This holiday season will see an unprecedented number of mobile phone competitors in the market, but carriers still seem unwilling to compete with break-neck pricing as they aim to keep average revenue per user at high levels.
It’s a “digital Christmas” this year, said Miles David, executive vice president of New York-based Trade One Marketing, a firm that tracks wireless advertising. Advertising clearly will be focused around digital products and rate plans.
“There will be a considerable emphasis on the features that digital makes possible …, and I think that success for marketers will really revolve around getting to the customers with the largest potential for growth.”
“You’re going to see promotions where there may be a very special price but customers have to set it up on the high-end plan,” said Perry Walter, analyst with Robinson-Humphrey Co. Inc. in Atlanta.
Powertel Inc. recently introduced free long-distance calling, within its footprint, for current customers and those that sign onto $50 per-month and higher plans before the end of December. AirTouch Cellular on Friday began offering a 50-state national home rate plan to new and existing digital customers and 10-cent-per-minute long-distance rates throughout the Western region. Calling plans range from $60 per month to $200.
David expects to see a strong emphasis in advertising on digital features, including voice mail and caller ID. Ten-cent-per-minute plans, free long-distance service and no roaming fees are major themes. Nationwide players Sprint Spectrum L.P. and AT&T Wireless Services Inc. along with regional players Bell Atlantic Mobile and Coast Cellular already have introduced one-rate plans this year and don’t plan to change much of their pricing schemes.
Regional carriers not offering one-rate plans are focusing on double-your-minute promotions and other bucket-minute pricing schemes. BellSouth Mobility, which recently launched personal communications services in Tampa, Fla., is offering free incoming calls until 2000.
Analysts expect prepaid service to be key in targeting lower-end users. Priced rather punitively in the past, prepaid prices today are more in line with per-minute rates of post-pay customers. And prepaid gift givers don’t leave the recipient stuck with activation charges, contracts and a monthly bill. AirTouch is offering for $130 Prepaid Phone in a Box, which includes a Nokia 252 handset, cigarette lighter adapter and a $30 prepaid card.
“It will be a very successful marketing season,” predicts David. “I do think that wireless marketers have been getting their act together in terms of having a good grasp on how to target the market efficiently. The days of looking at the marketplace as just being `How do we add numbers?’ is gone. Now the theme has to be `How do we add profitable numbers?’ “
With digital service becoming so popular, the fear this Christmas is a shortage of digital handsets, especially among Code Division Multiple Access cellular players. Handset rebates and special offers will be prevalent this season, say analysts.
“If this quarter is as big as others have been, there could be potential shortages,” said Phil Redman, analyst with the Yankee Group in Boston. “There could be shortages for AT&T Wireless and cellular CDMA carriers. CDMA carriers will be careful about what they offer and who they bring on. There still is not a lot of selection for cellular CDMA.”
AT&T Wireless ran into a shortage situation with the Nokia 6160 after launching its Digital One Rate plan in May. Matt Hoffman, senior analyst with Dataquest in San Jose, Calif., said 36 percent of mobile phone activations occur during the Christmas season, and more than 40 percent of total handsets are sold.
“The interesting thing will be to see just how many of the CDMA vendors have product available and to see to what extent they try to push that on the market,” said David Kerr, director of wireless programs with Strategy Analytics in Milwaukee.
Motorola Inc.’s CDMA StarTac phone and the SC-725, for instance, are available with a limited number of cellular carriers.
Advertising dollars also will highlight the holiday season as the industry is set to spend the most in its more than 10-year history.
“In the fourth quarter of last year, 38 percent (of the advertising dollars) were spent in the fourth quarter,” said David. “Our prediction would of course be that this will be the largest fourth quarter for cellular and other wireless telephone advertising in the history of the field.”
According to Competitive Media Reporting in New York, the top 10 wireless brands in 1997 spent $918.3 million for the year on advertising. They are set to exceed that number significantly this year. By July 1998, all had spent a total of $607.7 million.
