Cellphone Deals Sweeten in Face of New Rule on Keeping Number

New York Times
October 18, 2003

Cellphone Deals Sweeten in Face of New Rule on Keeping Number
By MATT RICHTEL

Bet Sirianni is the subject of an intensifying courtship. The
overtures - like the recent offer for a free second cellular phone -
may win her over to a longer-term relationship.

Her mobile phone service provider, AT&T Wireless, wants her to commit
to an additional two years on her contract. "I'm thinking about it,"
Ms. Sirianni, a 40-year-old corporate art director in San Francisco,
said of the free phone proposal. "I may give it to my son."

Ms. Sirianni is one of millions of customers whom wireless companies
are trying quietly to entice into renewing their contracts in the next
few weeks. New phones, additional minutes and cash credits are being
handed out - all with an eye to locking in customers who may not know
that come Nov. 24 a new federal regulation will allow them, for the
first time, to keep their cellphone numbers when they change mobile
services.

Because mobile phones have become as important as traditional phone
lines for many consumers, the desire to keep the same cellular number
has prevented many from switching providers even if they are less than
satisfied with the service. That is about to change.

Kathleen Abernathy, a commissioner at the Federal Communications
Commission, recently cited a study that said as many as 8.7 million
cellphone users would switch immediately after number portability
became available.

The movement may be a watershed moment for the industry. For the six
major national mobile phone providers - AT&T Wireless; Verizon
Wireless; Cingular Wireless, a joint venture of SBC Communications and
BellSouth; T-Mobile, a subsidiary of Deutsche Telekom; Nextel
Communications; and Sprint PCS - this could be the start of a shakeout
that determines which companies will thrive and which may be absorbed
by others.

Heavy competition in this industry has always meant strong marketing
and customer retention campaigns. One of the mobile phone carriers'
biggest problems has been customer churn, with tens of thousands of
customers shifting from one provider to another every month in search
of better deals or service. The regulation allowing customers to take
their phone numbers with them will accelerate churn, and that is why
wireless companies are eager to sign customers to new one- or two-year
deals before Nov. 24.

AT&T Wireless is now giving away $50 credits to some customers signing
up for an extra year of service as well as airline miles to
particularly valuable users. Cingular is handing out free phones and
big discounts on color flip-phones to people who sign up for two more
years of service. Sprint PCS has been offering similar giveaways.

While many customers are taking up these offers, most are not aware of
impending number portability. Industry analysts, research
organizations and the wireless carriers themselves say that public
awareness of the new regulations is low.

Wireless carriers are hoping that they can take advantage of that
absence of awareness to make an 11th-hour hard sell. "They are trying
to sign people up for multiyear contracts," said Patrick J. Comack, a
telecommunications industry analyst with Guzman & Company, an
investment banking firm. "They've significantly upped the incentives,
and it's going to get crazy going forward."

By signing customers to longer contracts now, the companies will be
able to keep more of them after portability takes effect - or at least
force customers to pay termination fees if they do jump services
before their contracts expire.

The industry has been trying to address the portability issue since
the beginning of the year, and has had notable success in reducing the
percentage of customers changing carriers, said Roger Entner, an
analyst with the Yankee Group. He said that 2.2 percent of mobile
phone customers switched carriers each month during the quarter that
ended June 30 compared with 2.7 percent a month on average in 2002.

Nonetheless, Mr. Entner and other analysts expect the numbers of
customers switching to soar immediately after Nov. 24, when news
coverage and advertising campaigns by wireless companies to lure away
their competitors' customers will increase public awareness. He
projects that 50 million people will switch providers in 2004, up from
the 39 million the group expects to change carriers this year.

The companies are quite aware that number portability gives them a
huge opportunity to compete for existing subscribers. Indeed, media
outlets are expecting already sizable advertising campaigns by those
companies to take off over the next few weeks.

Sprint, for example, has recently published 10 tips for consumers who
want to keep their phone numbers and plans to put brochures in stores
explaining the process. Three weeks ago, Verizon Wireless put up a Web
site where customers can learn about their right to keep their phone
numbers and sign up to be contacted by a company representative.

John Stratton, chief marketing officer for Verizon Wireless, said
portability would not change the company's long-term retention
strategy, but would "magnify it." One strategy is to provide
subscribers with a new phone every two years.

