NEW YORK-Earlier this month, Charles E. Hoffman, president and chief executive officer of Rogers Cantel Inc., temporarily assumed a new identity as a retail sales clerk to gain first-hand understanding of his wireless customers.
After four hours on the job, the CEO concluded, “It’s obvious customers aren’t doing a lot of shopping (because) all the phones are small and attractive, so we need to do a better job of marketing.”
Cantel, with 1.7 million cellular and 250,000 paging customers, had a 35-percent share of the 4.6 million wireless subscribers in Canada as of June 30.
The wireless market in Canada is booming, hitting a nationwide record of 400,000 net subscriber additions during the first half of 1998, said Robert C. Simmonds, chairman and vice president of Clearnet Communications Inc. That’s a market penetration of 15.6 percent. Third-quarter results also are likely to break records, he said at a recent Kagan seminar, “Wireless Telecom Values & Finance.”
Clearnet and Microcell Telecommunications Inc., another personal communications services newcomer, each have a 3-percent share of the Canadian wireless market, according to Sharon Armbrust, vice president of Kagan Associates Inc., Carmel, Calif. In this growth environment, Clearnet and Microcell have taken a greater proportion of market share from Rogers Cantel than from BCE Mobile Communications Inc., which controlled 58 percent as of June 30. And that is one important reason Cantel CEO Hoffman became a clerk for a day.
About 30 percent of the carrier’s cellular subscribers are digital users, as are 65 percent of its new customers. However, Hoffman said, Rogers Cantel still must counteract the negative image it received because “our [Time Division Multiple Access] handsets weren’t ready” at digital rollout time a year ago.
“We’re still replacing those darned things, and this is hard to overcome.”
Having staked its claim early in the consumer market segment, the one best-targeted by PCS newcomers, Rogers Cantel found itself spending too much money and effort obtaining and retaining low-margin customers, Hoffman said. Intended to counteract that difficulty are its recent launches of prepaid services and one-rate calling plans, the latter with AT&T Wireless Services Inc.
“Prepaid has been more successful than it should be, and the trick now is to match some of these customers with more appropriate services,” he said.
A dearth of sales representatives assigned to business customers contributed to Cantel’s loss of market share, Hoffman said.
“TDMA is a mature technology, well-suited for the wireless office, which is a way to get back to the business customer.”
Whether on the business or consumer side, wireline replacement in general promises to help carriers reverse the continuing slide in average revenue per unit, said Robert Ferchat, chairman and chief executive officer of BCE Mobile.
“After Cantel introduced digital in October 1997, prices dropped like a proverbial stone. We went over the cliff on pricing,” he said.
“There isn’t much (ARPU) increase left in usage because prices keep dropping as usage increases. We will have to change the game to find new sources of revenue, and we are well-positioned to do that.”
BCE Mobile has launched more than 30 new services this year and expects to double that in 1999, but it anticipates only a few to take hold. This year, short message service and caller ID were hits.
Next year, Ferchat said, he expects consumer appreciation for the Simply One plan, offering customers a single number for wireless and wireline phones. BCE’s Office Link, which allows four-digit dialing, and wireline replacement also promise to be popular, said Ferchat.
Furthermore, companies like Microsoft Corp. and Unwired Planet Inc. are making it possible for wireless carriers to offer a host of new services, Ferchat added.
“It will require a lot of ingenuity, a lot of risk-taking, but there could be a big payoff,” he said.
Hoffman, on the other hand, said Rogers Cantel is going back to the basics of wireless. “We offered too many services that no one wanted. You can do a lot of studies where people say they want something, but that doesn’t mean they’ll pay for it.”
