In these days of competitive, get-the-activation-at-any-cost retail marketing, can a cellular service provider that charges high airtime rates without discounting handsets or letting its subscribers roam find success in the nation’s capitol?
Well, maybe if it targets the “credit impaired.”
Phoenix-based Cellexis International Inc. is opening the doors of a new cellular sales and service outlet in Washington, D.C., this month to sell prepaid service to primarily lower-income consumers.
“There are no contracts, credit checks, nor big cash deposits,” said Cellexis’ founder and Chief Executive Officer Doug Fougnies. “This expands the cellular market by as much as 20 percent, making service available to people with poor credit ratings and to those unable to come up with the large cash deposits usually required for cellular service,” he added.
Cellexis estimates this may be a $4.2 billion untapped market nationwide. And the company believes it can serve this market by selling prepaid increments of airtime and then using a proprietary computer system to meter usage. The system issues multilingual alerts to the subscriber when cellular time is running out.
The company charges $50 to program and activate a phone. Access charges are $30 per month with airtime rates ranging from 59 cents to 79 cents per minute depending on time of day and service plan.
Additional airtime can be purchased from any of 100 distribution points-ranging from cellular agents to check-cashing outlets-the company said it has set up in the city.
Cellexis said it is reselling cellular service from Bell Atlantic Nynex Mobile in the Washington market.
Cellexis reduces its exposure to churn by not discounting cellular handsets. Fougnies believes that half of the people who come through his door won’t need a phone because they still have one left over from previous service. Cellular carriers may drop as many as five percent of their subscribers because of bad debts, he said. For those who do need a phone, Cellexis offers several used models.
And Fougnies said he has a simple solution to the fraud problem plaguing the cellular industry, “We don’t allow ’em to roam.”
Founded in 1987, Cellexis is a cellular reseller with five stores in Arizona. The company already offers prepaid service in its Phoenix market and-after the national kickoff in Washington-has ambitions to introduce service in Tucson, Ariz., Denver, Seattle, New York City, Chicago, Salt Lake City, Minneapolis and other U.S. markets next year.
The company also has plans to offer other types of services including TeenTalk, a service for parents to control their children’s phone use.
