "Barrack Obama is leading with odds of 1-2 according to Sportsbook. thx!"

Analysis: unfortunately, this answer is wrong--our review of Sportsbook shows Obama at 1-8, which is consistent with Linesmaker at 1-8, and in the same range as 1800-Sports at -1100.

We will report answers to the other questions, when and if they arrive. -Stuart Whitaker, Smarajit Dasgupta