Jonathan Tinter, who oversees the portability strategy at AT&T
Wireless, said the company did not plan to change significantly its
effort to keep customers. But he said he had contingency plans to
sweeten the deals if the other carriers started to cut into his
customer base, noting that the whole industry was "getting more
aggressive with retention."

Other carriers admit that they are already pursuing a hard sell. Andy
Wilson, the vice president for marketing at Cingular, said it was
offering better incentives to customers whose contracts were about to
expire and that he had seen a "much higher than a normal response."

Mr. Entner from the Yankee Group said many people were surprised and
pleased with the new deals. "When I talk to unsuspecting friends, they
say, `Look at the coup my carrier just offered me.' "

But he said the packages were likely to get even better after it
becomes possible to keep a cellphone number when switching carriers.
"The smart people are holding out to Christmas" to see what kind of
deal they can get to stay with their carrier, he said.

One holdout is John Engelhardt, 51, the director of public relations
at River Downs Racetrack, a thoroughbred race track in Cincinnati. He
said he was a satisfied customer of Cingular, but he planned to march
into one of its stores after Nov. 24 to see if he could get more
weekly minutes or free voice mail. "I'm going to ask them what they
can do to sweeten the deal," he said, his voice growing with
enthusiasm. "This is America. We're built on competition."

Other mobile phone users have circled the date on their calendar for a
different reason: they are bent on changing service providers. Vanessa
Stagi, 28, a medical sales representative who has been with AT&T
Wireless for seven years, said she was tired of dropped calls, poor
coverage and high bills.

She has not switched until now because her friends and business
clients all have her current cellphone number. "If I switched, I'd
have to notify every single hospital and the doctors, surgeons,
nurses, hospital directors," she said. Very soon, she added, she will
be liberated.

But, all that said, she could be persuaded to stay with AT&T Wireless,
she said, if it sweetened the pot enough. "If the offer was right,"
she said, "I'd consider staying."

=============================================

someone should conduct a poll (maybe on their website) to see just how
many people plan on switching carriers in november.

??

rich
xingtone







On Sun, 19 Oct 2003 15:21:53 GMT, fiero@weer.net (fiero) wrote:

