Wireless 2003: Boom or Bust?
By Andrew M. Seybold
<andy@outlook4mobility.com>
6 January 2003
2002 was not kind to most of the telecom sector, nor to wireless in particular. Wall
Street decided that wireless was no longer an important sector and that the
wireless industry was bound and determined to drive margins down, thus reducing
ARPU. Net adds were all over the map--up for some, way down for others--and the
word "saturation" was bandied about. Spectrum issues loomed large on the horizon.
The Supreme Court heard the FCC/NextWave arguments and while we are waiting
for that final shoe to drop, the FCC and the feds in general have promised (yet
again) more spectrum coming to an auction near you real soon now (RSN), meaning
that we probably won't see any "new" spectrum until at least 2006 or 2008.
Based on the FCC's "hands off" policy, many states have taken on wireless providers
as complaints from customers apparently increase in number. The states are itching
to play a role in "regulating" the wireless industry which has been off limits to all
but the feds. Meanwhile, the FCC and others on a federal level seem to come up
with new spectrum plans or policies on a weekly basis, in some cases offering to
auction spectrum that has already been auctioned and talking about new ways of
measuring interference and usage.
Wireless operators have become the "bad guys," providing service that is not
reliable, with lots of coverage holes and forcing folks into multi-year contracts.
While most folks don't want a wireless tower anywhere near their homes, they
demand coverage. And many cities have decided to halt all wireless tower
construction while at the same time demanding better coverage for their citizens.
So here we are, entering a new year--a year that should be great for the wireless
industry. We now have data services available on most of the networks, new
devices that sport color screens, cameras and keyboards and are capable of Java
and/or BREW. The price of wireless data services is becoming more realistic, the
content is better and corporations are more interested in providing voice and data
services for their mobile workforces than ever.
This should, therefore, be a great year for wireless voice and data. But unless the
wireless industry goes on the offensive with a dedicated public relations campaign
I am not convinced that it will be. More needs to be done for the good of the
entire industry, and it must be done quickly. The good news is that the CTIA, led
by Tom Wheeler, has stated that it will get involved not only on a federal level but
on a state level as well.
The industry needs to take a page out of the cable TV industry's PR pages.
Remember how bad its reputation for service was only a few years ago? How it
went on the offensive and ran ads about being on time, offering free installation if
they were late at your home and giving better customer service? While it didn't fix
all of the problems, the fact that it took the offensive and worked on fixing
customer service perceptions made a big difference. I think the wireless industry
needs to do the same thing.
Non-techies I talk to who complain about wireless coverage don't understand the
correlation between cell sites and coverage, and they certainly don't understand
why, if there is a site near them, they still may lack coverage. The idea that each
network has its own towers and that being near an AT&T tower doesn't help if
they're a Verizon customer is foreign to them. Unfortunately, it's the same when
talking to zoning folks at various cities and counties. What I get is, "Why does
Company X need a tower when Company Y already has one in that area?"
From the public's perspective, the issues have to do with coverage (or lack of it),
contracts that cannot be cancelled if coverage is found to be lacking, poor
customer service (one attorney firm with more than 100 phones recently cancelled
service because of billing problems and the inability to get any customer service
representative to figure out how to authorize international calls) and the fact that
soon after entering into an agreement there are better deals available.
My son and daughter-in-law recently moved to Georgia and are now "stuck" with
two wireless phones that do not provide coverage at their new home, even
though they were told they would. It seems that the operator convinced them to
sign up for a two-year contract to get a better deal on the phones (no, they did
not check with me). When they went back to the store they were told, "Sorry,
you signed the contract. If you want out you will have to pay the (huge) penalty
fee." They intended to use wireless phones only and not install a wired phone but
now they have no choice. And we wonder why the wireless industry has a bad
reputation
I believe that now is the time for the industry to come together to work toward
changing its image and changing the public's view in an effort to help the industry
grow. The CTIA has been doing some of this and several wireless operators have
joined together to work with the California PUC after it threatened to enact new
consumer protection laws. And there are industry and network specific ads about
using a phone in a car responsibly, but that is are far as it has gone.
I'd also like to dust off my idea about holding a Wall Street analyst day that is not
about numbers and forecasts but about educating these folks about the wireless
industry, how important it is now and how much more important it will be moving
forward as our society grows ever more mobile. We would emphasize that in
order to provide the services customers want now and into the future there have
to be large investments and while they are building for the future, wireless
operators might not be rolling in cash.
Every time I go to an event as a Forbes newsletter editor and mingle with
investment advisors, gurus and soothsayers, I am amazed at how little they really
know about the wireless business. If they cannot reduce it to income versus
expenses or some other formula that might apply to other industries they are
totally lost. I have spent hundreds of hours trying to explain why this industry is so
important and different. Those who listen to me seem to "get it" but I can't afford
to talk to every Wall Street analyst and explain the basics of our industry. We need
to do it as an industry, and we need to do it soon.
The Bottom Line
Today 140 million of us in the U.S. have a wireless phone (more than 50% of the
population) and as our contracts expire we will: 1) pay less for our next contract;
2) change networks because we believe our network signed us up under false
pretenses or has lousy customer service; and 3) won't try new services such as data
and messaging because our wireless voice service provider has really ticked us off!
I meet a lot of people and when they find out what I do, I have to stand back and
listen to their anger, frustrations and beefs about poor coverage and poor customer
service. At least I dont have to listen to them complain about high pricing. When I
explain the realities of cell towers and how there cannot be better coverage
without them, and tell them that more and more towers are being used as shared
sites, they at least begin to understand the issues. But I still don't have a good
explanation for contracts that cannot be cancelled without penalties and poor
customer service.
I was recently in a Circuit City in California. A woman came in and complained that
her phone did not provide coverage where she lived and her contract was finally
up. The salesperson told her she could change from Cingular to T-Mobile and that
would fix her problem. I admit I blew a fuse and butted in. You see, in California,
Cingular leases its network to T-Mobile so the network is the SAME! I explained this
and the sales guy was upset with me when the woman decided to try another
network provider. When I asked him if he could provide her with a trial phone or
a 30-day return deal he said no, she would have to sign up for another one or two
year contract!
I believe that the wireless industry had better start the year off by being proactive
if 2003 is to be a good year and band together to explain the issues. I also believe
that many of the network operators' top management ought to place a call to their
own customer support folks once a month and see how they are treated! Or go into
one of their stores and see what kind of (dis)information they are given by the
sales clerk who is on a quota and only cares about selling a phone and service, not
about taking care of customers!
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