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To: Les H who wrote (156220)	3/19/2002 11:29:41 AM
From: Les H	Read Replies (2) \| Respond to of 436258

Credit-challenged: PC for broke The Kansas City Star, Mo., Bits and Bytes Column Mar 19, 2002 (The Kansas City Star - Knight Ridder/Tribune Business News via COMTEX) -- Credit-challenged customers, along with a perception issue, may be the biggest threats to the future of Sprint PCS, a new study by Chicago-based Wachovia Securities suggests. In a "mystery shopper" survey of about 240 RadioShack stores across the country, researchers posing as shoppers found that the company's sales force recommends Verizon Wireless more often than Sprint PCS because of Verizon's perceived "better network coverage and large focus on customer service." Despite that, "Sprint PCS seems to actually be selling more aggressively through the RadioShack network" during the first three months of the year, the study found. Wachovia researchers said Sprint appeared to be selling better because of its "more lenient credit policy." The company's plan for credit-challenged consumers helped Sprint PCS add a record number of subscribers in the last half of 2001. RadioShack is the nation's largest wireless phone reseller, making the company's sales figures an important benchmark for the mobile phone industry. For instance, about 25 percent of Sprint PCS sales come through RadioShack. RadioShack handles only Sprint PCS and Verizon Wireless phone services, an outgrowth of some odd marketing contracts it signed with each company. Sprint is the nation's fourth-largest wireless company; Verizon is No. 1. The Wachovia mystery shopper study raises questions about whether Sprint PCS is picking up credit-challenged customers while Verizon picks up more stable customers with good credit. Because of the high cost of adding customers, losing customers -- churn -- is a big issue in the wireless business. Wachovia analysts, as well as some other financial analysts, are concerned about Sprint's reliance on credit-challenged customers to add to its customer base. Those customers cost more to maintain and have their service shut off more often, leading to churn. "We remain somewhat concerned that Sprint PCS is risking both higher churn and a larger bad debt expense to capture more market share," Wachovia said in the study. But is working with credit-challenged customers really a bad thing? Sprint PCS contends it has controls to cut off customers when they don't pay their bills. And -- in an industry where more than 50 percent of Americans now carry cell phones -- growth has to come from somewhere. The most credit-worthy customers already are carrying wireless phones. More troublesome for Sprint PCS is the perception issue. Wachovia researchers found that a majority of RadioShack salespeople apparently believe Verizon has a larger national network. Without talking about the quality of coverage -- I've used both Sprint PCS and Verizon Wireless and neither would get anything near an A -- just looking at national coverage maps for Sprint and Verizon shows that Sprint's network has Verizon beat hands down. For years, Sprint PCS has been hammering away with its no-static and national network message. Apparently, like those cellular calls the trenchcoat guy swoops in to remedy during Sprint PCS television commercials, that message is not getting through. Link to another related article on wireless industry reaching out to the credit-challenged. wirelessweek.com