In an attempt to expand their customer bases, some wireless operators have taken to rolling out wireless local loop-type services allowing customers to pay a pre-set amount for unlimited wireless calls in their local area. These services are being touted as “super cordless phones” and are aimed square at wired carriers that have held a monopoly on local service for years.
While these types of services are proving to be a good deal for customers looking for inexpensive wireless service, carriers are having to find a delicate balance with traditional customers who are often finding the extra network traffic is reducing their quality of service.
The current wireless model for these services is San Diego-based Leap Wireless International Inc., which has launched its Cricket Communications service plans in 10 markets across the country. The Cricket plan runs $30 per month and includes unlimited calls in the local market. Analysts have noted that the key to Cricket’s success has been Leap’s commitment to building its CDMA network solely for the purpose of providing local services.
“In every market for every company there is some work that needs to be done to ensure quality of service,” explained Dan Pegg, senior vice president of public affairs for Leap. ” In some of our early markets, we did have a bit of a stretch, but we have learned our lessons.”
Pegg noted Leap tries to thoroughly explain how its service works to customers so they know its limitations. Leap currently offers service in Tucson, Ariz.; Little Rock, Ark.; Charlotte and Greensboro, N.C.; Tulsa, Okla.; Chattanooga, Knoxville, Memphis and Nashville, Tenn.; and Salt Lake City.
Other carriers have taken note of Leap’s success and launched similar services, including U.S. Cellular Corp.’s MetroZone service and Alltel Corp.’s Boomerang and MetroTalk service.
Alltel said it is test marketing its Boomerang and MetroTalk services in five markets in Arizona, New Mexico, Arkansas and North Carolina. These services run $30 per month and allow customers to add voice messaging, caller identification and call waiting for $4 each or $8 for all three.
“It takes a lot of extra capital to launch these services,” said Kevin Helpner, vice president of marketing for Alltel and president of Boomerang. “But, I think we have done a good job with these services.”
U.S. Cellular claims its MetroZone offering, which the company launched in Knoxville, Tenn., last August, is a simple and affordable alternative for customers who have relied on typical wireline services. For $35 per month, MetroZone customers have unlimited calling in the Knoxville area on U.S. Cellular’s CDMA network.
“This service is as convenient and affordable as your cordless home phone, with the added benefit of mobility,” said David Friedman, vice president of marketing for U.S. Cellular. “MetroZone is ideal for high school and university students or any on-the-go customer who wants to make unlimited calls for the same prepaid price each month.”
But, unlike Leap, Alltel and U.S. Cellular have launched their services on the back of their current wireless networks, which has led to some network capacity problems.
In Albuquerque, N.M., Alltel’s Boomerang service has received the ire of the company’s regular subscribers who have complained about network call quality. Problems customers say are caused by the cheaper service plan pushing out higher-paying customers.
“Here, we’ve been reading news stories and experiencing first-hand Alltel’s problems with its wireless phones-including cannibalizing its own existing service-turning customers who pay more than $100 a month into customers who pay less than [one-third] of that,” said Albuquerque resident John DuPont in a letter to RCR Wireless News.
Some Albuquerque customers are so fed up with Alltel they filed a lawsuit against the company claiming Alltel is not fulfilling its guarantee to offer its customers lower prices if cheaper plans are introduced. The lawsuit contends Alltel is not honoring its “Always Up2Date Guarantee” to analyze customers’ phone habits and notify them if a better rate plan is available. The lawsuit seeks $5,000 in damages for breach of contract.
“Because of their success, they’ve overloaded their network and there’s a capacity issue there,” John Clark, general manager of Cricket in New Mexico, told the New Mexico Business Weekly. “It’s like Mother’s Day, which is typically the most popular calling day of the year. If you pick up the phone and can’t get a dial tone, that’s a capacity issue.”
Helpner noted Alltel’s Boomerang and MetroTalk services are only being test marketed at this time and that Alltel has not decided if it is going to officially launch the service. In addition to Albuquerque, Alltel is testing Boomerang in Tucson, with MetroTalk currently testing in Little Rock, Ark., Charlotte and Greensville, N.C.
“The users who are signing up for these services have told us they did not have satisfactory results from typical wireless services,” Helpner said. “Sixty-five percent of the customers who purchase our products are new to wireless.”
U.S. Cellular said the company is still tweaking and evaluating the success of its MetroZone service for future expansion and that the company is unaware of network capacity issues with its Knoxville market.
While Alltel and U.S. Cellular are still testing the viability of offering unlimited calling plans to customers on their current networks, Leap is charging ahead with its service, saying it plans to offer Cricket services in a total of 35 markets by the end of the year.
