Cellphone Disconnect: Carriers Offer More, Customers Want Less

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: September 29, 2004 11:59:43 PM EDT
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] Cellphone Disconnect: Carriers Offer More, 
Customers Want Less
Reply-To: dewayne () warpspeed com

Cellphone Disconnect: Carriers Offer More, Customers Want Less

By CHRISTOPHER RHOADS
Staff Reporter of THE WALL STREET JOURNAL
September 29, 2004; Page D5


Carriers have loaded up mobile phones with new features, from instant 
messaging to music players, but for many consumers a phone is still a 
phone -- and they would just as soon keep it that way.

Having video and camera features ranked last among priorities for 
cellphone users, according to a recent study by Forrester Research 
Inc., a technology research firm based in Cambridge, Mass. Just 8% said 
such features were important when deciding which phone to purchase.

Some smaller companies are focusing on cellphone consumers looking for 
simpler service plans. MetroPCS, a wireless carrier in Dallas, is 
targeting users who don't leave town much, probably haven't used a 
cellphone before and want a simple pricing plan.

For $35 a month, MetroPCS customers can make unlimited local calls. For 
$5 more a month, they get unlimited long-distance service within the 
continental U.S. The company has just begun to offer what the larger 
operators have long considered the basics, such as voice mail, for 
another $5. The 2½-year-old company now has 1.2 million customers, says 
J. Lyle Patrick, chief financial officer.

Kevin Hill, a 21-year-old student at the University of New Mexico in 
Albuquerque, uses a cellphone service with a similar fixed-price 
approach called Cricket, offered by Leap Wireless International Inc. in 
San Diego. He pays about $50 a month for unlimited local and 
long-distance calling, along with a few features like caller 
identification. His phone doesn't have a music player or text 
messaging. It does, however, have a camera. "I took couple of pictures 
with it, but then it got old."

Cameras -- a rarity on phones just 18 months ago -- are now built-in 
for more than 80% of Motorola Inc.'s new handsets. Another increasingly 
common feature: cellphones that receive data such as the latest 
headlines or sports scores.

But while the number of consumers using the data service is growing, it 
remains small. Just 13% of the customers of Deutsche Telekom AG's 
T-Mobile use its data service, called t-zones, at least once a week, 
according to the Forrester study -- and that was the highest figure 
among all the main carriers.

"There is a big gap between what operators think adds value and what 
customers really value," says Ari Iso-Rautio, a consultant in the 
telecom, media and entertainment group of Capgemini, the technology 
research and advisory firm based in Paris.

A six-month study conducted by Capgemini and INSEAD, the business 
school in Fontainebleau, France, showed that 77% of the respondents 
from 27 wireless carriers surveyed in Europe believed that advanced 
data services were a "key factor" in remaining competitive.

Cellphone users felt just the opposite. Such services were the least 
important factor of all for consumers, with 73% of those questioned 
considering them "unimportant. A similar study on the U.S. market due 
out in the coming weeks shows a similar mismatch, says Mr. Iso-Rautio.

What is important for users is price, network coverage, simplicity of 
offers and ease of paying, the study showed.

But with cellphone growth world-wide slowing as developed countries 
become saturated and new competitors emerge, the major carriers contend 
that offering everything that a customer may want is crucial to 
remaining competitive.

Levi Laine, of Denver, typifies the view of many consumers. He oversees 
his 100-person cable-installation company mostly while on the road in 
his van and says he uses his cellphone for one thing: phoning. He 
estimates he has spent more than 6,600 minutes on his cellphone since 
July alone. "I don't need all these bells and whistles," says Mr. 
Laine, 42 years old. "Those are toys. People don't need toys. What I 
need is to be in touch."

Write to Christopher Rhoads at christopher.rhoads@wsj.com3

 URL for this article:
http://online.wsj.com/article/0,,SB109640898421430540,00.html

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