>New York Times
>October 18, 2003
>
>Cellphone Deals Sweeten in Face of New Rule on Keeping Number
>By MATT RICHTEL
>
>Bet Sirianni is the subject of an intensifying courtship. The
>overtures - like the recent offer for a free second cellular phone -
>may win her over to a longer-term relationship.
>
>Her mobile phone service provider, AT&T Wireless, wants her to commit
>to an additional two years on her contract. "I'm thinking about it,"
>Ms. Sirianni, a 40-year-old corporate art director in San Francisco,
>said of the free phone proposal. "I may give it to my son."
>
>Ms. Sirianni is one of millions of customers whom wireless companies
>are trying quietly to entice into renewing their contracts in the next
>few weeks. New phones, additional minutes and cash credits are being
>handed out - all with an eye to locking in customers who may not know
>that come Nov. 24 a new federal regulation will allow them, for the
>first time, to keep their cellphone numbers when they change mobile
>services.
>
>Because mobile phones have become as important as traditional phone
>lines for many consumers, the desire to keep the same cellular number
>has prevented many from switching providers even if they are less than
>satisfied with the service. That is about to change.
>
>Kathleen Abernathy, a commissioner at the Federal Communications
>Commission, recently cited a study that said as many as 8.7 million
>cellphone users would switch immediately after number portability
>became available.
>
>The movement may be a watershed moment for the industry. For the six
>major national mobile phone providers - AT&T Wireless; Verizon
>Wireless; Cingular Wireless, a joint venture of SBC Communications and
>BellSouth; T-Mobile, a subsidiary of Deutsche Telekom; Nextel
>Communications; and Sprint PCS - this could be the start of a shakeout
>that determines which companies will thrive and which may be absorbed
>by others.
>
>Heavy competition in this industry has always meant strong marketing
>and customer retention campaigns. One of the mobile phone carriers'
>biggest problems has been customer churn, with tens of thousands of
>customers shifting from one provider to another every month in search
>of better deals or service. The regulation allowing customers to take
>their phone numbers with them will accelerate churn, and that is why
>wireless companies are eager to sign customers to new one- or two-year
>deals before Nov. 24.
>
>AT&T Wireless is now giving away $50 credits to some customers signing
>up for an extra year of service as well as airline miles to
>particularly valuable users. Cingular is handing out free phones and
>big discounts on color flip-phones to people who sign up for two more
>years of service. Sprint PCS has been offering similar giveaways.
>
>While many customers are taking up these offers, most are not aware of
>impending number portability. Industry analysts, research
>organizations and the wireless carriers themselves say that public
>awareness of the new regulations is low.
>
>Wireless carriers are hoping that they can take advantage of that
>absence of awareness to make an 11th-hour hard sell. "They are trying
>to sign people up for multiyear contracts," said Patrick J. Comack, a
>telecommunications industry analyst with Guzman & Company, an
>investment banking firm. "They've significantly upped the incentives,
>and it's going to get crazy going forward."
>
>By signing customers to longer contracts now, the companies will be
>able to keep more of them after portability takes effect - or at least
>force customers to pay termination fees if they do jump services
>before their contracts expire.
>
>The industry has been trying to address the portability issue since
>the beginning of the year, and has had notable success in reducing the
>percentage of customers changing carriers, said Roger Entner, an
>analyst with the Yankee Group. He said that 2.2 percent of mobile
>phone customers switched carriers each month during the quarter that
>ended June 30 compared with 2.7 percent a month on average in 2002.
>
>Nonetheless, Mr. Entner and other analysts expect the numbers of
>customers switching to soar immediately after Nov. 24, when news
>coverage and advertising campaigns by wireless companies to lure away
>their competitors' customers will increase public awareness. He
>projects that 50 million people will switch providers in 2004, up from
>the 39 million the group expects to change carriers this year.
>
>The companies are quite aware that number portability gives them a
>huge opportunity to compete for existing subscribers. Indeed, media
>outlets are expecting already sizable advertising campaigns by those
>companies to take off over the next few weeks.
>
>Sprint, for example, has recently published 10 tips for consumers who
>want to keep their phone numbers and plans to put brochures in stores
>explaining the process. Three weeks ago, Verizon Wireless put up a Web
>site where customers can learn about their right to keep their phone
>numbers and sign up to be contacted by a company representative.
>
>John Stratton, chief marketing officer for Verizon Wireless, said
>portability would not change the company's long-term retention
>strategy, but would "magnify it." One strategy is to provide
>subscribers with a new phone every two years.
>
>Jonathan Tinter, who oversees the portability strategy at AT&T
>Wireless, said the company did not plan to change significantly its
>effort to keep customers. But he said he had contingency plans to
>sweeten the deals if the other carriers started to cut into his
>customer base, noting that the whole industry was "getting more
>aggressive with retention."
>
>Other carriers admit that they are already pursuing a hard sell. Andy
>Wilson, the vice president for marketing at Cingular, said it was
>offering better incentives to customers whose contracts were about to
>expire and that he had seen a "much higher than a normal response."
>
>Mr. Entner from the Yankee Group said many people were surprised and
>pleased with the new deals. "When I talk to unsuspecting friends, they
>say, `Look at the coup my carrier just offered me.' "
>
>But he said the packages were likely to get even better after it
>becomes possible to keep a cellphone number when switching carriers.
>"The smart people are holding out to Christmas" to see what kind of
>deal they can get to stay with their carrier, he said.
>
>One holdout is John Engelhardt, 51, the director of public relations
>at River Downs Racetrack, a thoroughbred race track in Cincinnati. He
>said he was a satisfied customer of Cingular, but he planned to march
>into one of its stores after Nov. 24 to see if he could get more
>weekly minutes or free voice mail. "I'm going to ask them what they
>can do to sweeten the deal," he said, his voice growing with
>enthusiasm. "This is America. We're built on competition."
>
>Other mobile phone users have circled the date on their calendar for a
>different reason: they are bent on changing service providers. Vanessa
>Stagi, 28, a medical sales representative who has been with AT&T
>Wireless for seven years, said she was tired of dropped calls, poor
>coverage and high bills.
>
>She has not switched until now because her friends and business
>clients all have her current cellphone number. "If I switched, I'd
>have to notify every single hospital and the doctors, surgeons,
>nurses, hospital directors," she said. Very soon, she added, she will
>be liberated.
>
>But, all that said, she could be persuaded to stay with AT&T Wireless,
>she said, if it sweetened the pot enough. "If the offer was right,"
>she said, "I'd consider staying."
>
>=============================================

fiero@weer.net (fiero) wrote in message news:<3f92ab47.5862748@news.io.com>...
> New York Times
> October 18, 2003
>
> Cellphone Deals Sweeten in Face of New Rule on Keeping Number
> By MATT RICHTEL

What a steaming load! Most carriers have always "sweetened the
pot" to extend contracts. Any customer not in a contract is a
potential churn stat, WNP or no WNP.

