NEW YORK-Promotional activity revved into high gear during the critical December holiday season, which accounts for about 40 percent of carriers’ yearly gross customer additions, according to an informal but intensive survey by the wireless research consulting staff at The Yankee Group, Boston.
Based on a one-day survey of newspaper advertisements, Web site information and interviews with distributors and carriers, the Yankee wireless team identified what it calls “key themes.”
Wireless carriers marketing digital services, particularly those deploying services that use Global System for Mobile communications technology, offered reduced prices or rebates on handsets. “This is most prevalent among GSM operators, who have ample quantity and variety of phones and report ongoing reductions in wholesale prices. Most are offering one brand of GSM phone for $49.”
Handset manufacturers subsidized carriers’ promotional plans in a significant way during the last quarter of 1997. “Bond. James Bond” is the most obvious joint promotion, in which many GSM carriers are advertising jointly with Ericsson Inc. and offering the Ericsson CF388 phone for $50, a $110 discount.
Motorola Inc. subsidized Cellular One’s national print and TV campaign advertising the Cellular One brand, the benefits of cellular service and its GSM StarTac phone for $149. In some instances, Motorola joined forces with carriers to offer its StarTac for as low as $99.
Wireless providers took two different tacks to sell their services this holiday season. At one end of the spectrum, cellular carriers reacted to competition by deploying their most aggressive promotions to sign up new and renewing customers to long-term contracts, some as long as two years.
At the other extreme, all carriers began to market prepaid calling as a gift for others. “It makes a lot of sense. You can give someone a phone and a package of minutes as a nice gift bundle, and the carrier’s risk is mitigated.”
Bundled rate plans-whether they included buckets of wireless airtime and/or combinations of wireless and wireline minutes-were an integral part of the holiday promotional push by both cellular and PCS providers.
However, the Yankee Group noted, “We’ve seen few promotions giving away or emphasizing the value of enhanced services.
“The fourth quarter is about selling to the consumer. Enhanced services complicate the sale, take more time to provision and do not yet have a proven return on investment.”
Yankee Group researchers said the best entry level deal they encountered is from AT&T Wireless in Pittsburgh, Pa. It’s a $20 digital monthly rate plan that includes a $49 Ericsson phone with 40 minutes of use included, plus 1,000 off-peak wireless minutes and 30 minutes of residential long-distance wireline calling.
The best promotional price identified is Aerial Communications’ 1,000 anytime minutes for $50 per month, also in Pittsburgh. “That’s getting competitive with landline, folks,” the Yankee Group said.
Runners-up in this category include: Sprint PCS’ plans of 180 minutes for $30 per month, 500 minutes for $40, 800 for $80; $35 for 300 minutes from PrimeCo Personal Communications L.P.; Aerial’s 300 minutes for $35.
When factoring space, not just time, into the calculation of best deals, the Yankee Group cited Sprint’s $40 for 500 minutes and $80 for 800 minutes, including “Home Rate USA.” In some plans offered to Pittsburgh customers, AT&T Wireless offers home rate pricing nationwide.
The best bundled wireless/wireline deals its researchers came across were these: GTE Mobilnet Inc.’s offer to cellular subscribers in select markets of discounts on landline long-distance and/or Internet access; Sprint PCS’ offer in San Francisco of 1,000 long-distance minutes for $10 per month; AT&T Wireless Services’ offer of 30 minutes of free residential long-distance calls.
Pittsburgh keeps popping up on the radar screen of best deals because it appears to be one of the most competitive markets, the Yankee Group said. Other highly competitive markets where the amount of print advertising and the number of promotional deals available were comparatively great included: Philadelphia, Miami, Minneapolis, Portland, Ore., San Francisco and nearby San Jose, Calif., Dallas, Chicago and Atlanta.
