With less than a month to go before the scheduled Nov. 24 implementation of wireless local number portability, few carriers have engaged in the cut-throat rate plan battles many expected and instead have taken more subtle approaches to retaining or acquiring customers.
Late last month T-Mobile USA Inc. took one of the more aggressive measures by adding a $40 per-month rate plan that includes 600 anytime calling minutes, similar to its previous offering, but adds Friday to its unlimited weekend calling minutes at the expense of unlimited night calling minutes.
Analysts were mixed on the plan, noting that while the offer will take away 20 percent of the normal billable time for the carrier, which could affect average revenue per user results, many people usually reserve their Friday calling until later in the evenings instead of during the day when they are near a landline phone at work.
While the financial impact is uncertain, some note the plan should prove compelling to those customers without traditional Monday through Friday jobs, which includes the increasingly popular college market.
“We believe this offer will be compelling in the coveted college markets, viewed as a key battleground for carriers, as students increasingly opt for a wireless-only approach to communications,” said Thomas Watts, telecommunications analyst at SG Cowen.
Others noted that since T-Mobile USA is already one of the most aggressively priced carriers, the move could foreshadow lower-than-expected third-quarter customer growth when its parent company Deutsche Telekom AG releases results later this month.
Prior to T-Mobile USA’s three-day weekend offer, only a few nationwide carriers had made any substantial changes to their rate plans in the past month. Sprint PCS and AT&T Wireless Services Inc., both of which posted lower-than-expected growth in the third quarter, made changes last month to bolster their offerings, including adding hundreds of anytime calling minutes to select rate plans.
Analysts noted that one positive of the current rate plan changes is that most are happening at the $50 and higher price points, which in many cases increases or stabilizes ARPU, instead of the sub-$40 price points that typically drive down ARPU. Most carriers today offer rate plans that include between 500 and 1,000 anytime calling minutes in addition to unlimited night and weekend calling minutes for between $50 and $60 per month, which analysts note seems to be the sweet spot in the consumer market.
While the expected rate plan battles have yet to fully materialize, others suggest the battles for wireless customers have been fought more covertly.
Albert Lin, telecom analyst at American Technology Research, noted carriers have been busy behind the scenes for several months preparing for WLNP-including signing up existing customers to longer-term contracts, establishing specific call centers geared toward retaining customers who call wanting to port their numbers to another operator, and continuing to lobby the government to either postpone the Nov. 24 deadline or provide a grace period before fines are issued to carriers that have problems porting.
“The industry has been busy with a number of initiatives over the last several months, and I expect them to continue those efforts all the way up until the last minute,” Lin said, adding most of the efforts have been geared to smoothing any potential spike in customer churn over a longer time frame.
“I initially thought [WLNP] would have an immediate impact on churn, but after seeing carrier actions, I think the effect will be more gradual,” Lin explained.
Lin added that carriers could also be relying on negative publicity surrounding the porting process to deter customers from running to another carrier on Nov. 24.
“I think the industry is banking on porting problems and horror stories to act as a deterrent,” explained Lin. “If enough people complain about not having phone service for three weeks, customers may think twice or realize its better to know the devil you are used to dealing with than moving to the devil they know nothing about.”
Lin’s comments have been backed by a number of industry sources claiming that while the carriers will say they are ready for the WLNP mandate, the unknown variables of the porting process could provide a late Halloween trick to consumers instead of a holiday treat.
Those variables include estimates as high as tens of millions of customers clogging wireless retail outlets or even worse, unprepared independent wireless agents in the first several weeks following WLNP implementation clamoring to change carriers, consumer not being aware of what is expected of them to facilitate the porting process, or a lack of inter-carrier porting agreements with rural carriers or prepaid specific carriers like Virgin Mobile USA L.L.C.
