Cingular dropping more customers that they sold service to, due to50% policy

On Tue, 01 Aug 2006 18:30:18 -0700, SMS <[email protected]>
wrote in <[email protected]>:

>Let's face it, of the 4.6 million TDMA customers, what percentage do you
>think they will be able to retain on a higher cost GSM plan? They've
>already indicated that they KNOW that they're going to lose a lot of
>them,

What "they" actually indicated
<http://www.easybourse.com/Website/dynamic/News.php?NewsID=27229>:

The Atlanta carrier looks to have all of its customers on the same
billing platform, and move most of its customers away from the old
AT&T Wireless technology by early 2007. The company plans to
discontinue the old network by 2008. Cingular acquired AT&T Wireless
in October 2004.

While the improvement in network quality and increased focus in
customer care has been instrumental in reducing the turnover rate,
there will likely be a seasonal increase in cancellations in the
third quarter, Ritcher said during a Thursday conference call to
discuss the company's second-quarter results.

"That will create some pressure, but we're going to try to minimize
that pressure," he said. "At the end of the day, there will be some
that don't want to move over."

>but probably they'll keep well over 50% of them.

Indeed.

>What no one should believe, is that these low-revenue customers are
>somehow "unprofitable." They actually are extremely profitable, because
>they place a low burden on the network, there is no acquisition cost,
>and they generally require the least support because they are not using
>advanced features. ...

In fact they are unprofitable, as I've shown in analyses posted here
earlier today.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

---

› See More: Cingular dropping more customers that they sold service to, due to50% policy

John Navas <[email protected]> wrote:

>On Tue, 01 Aug 2006 21:15:44 -0700, SMS <[email protected]>
>wrote in <[email protected]>:
>
>>Scott wrote:
>>
>>> The losses are unacceptable when they could save many more than that with
>>> even the smallest carrot.
>>
>>Obviously the bean counters at Cingular feel that it's better to lose
>>many of the TDMA customers to other carriers. I guess that they feel
>>that a higher ARPU is better for the stock than higher profit.
>
>Obviously not. Cingular is trying to retain as many as it can on
>profitable terms. Low revenue customers aren't profitable.

I have been on the $29.99 plan for years. I normally use less that
100 minutes total for the month. Are you saying that they are not
making money on me?
--
Jim Rusling
More or Less Retired
Mustang, OK
http://www.rusling.org

In article <[email protected]>,
SMS <[email protected]> wrote:

> Scott wrote:
>
> > The losses are unacceptable when they could save many more than that with
> > even the smallest carrot.
>
> Obviously the bean counters at Cingular feel that it's better to lose
> many of the TDMA customers to other carriers. I guess that they feel
> that a higher ARPU is better for the stock than higher profit.

Don't they realize that todays low ARPU customer is next weeks high ARPU
customer? It's like a Major League baseball team getting rid of their
farm system cause it costs money to run.

Which new MBA nephew of the President thought this up? Did his cousin
introduce New Coke?

Jim Rusling wrote:

> I have been on the $29.99 plan for years. I normally use less that
> 100 minutes total for the month. Are you saying that they are not
> making money on me?

In reality, the low-revenue customers are profitable, as they consume
very few network resources, and typically don't bug customer service
much since they're not using advanced features. There are some fixed
costs per customer, such as billing and payment, but the long-term
customers tend to be good about payments, and don't require much effort
in collections.

In fact, if you want to look at network resources, the customers like
you are the most profitable, since they are paying far more per minute
than the higher use customers. But of course since there are no network
capacity issues anymore, the network resources aren't really an issue.
It's not like they have to drop a low-revenue customer in order to have
bandwidth for a high-revenue customer.

The low-revenue customers do drive down the ARPU, which is one metric
that is used to gauge how well a carrier is doing. However the number of
remaining low-revenue customers on a $30 or less plan is pretty small,
and these plans are no longer offered. The falling ARPU of all the
carriers has more to do with people moving to the lowest cost plan as
the number of peak minutes they require declines. Also, the failure of
the carriers to sell a lot of add-ons like SMS, ringtones, etc, is a
reason for the falling ARPU.

On Wed, 02 Aug 2006 08:04:28 -0700, SMS <[email protected]>
wrote in <[email protected]>:

>Jim Rusling wrote:
>
>> I have been on the $29.99 plan for years. I normally use less that
>> 100 minutes total for the month. Are you saying that they are not
>> making money on me?
>
>In reality, the low-revenue customers are profitable, as they consume
>very few network resources, and typically don't bug customer service
>much since they're not using advanced features. There are some fixed
>costs per customer, such as billing and payment, but the long-term
>customers tend to be good about payments, and don't require much effort
>in collections.

