Hands-free laws a boon for Bluetooth

June 18, 2008: 10:32 AM ET

By Michal Lev-Ram

A flurry of new state laws making it illegal for people to drive while holding a cell phone is expected to be a bonanza for Bluetooth, a wireless technology that lets devices communicate with each other.

Connecticut, New Jersey and New York are among those states that have already enacted laws requiring drivers to use a headset when talking on the phone. Similar laws take effect in California and Washington on July 1 while other states are considering such legislation.

That's why Bluetooth gadget makers, including Plantronics (PLT) and Jabra, and retailers like Radio Shack (RSH) and Amazon.com (AMZN) are betting that headsets will someday become as ubiquitous as sunglasses.

Mike Faith, chief executive of online retailer Headsets.com, says past hands-free laws have led to a rise in sales. "[Sales] have spiked in the past, with the three weeks around any law change being when activity dramatically goes up," he says. "End of June through July our phones are going to be ringing off the hook." Faith, who says his company sells 600 to 700 headsets per day, saw sales surge 35 percent to 45 percent on average in states with new hands-free laws.

Bluetooth gadgets first came on the scene in 2000. Back then the bulky headsets were expensive, could connect to few phones and made you look like Lieutenant Uhura opening hailing frequencies.  Today, headsets sport stylish designs and over 60% of the phones sold in the United States come with built-in Bluetooth.  Headsets now sell for anywhere from $25 to several hundred dollars.

Analysts are bullish on the future of Bluetooth headsets: A recent study from ABI Research projects that 2.4 billion Bluetooth-enabled devices will be shipped worldwide by 2013. About a quarter of those will be wireless headsets.

To lure customers, Headsets.com is promising a free cell phone headset to anyone in California or Washington who receives a ticket for using their phone while driving – provided they send the company a copy of their traffic citation.

Plantronics, one of the largest manufacturers of Bluetooth handsets, has also launched a marketing campaign around hands-free laws in California and Washington. Clay Hausmann, the company's VP of corporate marketing, says it's created a website designed to educate people about the upcoming legislation and is collaborating with retailers like Wal-Mart (WMT) to promote headsets. California in particular is an attractive market for Plantronics.

"It's certainly the largest market where we've seen the law go into effect," says Hausmann. "Especially if you factor in the commute-heavy cities and areas of California, plus the fact it's also probably the most tech-savvy state."

BlueAnt Wireless, a headset manufacturer based in Australia, is also hoping to capitalize on the upcoming legislation by launching two new Bluetooth headsets just a few weeks before the latest hands-free cell phones laws take effect.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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