| 18 September 2003 - Still chasing
sustainable profitability, wireless carriers have
one more thing to worry about: losing market share
in key growth segments. According to recent research
from In-Stat/MDR, provider rankings in various market
segments may shift after the introduction of Local
Number Portability (LNP) in November, particularly
in the enterprise (firms with 1000+ employees) and
small business (firms with 5 to 99 employees) markets,
where LNP may have the most impact on churn. The
high-tech market research firm finds that LNP could
cause some providers' churn rates to skyrocket in
these segments over the next 12 months if they fail
to improve retention programs. |
 |
The providers with most to lose are those with the
greatest share: AT&T Wireless - ranked #1 in the enterprise
and #2 in small business and Verizon Wireless - ranked
#2 in the enterprise and #1 in small business in terms
of subscribers, respectively.
In-Stat/MDR research suggests that the impact of LNP
on small and enterprise business customers' extreme
likelihood to switch in the next 12 months will be relatively
low for Verizon Wireless, possibly less than 5 percentage
points in either segment. However, the picture isn't
so rosy for other carriers. For AT&T Wireless, the
extreme likelihood to switch may increase by 11 and
15 percentage points among enterprise and small business
customers, respectively. For Sprint PCS, the increase
may be 10 and 13 points, respectively, and for T-Mobile,
8 and 15 points, respectively. However, the future isn't
written in stone. These data give providers a worst-case
scenario and they should consider it a call to action
to improve loyalty programs for both individual and
corporate decision-makers.
In-Stat/MDR believes that the viability of wireless
providers will lie in their ability to address the needs
of both the individual (consumers and employees) and
corporate (group) buyer, and recommends providers segment
the market more granularly to offer unique programs
to each kind of customer: consumers, individual business
users in SOHO, small, mid-sized, enterprise businesses,
and corporate contract holders.
In-Stat/MDR conducted interviews with consumer (1003)
and business (1490) users of wireless services and combined
it with vendor-side research to paint a picture of the
wireless market by segment: consumer, SOHO, small, mid-sized
and enterprise business. Other findings included:
- Business users account for about 40% of wireless
subscribers in the US today.
- Cingular and Nextel also appear to have some risk
in the small business market, with the percentage
point increase in "extremely likely to switch"
responses being 15 and 12, respectively.
- Wireless services are a growing part of US firms'
telecom budgets. Currently, wireless voice services
account for roughly 22% of all telecom spending, with
US businesses expected to spend more than $36.3 billion
on wireless voice this year.
- Government organizations spend a disproportionately
high amount on both wireless voice and wireless data,
accounting for 9% and 18% respectively, while only
accounting for less than 1% of firms in 2003.
The In-Stat/MDR dynamic data file, "Segment
Churn: Impact of Local Number Portability on Churn for
Wireless Voice Services by Provider and Market Segment",
provides detailed end-user data on the impact of Local
Number Portability on the propensity to switch carriers,
along with other features which might cause users to
switch. Data is provided by size of business and by
each of the major wireless providers. This press release
also references data from In-Stat/MDR's "Evolving
US Wireless Market" series and Business Wireless
Vertical Market View.
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