Per subscriber costs are much higher than you suggest, which is why they
are unprofitable. If they were so profitable, then carriers would be
chasing them, but they aren't. Carriers want them on prepaid instead,
which better matches costs and revenues.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

On Wed, 02 Aug 2006 13:09:18 GMT, Jack Zwick <[email protected]> wrote
in <[email protected]>:

>Don't they realize that todays low ARPU customer is next weeks high ARPU
>customer? ...

Not necessarily. There are lots of low revenue customers that just
don't use their phones very much and aren't likely to change (e.g.,
senior citizens).

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

On Wed, 02 Aug 2006 06:54:27 -0500, Jim Rusling <[email protected]>
wrote in <[email protected]>:

>John Navas <[email protected]> wrote:
>
>>On Tue, 01 Aug 2006 21:15:44 -0700, SMS <[email protected]>
>>wrote in <[email protected]>:
>>
>>>Scott wrote:
>>>
>>>> The losses are unacceptable when they could save many more than that with
>>>> even the smallest carrot.
>>>
>>>Obviously the bean counters at Cingular feel that it's better to lose
>>>many of the TDMA customers to other carriers. I guess that they feel
>>>that a higher ARPU is better for the stock than higher profit.
>>
>>Obviously not. Cingular is trying to retain as many as it can on
>>profitable terms. Low revenue customers aren't profitable.
>
>I have been on the $29.99 plan for years. I normally use less that
>100 minutes total for the month. Are you saying that they are not
>making money on me?

Probably not. Carriers consider $30 and under as a loss leader.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

"John Navas" <[email protected]> wrote in message news:[email protected]...
> On Wed, 02 Aug 2006 06:54:27 -0500, Jim Rusling <[email protected]>
> wrote in <[email protected]>:
>
> >John Navas <[email protected]> wrote:
<snip>
> >>Obviously not. Cingular is trying to retain as many as it can on
> >>profitable terms. Low revenue customers aren't profitable.
> >
> >I have been on the $29.99 plan for years. I normally use less that
> >100 minutes total for the month. Are you saying that they are not
> >making money on me?
>
> Probably not. Carriers consider $30 and under as a loss leader.
>
I suppose it's possible they are staggeringly inefficient, but it's hard
to imagine how they could lose money on us $30/month customers.
And I would think someone would want us because there must be
millions of us out here (current users plus potential new users).

On Wed, 2 Aug 2006 15:32:36 -0400, "L David Matheny"
<[email protected]> wrote in
<[email protected]>:

>"John Navas" <[email protected]> wrote in message news:[email protected]...

>> Probably not. Carriers consider $30 and under as a loss leader.
>>
>I suppose it's possible they are staggeringly inefficient, but it's hard
>to imagine how they could lose money on us $30/month customers.

It's quite expensive to run a consumer-oriented service business, and
very hard to make money at low price points, which is why you don't see
companies pushing such options.

>And I would think someone would want us because there must be
>millions of us out here (current users plus potential new users).

Sure, but they want you on prepaid, not low postpaid.

--
Best regards, FAQ FOR CINGULAR WIRELESS:
John Navas <http://en.wikibooks.org/wiki/Cingular_Wireless_FAQ>

"John Navas" <[email protected]> wrote in message
news:[email protected]...
> On Tue, 01 Aug 2006 21:15:44 -0700, SMS <[email protected]>
> wrote in <[email protected]>:
>
>>Scott wrote:
>>
>>> The losses are unacceptable when they could save many more than that
>>> with
>>> even the smallest carrot.
>>
>>Obviously the bean counters at Cingular feel that it's better to lose
>>many of the TDMA customers to other carriers. I guess that they feel
>>that a higher ARPU is better for the stock than higher profit.
>
> Obviously not. Cingular is trying to retain as many as it can on
> profitable terms. Low revenue customers aren't profitable.
>
> --
Patently false on both points. Cingular has extended nothing special to
existing customers to retain them. And you can not even begin to back up
your claim of unprofitability. But keep googling for it, John- after all,
you admitted that this is the only experience you have with any of this.

"John Navas" <[email protected]> wrote in message
news:[email protected]...
> On Wed, 02 Aug 2006 08:04:28 -0700, SMS <[email protected]>
> wrote in <[email protected]>:
>
>>Jim Rusling wrote:
>>
>>> I have been on the $29.99 plan for years. I normally use less that
>>> 100 minutes total for the month. Are you saying that they are not
>>> making money on me?
>>
>>In reality, the low-revenue customers are profitable, as they consume
>>very few network resources, and typically don't bug customer service
>>much since they're not using advanced features. There are some fixed
>>costs per customer, such as billing and payment, but the long-term
>>customers tend to be good about payments, and don't require much effort
>>in collections.
>
> Per subscriber costs are much higher than you suggest, which is why they
> are unprofitable. If they were so profitable, then carriers would be
> chasing them, but they aren't. Carriers want them on prepaid instead,
> which better matches costs and revenues.
>
Okay, Mr. Expert- where is the line for profitability drawn.

