Here is a link with a brief description of the top 25 US wireless networks......Also has an article on PCS's growing pains.
wirelessreview.com
“Sell Like Hell”
Did Sprint PCS' subscriber base grow faster than its competitors'? Yes.
Was that a problem? Sure.
If growth means change, and change involves risk, Sprint PCS is the industry's biggest risk-taker. Almost every one of last year's Top 25 carriers experienced subscriber growth between 2Q98 and 1Q99, but Sprint PCS blew its competitors
away, upping its subscriber base by a whopping 145%. The only carrier to come close was Omnipoint, which trailed at 88%.
In addition to subscriber growth, the company's coverage grew from 110 million POPs to 170 million in one year, said Andrew Sukawaty, Sprint PCS president & COO. Sukawaty attributes the increase in subscribers to this geographic growth,
strong marketing and nationwide pricing plans. Sprint PCS' Free & Clear Plans, nationwide service plans that let customers call from anywhere on the network for one price, include free long-distance calls anywhere in the United States, Puerto
Rico and the U.S. Virgin Islands. These plans make up the bulk of its sales.
“A broad-based consumer market wants to use the phone the same way wherever they go, not just within a city or region, but within the country,” he said. “The national drum is being beat and is getting very loud, and consumers are hearing
it and are receptive.”
With growth, however, came challenges.
“Did we have issues? Sure,” he said. “Did we have Christmas holidays when we were deluged with more sales than we expected, and did we have backup at our customer-care operation and not enough seats? Yes. Did we fix it and fix it
quickly? Yeah, we did. Did we have a city where we sold double what we thought we were going to sell and a short-term capacity issue? Yeah. Did we address that issue quickly? Yes. We added capacity as quickly as we could get it in. We
made the investment.”
Sprint PCS' adaptability could be its saving grace as customers who crave a flat-rate pricing plan are becoming dissatisfied with some carriers' “national” coverage and capacity. Customers have recently criticized AT&T Wireless, for
instance, for dropped calls and poor coverage, despite its aggressive Digital One Rate marketing campaign. Sukawaty said Sprint PCS has not run into the same problems because its strengths were right for a nationwide flat-rate pricing
campaign. Some strengths are the voice quality associated with CDMA technology, resulting in its clarity message; service in the top 50 cities, which created its nationwide theme; and a large network with a lot of capacity.
“The proposition we put in the marketplace was very much keyed to our strengths as a company. If you look across the board to some carriers who have not grown as fast, a lot of them are promoting things just to match the other guy that
are, in fact, their weaknesses,” he said. “When you are a cellular carrier who has congestion in a city, and you go out with a big bundled minute plan, that is playing to your own weaknesses.”
All for One? Maybe.
Launching anything nationally in an efficient, coordinated way is an enormous challenge for any carrier. In its first year of operations, Sprint PCS launched city after city with different propositions in each. Today, the company executes
everything in a coordinated way across the country.
“I think that has really shown that we have tackled the logistical issue in a big way,” he said.
Logistics become a bit tricky when you are involved with affiliates. As of February, Sprint PCS had signed 16 affiliates representing licensed PCS coverage of more than 45 million people in 30 states. Sukawaty said this agreement is different
from other affiliations because it offers independent companies a long-term business. Sprint PCS does not own any part of the business, but it does require each affiliate to construct an all-digital CDMA network, the majority of which will
operate on the PCS licenses owned by Sprint PCS. Each company operates and markets its network as Sprint PCS service, leveraging Sprint PCS' branding, marketing and distribution programs. The deal appeals to long-term players, including
telephone and utility companies.
“We don't do what some of the other deals do. We don't have buy-out rights in the fifth year and force them to sell it to us or own a piece of the company and sit on the board and second-guess their business decisions,” he said.
The affiliations were complicated to put together on the front-end, Sukawaty said, and Sprint PCS still is pulling together many of the elements. Each affiliate's culture is different, and it takes awhile to decide what parts of the business to
standardize.
Although Sprint PCS' affiliations cover 45 million people, they make up a small percentage of its overall subscriber base. Of the top 100 cities in the United States, Sprint PCS covers 80% of the POPs with its own homegrown network.
Affiliations cover between 10% and 15%, and roaming agreements cover approximately 5%. The company will build out any rural areas where it can't get roaming agreements.
False Advertising? No.
Competitors have criticized Sprint PCS for touting a 100% digital, 100% PCS nationwide wireless network since it offers some analog roaming, but Sukawaty said the words it uses to describe its service are accurate.
“Most of the packages we are promoting are on-network; they are not off-network. The customer has the option to use the off-network,” he said. “We are very clear about it. The customer has to go through multiple steps to use the analog
when they buy a dual-mode phone, so I believe we have been straight with customers, and our customer feedback says we have been straight with the customers. We would do it different if our tests showed that our customers were being
confused by that.”
Industry skeptics also have questioned whether national flat-rate pricing is profitable. Sukawaty pointed out that AT&T's Digital One Rate is not profitable because the company subsidizes off-network minutes. If customers are heavy
off-network users, that is a lot of subsidizing. Sprint PCS offers a good rate for on-network minutes and does not subsidize the off-network minutes.
“If you believe that your customers are going to spend most of their time where you build your system, then that should be a better proposition for you and the customer,” he said.
Now that it has achieved the top place in subscriber growth, the company hopes to hit another goal. Sukawaty wants to be No. 1 in revenue growth. The market is starting to segment, and the company is getting picky about its customers.
People who use the phone only for safety are not its target.
“We try to offer value packages for people who like to talk,” he said. “That can happen over time, due to the value and strength of our marketing proposition, but also due to the strength of our network.”
To get there, the company's strategy for the rest of 1999 is “sell like hell.” Sukawaty called 2Q99 the quiet before the storm. April, May and June brought advances in the business market, and the rest of the year is aimed at consumers. Look
for more segmented offers, including some niche offerings that will answer the demand for stylish phones and accessories. Consumers have started to take their phones personally, Sukawaty said, and no company can get away with all-black
sets of phones.
“Style is very hard to predict, and the soft part is not well understood by a lot of telcos. They think it is all functionality driven. We know phones are going smaller, but style is anybody's guess,” he said.
Where Sprint PCS will land next year is anybody's guess, too. Despite the fact that it grew its subscriber base faster than any other carrier, it still has a long way to go to reach AT&T Wireless' number one position on the Top 25 list. At
number nine, Sprint PCS moved up only two places from last year. Is Sukawaty worried? No.
“If you are growing faster than anyone else, it is only a matter of time,” he said. |
