Cingular Wireless L.L.C. stirred up some controversy when it rolled out a new advertising campaign claiming that it has the least number of dropped calls on its network, claims that have led to a lawsuit.
Sprint Nextel Corp. challenged Cingular’s claim with the usual referee of such disputes, the National Advertising Division of the Better Business Bureau. Cingular responded by filing a lawsuit against Sprint Nextel in federal court in Atlanta, according to Sprint Nextel spokesman Matt Sullivan. The recently filed lawsuit, Sullivan said, not only asks the court to declare that Cingular’s claim is true-it takes issue with Sprint Nextel’s advertising claim that “no one has a more powerful network.”
Sullivan said that since the issue has been taken to court, the NAD has closed its review and the battle will play itself out in court.
“We just felt that [Cingular’s] claim wasn’t valid and they didn’t have the materials to back up the claim,” Sullivan said. He added that Sprint Nextel expects to file its response to Cingular’s suit within the next two weeks. “That’s where we’ll lay out our defense and why we feel their claim of fewest dropped calls continues to be false and misleading,” he said.
Cingular spokesman Mark Siegel said that the “fewest dropped calls” advertising campaign reflects the dramatic improvements that Cingular has made in its network. Seigel said the carrier invested around $6.5 billion in its network last year and plans to spend the same amount this year.
Siegel added in terms of Sprint Nextel’s “most powerful network” claims that, “by any objective measure, Cingular has a more powerful network than Sprint, and we think Sprint knows that.”
The lawsuit, Siegel said, was filed in order to get Sprint Nextel to stop its ads “and to make crystal clear that our own claims about our network are justified.”
The lawsuit, and Cingular’s cheerleading for its network, come amid Sprint Nextel’s plans to change its marketing message to place more emphasis on the “power” of its network, as Chief Financial Officer Paul Saleh told analysts in New York last week. Verizon Wireless, of course, has been saying, “It’s the Network” for awhile now.
Cingular’s dropped-call claim is based on work by independent network testing company Telephia, which is commonly used by all of the wireless operators as an independent check to their internal testing. Cingular spokesman Clay Owen said that the carrier purchases the raw testing data from the testing companies it uses and then analyzes it in order to formulate a basis for statements about its network.
The focus on network capabilities marks a “sea change,” according to Tower Group analyst Bob Egan. Network-related marketing messages used to emphasize how many people a network covered, or how many customers the carrier had-especially as unlimited in-network calling became a popular offering. But with the top three carriers covering between 250 million and 286 million potential customers, there isn’t much chance for differentiation on the coverage front. Sprint Nextel is about to close on its acquisition of Nextel Partners Inc. and will be able to say it has about 50 million customers, which is right behind Cingular and Verizon Wireless.
Egan noted that there are still significant differences among the geographical native voice coverage of the top three carriers, with Sprint Nextel being the weakest in that area. However, he added, Sprint Nextel’s network is the most homogenous, while Cingular and Verizon Wireless have to deal with legacy technologies. “The way they measure network performance still has games being played,” Egan said, noting that carriers could, for example, tweak performance numbers simply by examining a certain time of day.
Verizon Wireless says that along with independent testing, its own network engineers make more than 750,000 voice call attempts and more than 1.4 million data tests quarterly on its own network and those of other national carriers. Verizon Wireless also justifies its claim of being the nation’s “most reliable” network by looking to its industry-leading churn rate.
“The customers are the ones who decide, and they vote with their feet,” said Verizon Wireless spokesman Tom Pica.
Among the top four carriers, T-Mobile USA Inc. doesn’t say much about its network. Instead, the fourth-largest carrier continues to emphasize its place as a value player in the market, as well as its consistently good performance in multiple consumer surveys of customer satisfaction and network performance. But T-Mobile USA does allow customers a unique look at its network via a “personal coverage check” available in stores and on its Web site.
David Beigie, vice president of corporate communication for T-Mobile USA, said that the comparatively transparent view of its network helps the carrier reduce its churn levels, because people can check to see if service will be a good fit for them. “It’s one thing to offer generalized happy-talk about your network,” Beigie said. “It’s another to really get granular with customers and say `This is what it’s going to be like for you.”‘