Exact dollars and cents, please.

"John Navas" <[email protected]> wrote in message
news:[email protected]...
> On Wed, 02 Aug 2006 06:54:27 -0500, Jim Rusling <[email protected]>
> wrote in <[email protected]>:
>
>>John Navas <[email protected]> wrote:
>>
>>>On Tue, 01 Aug 2006 21:15:44 -0700, SMS <[email protected]>
>>>wrote in <[email protected]>:
>>>
>>>>Scott wrote:
>>>>
>>>>> The losses are unacceptable when they could save many more than that
>>>>> with
>>>>> even the smallest carrot.
>>>>
>>>>Obviously the bean counters at Cingular feel that it's better to lose
>>>>many of the TDMA customers to other carriers. I guess that they feel
>>>>that a higher ARPU is better for the stock than higher profit.
>>>
>>>Obviously not. Cingular is trying to retain as many as it can on
>>>profitable terms. Low revenue customers aren't profitable.
>>
>>I have been on the $29.99 plan for years. I normally use less that
>>100 minutes total for the month. Are you saying that they are not
>>making money on me?
>
> Probably not. Carriers consider $30 and under as a loss leader.
>

Proof? Cite? No carrier has ever made such a statement.

Why must you lie like that?

"John Navas" <[email protected]> wrote in message
news:[email protected]...
> On Wed, 02 Aug 2006 13:09:18 GMT, Jack Zwick <[email protected]> wrote
> in <[email protected]>:
>
>>Don't they realize that todays low ARPU customer is next weeks high ARPU
>>customer? ...
>
> Not necessarily. There are lots of low revenue customers that just
> don't use their phones very much and aren't likely to change (e.g.,
> senior citizens).
>
And you base this opinion on what professional experience?

"John Navas" <[email protected]> wrote in message
news:[email protected]...

>
> In fact they are unprofitable, as I've shown in analyses posted here
> earlier today.
>
You have posted nothing but unqualified and inexperienced opinion. Your
"analysis" is anything but definitive.

Scott wrote:
> "John Navas" <[email protected]> wrote in message
> news:[email protected]...
>> On Wed, 02 Aug 2006 08:04:28 -0700, SMS <[email protected]>
>> wrote in <[email protected]>:
>>
>>> Jim Rusling wrote:
>>>
>>>> I have been on the $29.99 plan for years. I normally use less that
>>>> 100 minutes total for the month. Are you saying that they are not
>>>> making money on me?
>>> In reality, the low-revenue customers are profitable, as they consume
>>> very few network resources, and typically don't bug customer service
>>> much since they're not using advanced features. There are some fixed
>>> costs per customer, such as billing and payment, but the long-term
>>> customers tend to be good about payments, and don't require much effort
>>> in collections.
>> Per subscriber costs are much higher than you suggest, which is why they
>> are unprofitable. If they were so profitable, then carriers would be
>> chasing them, but they aren't. Carriers want them on prepaid instead,
>> which better matches costs and revenues.
>>
> Okay, Mr. Expert- where is the line for profitability drawn.
>
> Exact dollars and cents, please.

I guess Navas has never actually had a job on the business side of a
company. There is a huge difference in cost between retaining an
existing customer, and acquiring a new customer. Retaining a customer
that has been your customer for many years, buying the same product in
the same quantity every month, and paying without any need for
collections, entails almost no cost. There are no acquisition costs.
There are no extra costs for collections (they most likely are on
auto-payment too). There are no lost opportunity costs, because no
resources are being expended on retaining the existing customers. There
are no marketing costs expended trying to retain these customers and
keep them from moving to other carriers. There are no forecasting costs,
because you know how much they are buying each month. It's reliable
revenue stream that you have to do essentially nothing to keep. The
support costs are low, because these sort of customers rarely call for
support.

Now of course you would not launch a multi-million dollar marketing
campaign to try to acquire $30/month customers, and you wouldn't be
giving out free $200 handsets, but you do want to retain these customers
because they are quite profitable in what's called "harvest mode." What
Cingular is doing in terms of cutting back on free upgrades on handsets
for low ARPU customers make sense. It looks bad because anytime you take
away something that used to be free it annoys people, but the problem
really stems from the release of those internal Cingular documents.