Wrong Way For Wireless?
Any day now, you will watch YouTube clips on the bus. You'll check your MySpace profile in line at the grocery store. And you'll listen to the latest Killers track without turning on your PC.
Why? Because the wireless business says you will: Verizon (nyse: VZ - news - people ) thinks you will pay to watch TV on your phone using its new VCast service. Sprint is creating its own news casts and other shows it thinks you'll pay for on its service. And, Apple (nasdaq: AAPL - news - people ), you may have heard, is coming out with a new a high-end phone--and you'll have to subscribe to AT&T's (nyse: T - news - people ) Cingular service to use it.
The carriers' logic: Selling games, songs and text-messaging services is much more profitable than plain-old phone calls. And wireless companies' data service revenue grew 88% year over year, according to research firm Telephia.
Yet Rasmus Wegener and Pratap Mukharji, Atlanta-based telecom consultants for Bain & Company, say wireless companies are headed in the wrong direction. Betting on customers to fatten up their phone bills won't work, they say. Instead, they think carriers should focus on their core business, and spend more time and money building customer loyalty. Dissatisfied customers are constantly bailing out on their contracts, and getting new ones is an expensive proposition. But if carriers cut their churn rates by 20%, they could boost profits by up to 15%.
source-forbes.com
Why? Because the wireless business says you will: Verizon (nyse: VZ - news - people ) thinks you will pay to watch TV on your phone using its new VCast service. Sprint is creating its own news casts and other shows it thinks you'll pay for on its service. And, Apple (nasdaq: AAPL - news - people ), you may have heard, is coming out with a new a high-end phone--and you'll have to subscribe to AT&T's (nyse: T - news - people ) Cingular service to use it.
The carriers' logic: Selling games, songs and text-messaging services is much more profitable than plain-old phone calls. And wireless companies' data service revenue grew 88% year over year, according to research firm Telephia.
Yet Rasmus Wegener and Pratap Mukharji, Atlanta-based telecom consultants for Bain & Company, say wireless companies are headed in the wrong direction. Betting on customers to fatten up their phone bills won't work, they say. Instead, they think carriers should focus on their core business, and spend more time and money building customer loyalty. Dissatisfied customers are constantly bailing out on their contracts, and getting new ones is an expensive proposition. But if carriers cut their churn rates by 20%, they could boost profits by up to 15%.
source-forbes.com
posted by SAKN at
7:48 AM
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