NEW YORK-“Why pay for cellular phone service if you only want it for emergency use?”
That’s the advertising slogan and the business concept for SOS Wireless Communications Inc., an Irvine, Calif., company that began selling its SOS Phone nationwide late last year.
The handset, which runs on disposable alkaline batteries, is manufactured for SOS Wireless by Hughes Electronics Manufacturing Services Co. Retail purchasers pay about $100, which is about a third less than the wholesale price. So far, more than 6,000 have been sold, but the company has the ambitious goal of hitting the 1 million customer mark in 2000.
“We have hit our demographic targets in the 26-to-54-year-old age group, but we think we will garner a huge share in the 55-year-plus group-people who need a cell phone but don’t want one,” said Gene Russell, company president.
Besides the domestic market, SOS Wireless also has its sites set abroad. It has signed a letter of intent with the China YuanWang Group Corp. to manufacture and distribute the SOS Phone within the People’s Republic of China.
In its marketing rationale, SOS Wireless cites American consumer survey results released at last year’s Cellular Telecommunications Industry Association meeting in Dallas: 64 percent of non-owners said they are likely to buy a cellular phone; 57 percent of cell phone owners only make outgoing calls; 88 percent of potential buyers cited security as the most important reason to purchase a cell phone; 35 percent of those who already own a cellular phone have used it in an emergency or lifesaving situation; 34 percent of current cell phone owners have more than one cellular handset.
Those who buy the SOS Phone at the $100 price must also pay a one-time activation fee of $25 and sign up for a one-year service contract at $10 per month.
Late this year, SOS Wireless plans to introduce a new handset. “SOS has signed a letter of intent with Meridian Wireless to design the new … phone [to] reduce size, weight and cost, compared with the current design; the projected manufactured wholesale price is $96,” said a company profile. “SOS is in discussions with Hughes, Meridian, Trans Capital and other low-cost contract manufacturers to produce the new phone. Criteria for selection will include quality, price, favorable terms and potential investment in SOS.”
Once purchased, the SOS Phone can only be used with SOS service. The SOS Phone permits only outgoing calls, which are billed to a customer’s credit card at the rate of $1.45 per minute. The per-minute charge includes all local, long-distance, cellular and roaming fees. There is no minimum usage fee. Emergency calls to 911, accessible by a discrete button on the handset, are free. When cellular carriers make available automatic caller location via Enhanced 911 services, SOS Phones will provide that as well, Russell said.
SOS Wireless functions as a reseller, purchasing air time at wholesale rates from cellular providers. “The B-side (cellular) carriers are carrying us,” Russell told RCR. “The reason we’re not on [personal communications services networks] is that we wanted the most ubiquitous, proven service, and that’s AMPS (Advanced Mobile Phone Service).”
To differentiate itself from cellular and PCS offerings, SOS Wireless gives its subscribers direct access to operators in a call routing center, at which the serial number of each handset has been recorded and attached to a personalized customer database. “SOS … has obtained agreements from Abacus Communications Partners, a call service center partially owned by MobileComm,” the company profile said. Abacus is providing this service to SOS Wireless on an exclusive basis.
Customers press the “call” button on their handset for automatic dial-in to the call center, which then connects them to one of 10 telephone numbers they have selected in advance. Customers don’t have to remember those numbers in order to reach them, nor are they restricted to pre-selecting only emergency numbers. They can select any numbers they call frequently.
Besides a 911 button and a call button, the SOS Phone has a third discrete automatic dialing button-for the subscriber’s emergency roadside automotive assistance service of choice. If an SOS subscriber doesn’t have such a service, the call center will connect him or her to one, affiliated with the Automobile Association of America, that is nearest their location at the time of the request. SOS also has agreed to market AAA membership to its customers.
Calls to numbers other than those on the top-10 list are permitted, but they require use of a password known only to the subscriber.
Consequently, another person who uses or borrows the handset will only be able to access emergency numbers and those authorized in advance by the subscriber. This system is designed to help SOS Wireless customers control the cost of service. Another cost-control measure, which is optional, is that customers can specify a maximum limit on usage charges billed each month to their credit card.
To date, the SOS Phone is being sold through retail outlets including: Sears Roebuck & Co., Montgomery Ward, Comtrad Industries, Spiegel, Damark, Hammacher Schlemmer, Home Shopping Network and Amway. Comtrad Industries financed a national print promotional campaign, which placed advertisements in publications like The Wall Street Journal, Parade, The New York Times, USA Today, Newsweek and US News & World Report.
SOS Wireless also has signed a barter-based agreement with CBS Entertainment for advertising and promotion on daytime game shows like “The Price is Right.”
Additionally, it has signed an agreement with a conglomerate of East Coast-based security firms like SafeGuard Security and Cops Monitoring, whose salespeople will pitch SOS Phone to potential and existing security system customers.
