Wireless Companies Try to Keep Customers Happy

By REUTERS
Filed at 7:51 a.m. ET
August 9, 2003

CHICAGO (Reuters) - Walk into a U.S. wireless telephone carrier's shop
these days, and you might be jolted by the friendlier service, and
improved quality of sound on the cell phone.

That's because the wireless industry is feeling an urgent need to keep
customers happy before the advent of a new government rule on
switching services. Starting in November, customers will be able to
keep their old phone numbers when switching wireless services.

The so-called number portability rule scares wireless companies
because it essentially makes it easier for disgruntled consumers to go
elsewhere. And in the $91 billion wireless industry, winning and
retaining customers is what it's all about.

``This is a wakeup call,'' said Rich Nespola, chief executive of
management consulting firm, the Management Network Group Inc., or
TMNG.

As the deadline nears, wireless companies are now trying to head off
the potential damage by making network improvements, re-evaluating
customer service, and stepping up their marketing.

According to a recent study by TMNG, 24 percent of large businesses --
the most likely segment to take advantage of number portability -- are
ready to switch services.

The research also found that 33 percent of businesses that use more
than one carrier are likely to consolidate their wireless accounts to
a single provider.

``What you're going to see now is a lot of positioning, a lot of
repairing and a lot of bridge-building,'' said independent
telecommunications analyst Jeff Kagan.

``That comes both on the perception side, where you see a lot of
advertising and marketing, and a lot on the reality side, which is
improving the systems and the operations.''

CUSTOMERS WILL WIN EITHER WAY

Sprint PCS Group (PCS.N) (FON.N), the nation's No. 4 wireless
telephone company, has made changes in everything from greetings at
stores to its automated voice services to the way it deals with
customer complaints.

The company has also invested in its network by adding new cell sites
and increasing signal density so there are fewer dropped or blocked
calls.

``Overall, it's been a large culture change that we're not done with
yet,'' said Len Lauer, president of Sprint PCS, who took over the
reins of the company last fall to address the company's declining
subscriber base.

``We're doing a lot of work to be ready for (number portability),'' he
told Reuters, adding the company is even informing customers if they
are paying too much.

Lauer emphasized that Sprint PCS needed to make the changes regardless
of number portability.

However, analysts said companies are feeling a greater urgency ahead
of the new regulation.

``No carrier will admit they're going to do anything,'' said Craig
Mallitz, wireless analyst with Legg Mason. ``(But) all of the carriers
seem to be taking somewhat of a defensive mode.''

Companies like No. 2 Cingular Wireless (SBC.N) (BLS.N) are offering
two-year contracts to keep customers longer while AT&T Wireless
Services Inc. (AWE.N), the No. 3 operator, is waiving the activation
fee on two-year contracts.

Meanwhile, Sprint PCS recently launched advertisements targeted at
businesses that tout its superior network quality compared with AT&T
Wireless.

Many of the operators' efforts so far have come as they posted solid
second-quarter gains in key industry metrics -- customer growth,
average revenue per user, and customer turnover.

Verizon Wireless (VZ.N) (VOD.L), the largest U.S. wireless operator
which analysts believe will gain the most from number portability,
demonstrated exceptional strength, adding twice as many customers as
its nearest competitor.

``At the end of the day it's going to benefit consumers either way,''
said Mallitz. ``You're either going to get better quality if you stay
with your carrier or you're going to get the ability to leave and go
to another carrier, who is also trying to improve their quality.''