> Nonetheless, Mr. Entner and other analysts expect the numbers of
> customers switching to soar immediately after Nov. 24, when news
> coverage and advertising campaigns by wireless companies to lure away
> their competitors' customers will increase public awareness. He
> projects that 50 million people will switch providers in 2004, up from
> the 39 million the group expects to change carriers this year.

So churn will increase about 25% in 2004. That's "soaring"? If anything,
it supports the position that WNP will have no long-term effect, which
means there will likely be no super deals to be had- margins are already
thin, competition already fierce, so why give away the farm to lure a
few extra customers. Remember most carriers let existing customers
take advantage of new rate plans. That super new plan that attracts
an extra million "churn" customers also causes a few million of your
previously profitable customers to choose the new profitless promo plan
as well!

November 24th will pass not with a bang, but with a whimper!

> So churn will increase about 25% in 2004.
> That's "soaring"? If anything, it supports the
> position that WNP will have no long-term effect...


Nice try. SprintPCS is a money losing operation, and has been deparately trying
to reduce churn. A 25% increase could be its death knoll, and Wall Street
expects Sprint to do worse than average from WNP given its already high churn
and worst rated customer service.

IRRELEVANT NEWSGROUPS SNIPPED.

"Todd Allcock" <elecconnec@aol.com> wrote in message
news:de37a2e0.0310192116.67afb904@posting.google.c om...

> What a steaming load! Most carriers have always "sweetened the
> pot" to extend contracts. Any customer not in a contract is a
> potential churn stat, WNP or no WNP.
>

Sprint has not yet really offered to sweeten the pot. They asked me if I
would sign a new one year agreement for a 5% discount on my bill. They also
offered free PCS-PCS minutes if I signed a two year agreement. Not a real
offer I think as PCS-PCS has traditionally be free on two-year plans anyway
and retention deals typically are 5% or better. So, I have no incentive to
take the offer. Also, Verizon in my area is a good alternative (although
native coverage in Minnesota is quite limited compared to that of Sprint
PCS) and my be an option if I can get a better deal come contract
termination. Currently, I have no plans to change providers, but instead
remain with Sprint PCS.

Tom Veldhouse

lovingmoonlight@aol.com (Loving Moonlight) wrote in message news:<20031020052336.29140.00000995@mb-m06.aol.com>...
> > So churn will increase about 25% in 2004.
> > That's "soaring"? If anything, it supports the
> > position that WNP will have no long-term effect...
>
>
> Nice try. SprintPCS is a money losing operation, and has been deparately trying
> to reduce churn. A 25% increase could be its death knoll, and Wall Street
> expects Sprint to do worse than average from WNP given its already high churn
> and worst rated customer service.

Which again sort of supports my position: the "strong" carriers, like Verizon, do
not need to "sweeten" pots, since they'd likely end up a winner (gaining more WNP
churners than they lose) and the weak like Sprint can't afford to sweeten deals- the
only thing worse than churn is converting your few profitable customers to
unprofitable ones!

"Todd Allcock" <elecconnec@aol.com> wrote in message
news:de37a2e0.0310192116.67afb904@posting.google.c om...
| fiero@weer.net (fiero) wrote in message
news:<3f92ab47.5862748@news.io.com>...
|
| November 24th will pass not with a bang, but with a whimper!


just like that lousy Y2K bug...

