Even as the wireless industry consolidates to four national carriers and as more regional consolidation is predicted, wireless customers are getting more choices-not fewer-as to which companies will provide their services. It’s a characteristic that has played out time and time again in wireless. Even as the industry contracts, it expands.
In the early days of cellular, there were just two carriers in each market. A-side carriers won cellular licenses either through competitive hearings or lotteries. (The Federal Communications Commission initially picked winners based on which company the commission deemed most qualified to offer service. Later that proved too cumbersome, and the lottery practice was formed. Imagine, early licensees did not have to pay for spectrum While there were only two service providers in each market, there were hundreds of companies providing service throughout the United States.
Only when McCaw Cellular bought all those A-side licenses did nationwide cellular service come to fruition. (B-side licenses were owned by the local telephone company in the area, often a regional Bell.)
Today is not all that different, despite the massive consolidation taking place in industry.
Sure, AT&T Wireless is no more. It’s now part of No. 1 carrier Cingular Wireless L.L.C. And Nextel Communications Inc. plans to merge with Sprint Corp. As I write this, it looks like Alltel Corp. is planning to buy Western Wireless Corp.’s business.
But even as that mega-consolidation takes place, Time Warner is testing whether it wants to jump into the wireless business, either by reselling service or as a virtual carrier in a deal with Sprint. ESPN is planning its own deal. 7-Eleven also can be your service provider, while AT&T Corp. plans to offer wireless service to business customers using Sprint’s network.
It’s all about segmentation, and customers will choose their service provider based on which match they like best. You want network coverage? You’ll be drawn to Verizon. You want a wide selection in handsets? You’ll likely choose Sprint. You’re young and hip? You’ve got a couple of options here: Virgin Mobile may be especially appealing with its irreverent ad campaign, its music association and maverick owner Richard Branson. If extreme sports is your cup of tea (although I doubt extreme-sports aficionados say phrases like “cup of tea”) you will want to go with Boost Mobile using Nextel’s network. Virgin and Boost aren’t traditional wireless carriers, but that makes no difference to their customers. The combined Sprint Nextel would be wise to keep both the Virgin and Boost businesses because each targets such specific audiences.
Sure, the backbone network is the same. But it’s the customer-facing marketing that attracts customers.
One of the big questions being asked today because of all of the potential consolidation is how T-Mobile USA will compete. A quick look at its advertising campaign can offer one answer: They’re highlighting Hiptop’s Sidekick II. It’s an appealing ad featuring Snoop Dogg and pals and likely to appeal to a young audience.
Sprint is behind most of today’s MVNO relationships-but like all good ideas, once proven successful, they are quickly copied.
