SBC Communications Inc. has made the latest move in the battle for prepaid cellular customers in Chicago.
In June, SBC, operating under the franchise name Cellular One, began offering its Chicago-area customers a prepaid card called the AccessCard. Last month, Ameritech Cellular Services followed by offering prepaid service with a disposable card backed by a credit card. Now, SBC has launched a pay-as-you-go cellular kit in a box which contains a cellular phone, the AccessCard, a battery and charger. The kit, called Cellular One-2-3, is available at SBC’s cellular retail stores.
Both SBC’s and Ameritech’s prepaid services require no long-term contracts, credit checks, monthly bills and activation fees. Under SBC’s new prepaid plan, customers have the choice of purchasing either a Motorola Inc. flip phone with 60 minutes of airtime, or the Motorola TelTac with 30 minutes of airtime.
SBC and Ameritech say they are reacting to what customers want-no long-term contracts and the ability to control their budgets.
“Our research shows that current cellular users would really like to have prepaid services to monitor their personal spending,” said Tom Ross, analyst for Economic and Management Consultant International Inc. of Washington, D.C.
From a competitive standpoint, prepaid services are another way cellular carriers can compete with personal communications services carriers that are entering the market. Some wireless analysts have been saying now is the time for cellular providers to lock customers into lengthy contracts. But carriers have observed that PCS customers in newly launched markets are willing to spend $200 up front for a handset and service.
“Obviously, [this latest service offering] does pre-empt PCS in some ways, but it’s what customers wanted,” said Gina Macchitelli, director of marketing communications for SBC.
“There’s a lot of [carriers] who have positioned themselves for prepaid … Current cellular carriers are looking for ways to be competitive by offering as many services as possible. It’s the best position to be in,” said Ross. “There’s a lot of people turned away from cellular because of credit. Prepaid will allow those people to enter the market.” New customers are difficult to come by, added Ross.
Competition stands to intensify in Chicago once PCS challengers AT&T Wireless Services Inc., PrimeCo Personal Communications L.P. and the forthcoming C-block auction winners enter Chicago’s highly penetrated market. EMCI predicts Chicago’s penetration rate will reach 18.9 percent by the end of this year.
PrimeCo and AT&T have declined to say when they plan to launch PCS service in the Chicago area. AT&T said its Time Division Multiple Access network will be up and running by next year in Chicago and other key markets.
PrimeCo, which has chosen Code Division Multiple Access technology, has already announced two service brand names for its PCS offerings, the TalkAlong phone-in-a-box targeted at the mass consumer market, and PowerBand, which will provide an expanded offering that focuses more on the commercial marketplace. AT&T already offers a boxed phone called the GoPhone, which is sold in retail stores, in its cellular markets. Neither company plans to deploy prepaid PCS anytime soon.