"Todd Allcock" <elecconnec@aol.com> wrote in message
news:de37a2e0.0310192116.67afb904@posting.google.c om...
> fiero@weer.net (fiero) wrote in message
news:<3f92ab47.5862748@news.io.com>...
> > New York Times
> > October 18, 2003
> >
> > Cellphone Deals Sweeten in Face of New Rule on Keeping Number
> > By MATT RICHTEL
>
> What a steaming load! Most carriers have always "sweetened the
> pot" to extend contracts. Any customer not in a contract is a
> potential churn stat, WNP or no WNP.
>
> > Nonetheless, Mr. Entner and other analysts expect the numbers of
> > customers switching to soar immediately after Nov. 24, when news
> > coverage and advertising campaigns by wireless companies to lure away
> > their competitors' customers will increase public awareness. He
> > projects that 50 million people will switch providers in 2004, up from
> > the 39 million the group expects to change carriers this year.
>
> So churn will increase about 25% in 2004. That's "soaring"? If anything,
> it supports the position that WNP will have no long-term effect, which
> means there will likely be no super deals to be had- margins are already
> thin, competition already fierce, so why give away the farm to lure a
> few extra customers.

Because they always do this.

> November 24th will pass not with a bang, but with a whimper!

There will be a big spike after LNP takes effect, as subscribers who
are not in contracts, and have been waiting to change carriers, all
change in the few months after November 24th. Then it will settle
out with slightly higher montly churn. Churn is already very high,
remember the numbers that the carriers report are monthly churn,
not quarterly or annual churn. AT&T Wireless, Cingular and Sprint
already reported higher churn from last quarter. Nextel continues
with low churn and high ARPU.

Verizon and T-Mobile have not yet reported third quarter results.
Verizon typically has very low churn, T-Mobile very high.

Verizon stands to gain the most from LNP because people that
cared only about price switched away from them already even
though they lost their number. People that care about quality and
coverage but that want to keep their number, will be moving to
Verizon in droves. This is why Verizon dropped their opposition
to LNP, it wasn't out of a sudden desire to do the right thing.

"Steven M. Scharf" <scharf.steven@linkearth.net> wrote in message
news:B1Slb.2975$I04.445@newsread4.news.pas.earthli nk.net...
>
> "Todd Allcock" <elecconnec@aol.com> wrote in message
> news:de37a2e0.0310192116.67afb904@posting.google.c om...
> > fiero@weer.net (fiero) wrote in message
> news:<3f92ab47.5862748@news.io.com>...
> > > New York Times
> > > October 18, 2003
> > >
> > > Cellphone Deals Sweeten in Face of New Rule on Keeping Number
> > > By MATT RICHTEL
> >
> > What a steaming load! Most carriers have always "sweetened the
> > pot" to extend contracts. Any customer not in a contract is a
> > potential churn stat, WNP or no WNP.
> >
> > > Nonetheless, Mr. Entner and other analysts expect the numbers of
> > > customers switching to soar immediately after Nov. 24, when news
> > > coverage and advertising campaigns by wireless companies to lure away
> > > their competitors' customers will increase public awareness. He
> > > projects that 50 million people will switch providers in 2004, up from
> > > the 39 million the group expects to change carriers this year.
> >
> > So churn will increase about 25% in 2004. That's "soaring"? If
anything,
> > it supports the position that WNP will have no long-term effect, which
> > means there will likely be no super deals to be had- margins are already
> > thin, competition already fierce, so why give away the farm to lure a
> > few extra customers.
>
> Because they always do this.
>
> > November 24th will pass not with a bang, but with a whimper!
>
> There will be a big spike after LNP takes effect, as subscribers who
> are not in contracts, and have been waiting to change carriers, all
> change in the few months after November 24th. Then it will settle
> out with slightly higher montly churn. Churn is already very high,
> remember the numbers that the carriers report are monthly churn,
> not quarterly or annual churn. AT&T Wireless, Cingular and Sprint
> already reported higher churn from last quarter. Nextel continues
> with low churn and high ARPU.
>
> Verizon and T-Mobile have not yet reported third quarter results.
> Verizon typically has very low churn, T-Mobile very high.
>
> Verizon stands to gain the most from LNP because people that
> cared only about price switched away from them already even
> though they lost their number. People that care about quality and
> coverage but that want to keep their number, will be moving to
> Verizon in droves. This is why Verizon dropped their opposition
> to LNP, it wasn't out of a sudden desire to do the right thing.

One thing that I haven't seen much in writing are those local landline
customers who will be moving their numbers to wireless providers. Actually,
I'm thinking that Verizon will see an impact on LNP, when their LL customers
move their LL numbers to wireless ..., whether it be to Verizon Wireless,
T-Mobile, ATTW or SPCS ...

Bob