Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
Last week I used this column to bemoan the rampant copying that happens across the domestic mobile market by carriers looking to tap into any sort of success a rival may have found with an idea. That argument was laid against the backdrop of the device financing hysteria that has drawn some hilarious jabs from rival operators.
This week I felt it was necessary to look at the other extreme of this mimicking, specifically the way the nation’s two largest wireless operators – Verizon Wireless and AT&T Mobility – tackle the prepaid space. For the most part, Verizon Wireless and AT&T Mobility have been interchangeable when it comes to rate plans and service offerings. When one makes a move, the other is sure to follow.
However, when it has come to the prepaid space that has not been the case.
AT&T Mobility for its part has been aggressively targeting the market through its GoPhone platform left over from the Cingular days, and more recently with its Aio Wireless service that seemed to be a more “mature” offering in that it provided a greater depth of smartphones and LTE. Adding to that, AT&T announced a few weeks back that it was looking to acquire Leap Wireless, which has made a name for itself in the prepaid/no-contract/whatever-you-want-to-call-it space with its Cricket service.
(It should be noted that the offer did follow T-Mobile US’ acquisition of MetroPCS, which offered a similar service to Leap, showing again that we just can’t get away from copying.)
In announcing its plans to acquire Leap, AT&T noted that it would keep the Leap brand, bolstering the service in a similar way that T-Mobile US has done with the MetroPCS brand. If completed, Cricket would add a third direct no-contract offering for AT&T to manage, and more importantly, spend time and money differentiating for the average consumer.
This model is also a bit similar to what Sprint has been doing for years with its various prepaid properties Virgin Mobile USA, Boost Mobile and Assurance. Sprint also had its Common Cents brand as a separate offering, but eventually folded that into the PayLo brand that is operated under the Virgin Mobile umbrella. Get all that?
It would seem to me that all of this slicing and dicing of what are basically just people not wanting to sign a contract for their wireless service has become something of a game. A bunch of marketing types sitting around a room watching Ginsu Knives commercials and somehow figuring that people are just like tin cans.
Or, if they are a bit younger, perhaps something from Tarantino.
By comparison, Verizon Wireless has nearly shunned the direct no-contract service, using just a token offer that is relegated to its legacy CDMA-based 2G and 3G network. The carrier has made a number of adjustments to its prepaid rate plans over the past months, but considering the hype surrounding the no-contract space the carrier’s offerings would seem to be well off the mark.
In addition, Verizon Wireless seems averse to offering up a special “brand” for its prepaid service in order to entice consumers that think the Verizon Wireless “brand” is not “brand-y” enough for their no-contract, wireless service needs. In fact, company management seems happy with the status quo, as noted during its recent second quarter financial results conference call.
“And then as I said previously, our other path is through resellers for the lower end market,” explained Fran Shammo, EVP and CFO of Verizon Communications. “I don’t see the need, at this point, to do a secondary brand around the Verizon Wireless network. We have built our brand around the quality, the reliability, a superior network. I don’t think that a secondary brand helps our overall brand at that point.”
Translation: “We will not soil our good name with something as soiling as prepaid! Now I must go and wash my mouth out with turpentine in order to rid it of that word I just used.”
Shammo also explained that the carrier’s prepaid plans would continue to be limited to its 3G network, with its LTE offering reserved for those willing to sign a contract. Conversely, AT&T Mobility appears more than happy to offer LTE access to customers not willing to commit pen-to-paper.
Again, in just about every other segment AT&T Mobility and Verizon Wireless can only be separated by the color of their logos. But, when it comes to prepaid, more different they cannot be.
So, who is doing it the right way? Well, according to the latest second quarter results, Verizon Wireless managed to add 97,000 customers through its direct prepaid channel, while AT&T Mobility attracted just 11,000 net new additions.
Sure, there are probably a lot of variables that impacted these numbers, including wind patterns, sun spot activity and the results from that television show “Wipeout,” but numbers are numbers and these numbers seem to say that despite its apparent disdain for those unwilling to commit, Verizon Wireless’ single-branded effort may be on to something.
Of course, this will not stop rivals from continuing to fine-tune their prepaid marketing efforts with “hot” new brands and “cool” new logos, and for that I am glad. You see, as a cynical observer of all things marketing related, watching how carriers try to slice-and-dice market segments and in turn attempt to serve those market segments is damn fine entertainment. Sure, maybe not as entertaining as watching someone chop a two-by-four with a steak knife, but entertaining none the less.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–I know AT&T has said it plans to keep the Cricket brand alive should it complete an acquisition of Leap Wireless, and while I have my doubts about the long-term validity of that pledge, I think we can all only hope that along with the brand, AT&T keeps Cricket’s customer out-reach direction in place.
While AT&T has spent un-told millions to put its name on the Dallas stadium where the Cowboys play, Leap recently teamed up with the wranglers of the monster truck Grave Digger for an “exclusive meet and greet” for fans before a Monster Truck Jam event in Corpus Christi, Texas. Nothing says: “We value our customers,” like monster trucks!
Woo Hoo!
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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