Subject: [NEXTEL-1] Wireless News Survey Outlines Challenges for Wireless Carriers.html

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Date: Sat, 26 Oct 2002 13:14:40 -0400

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Survey Outlines Challenges for Wireless Carriers

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By Jay Wrolstad
Wireless NewsFactor

October 21, 2002

The critical question is whether carriers will be able to separate themselves and compete based on wireless data services. That will require concentration on specific target markets, such as youth and enterprise, and delivering the applications each segment wants.

While advanced data networks promise to boost the bottom line for wireless carriers, there are obstacles blocking acceptance among end-users who thus far have been slow to see their value, according to a mobile user report from the Yankee Group.

Next-generation networks are poised to reduce customer turnover,
increase revenue from existing subscribers, and attract new customers with
compelling features. However, in a recent survey conducted by the firm, 63
percent of mobile phone users cited "value-related" issues -- "don't
want/need," "service too expensive" and "doesn't have information
needed" -- as reasons why they do not have wireless data Internet
services.

Of some 2,000 mobile phone users surveyed this summer by analysts, just
18 percent are using data services, up from 8 percent in 2000.

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Dare To Be Different

"Despite extended coverage with next-generation networks and richer data
services, U.S. carriers must provide compelling and differentiated
wireless data offerings and focus on their segmentation strategies,"
Linda Barrabee, Yankee Group wireless/mobile services senior analyst, told
NewsFactor.

Operators are competing on price, not differentiation, she said, and
have not generated a lot of interest in data services. Carriers must
re-evaluate that strategy and put a concerted effort into examining their segmentation strategies by looking at the teen/youth, prepaid and enterprise markets.

Price, Coverage Rule

The survey indicates that customer acquisition and loyalty remain tied
to the basics. Wireless users still consider price to be the most important
factor in sticking with a service provider, and network coverage has
grown in importance, the report shows. Phone upgrades rank third in
overall importance, but 80 percent of all subscribers pay less than
US$100 for their mobile phones.

Larrabee noted that most phones currently in use are older
models, adding that the Yankee Group projects a significant increase in
replacement among users in the next 12 to 18 months, with handsets
offering the BREW and
J2ME application platforms set to attract a larger audience.

On Location

Still, Larrabee said there is some interest in new, advanced mobile
phone applications. Location-based information services generated the
most interest among those polled, at 36 percent, with voice-activated
dialing resonating among 32 percent of mobile phone users.

Text-messaging services, including e-mail access, IM (instant messaging)
and SMS (short message service), also are popular. Survey results show
that 25 percent of respondents are interested in e-mail, 24 percent in
wireless IM and 19 percent in SMS .

"These services are available now, but they have to be user-friendly and
there has to be incremental investment by the end-users because price is
still a critical issue," Barrabee said. She suggested that offering
something of value to consumers for little or no cost initially will get
them into the fold and enable carriers to reap future benefits.

Setting Up Targets

Only by delivering these compelling applications and a richer,
differentiated and more rewarding "mobile experience" to the end-user
can carriers hope to improve their customer retention rates and increase additional voice and data minutes through the networks they have spent billions setting up.

The critical question, according to Larrabee, is whether carriers will be able to
separate themselves and compete based on wireless data services.
That will require concentration on specific target markets, such as youth
and enterprise, and delivering the applications each segment wants.

The always-on connectivity and higher-speed networks are moves in the
right direction, but service providers still struggle
with their targeted marketing efforts, she said, adding, "Carriers need to set up a
content ecosystem, in which developers are brought into the fold and
consumers are better educated as to the latest offerings."

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