Three quarters of the way into 1999, we are inundated with good news from many of the wireless carriers showing record numbers of new customers added to their networks. These numbers are impressive and, in spite of local resistance to towers and the controversy surrounding Wireless Technology Research L.L.C.’s radio-frequency radiation study, wireless phones continue to become an everyday part of our lives.
However, I would like know the actual number of customers wireless carriers lose each quarter to churn. Many wireless carriers acknowledge their churn rates are higher than the “industry average.”
Most industry analysts and carriers themselves place the major reason for wireless churn as price. Another reason cited recently in an RCR article is prepaid wireless. Studies performed by the wireless carriers and their trade associations give much of the credit to AT&T Wireless Services Inc.’s one-rate pricing plan. This plan has caused the creation of “super carriers” and is forcing the rest of the wireless industry to seek partners with whom they can share services, merge or perish under the threat of massive customer defections.
I agree that price and, to some degree, prepaid wireless are important factors. However, I don’t attribute them as the only reasons for wireless churn. Another major reason may be the quality of the networks. Wireless service is unacceptably poor in many areas of the United States.
It doesn’t matter whether it is cellular, personal communications services, enhanced specialized mobile radio or paging. Both analog and digital networks experience similar problems. In traveling an average of three weeks a month from one end of the United States to the other, I find it difficult to hold a call on any wireless network while I am mobile. Many of the networks also are experiencing capacity problems, and it can be difficult to obtain a dial tone or hold a signal, even in a major metropolitan area.
Many people I know have changed their wireless service at least once during the past year (including myself). Very few people I talk to mention price as the reason for changing wireless carriers. Usually it is quality or coverage of the network that surfaces as the No. 1 issue. I find that price discussions usually are limited to new users or consumers who travel.
Wireless churn rates actually may be approaching danger levels with some carriers. When the demand for new service inevitably peaks, wireless carriers will find themselves fiercely competing for the same customers. At that point, capacity and coverage issues will be even more important and customer service will determine the winners in the wireless survival game.
There is a solution to this problem. That solution is to fix the wireless networks and fix them now! Capacity and coverage must be increased dramatically and quickly to meet wireless use forecasts for the next five years. However, with per-minute prices for usage falling rapidly and the advent of free long-distance and no roaming charges, many carriers are squeezed for network capital outlay.
The build-to-suit industry is courting wireless carriers to solve that problem and build out their networks in every area of the United States. Build-to-suit companies are willing to build new networks and add to existing ones with little to no upfront cost to carriers. The only expense to carriers is for radios, antennas and coaxial cable. All upfront cost for facility siting, zoning, construction and the costs of the tower are born by the BTS companies.
What’s the catch? Nothing really. The build-to-suit industry is willing to do all this at their expense in exchange for the carriers commitment to as little as a five-year lease. The BTS companies are betting on a host of new wireless carriers arriving in the future, which also will need towers as a medium to transmit their services. Those new carriers range from wireless local loop to local multipoint distribution services and broadband wireless carriers.
Carriers also may want to consider deploying a blanket of low-cost microcells and repeaters to increase coverage and capacity of existing networks. New cell sites are expensive, but not every coverage issue calls for a $300,000 cell site. It’s not necessary to overdesign networks when fill-in coverage may be the requirement. The name of the game is to build sites. Carriers should be willing to screen sites or do whatever is necessary to gain public approval for their service. Don’t worry about setting a precedence. That probably has already been done in most major markets.
Without new wireless sites, carriers won’t be able to improve and expand their networks to meet the growing demand for their services. Until improvement is seen in the wireless carriers networks, I believe churn rates eventually could grow as fast as new customer additions.
Digital data service tied to the Internet is where the wireless market is heading. Date transfer over wireless phones on existing networks already has been announced by GTE Wireless and Vodafone AirTouch plc. But digital data customers will be difficult to retain if reliability is even remotely important to the end user.
As the Internet opens doors to new users in remote parts of the world, the wireless networks must improve their coverage quickly or fiber-optic cable undoubtedly still will be the only reliable medium to transmit data information.
Greg Sweet is president of Acquire Telecom Services.
