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AT&T Wireless,
Sprint PCS and T-Mobile Could Lose Business Market Share to LNP
Scottsdale, AZ. September 17,
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 (http://www.instat.com),
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," says Kneko Burney, Chief Market Strategist for
In-Stat/MDR. "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 (#IN0301259BW), 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. To purchase these
reports or for more information, please visit: or
contact Erin McKeighan at emckeighan@reedbusiness.com
or 480.609.4551. The report is priced at $1,995
U.S. Dollars.
For more information, contact:
Kneko Burney Chief Market Strategist, Business
Infrastructure & Services
Phone: 480.609.4544
Email: kburney@reedbusiness.com
Kirsten Skedd, Marketing Manager
Phone: 480.609.4534
Email: kskedd@reedbusiness.com
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About In-Stat/MDR
In-Stat/MDR (http://www.instat.com)
offers a broad range of information resources and analytical assets to technology
vendors, service providers, technology professionals, and market specialists worldwide.
The company stands alone in its ability to integrate both supply-side and demand-side
research methodologies into a single comprehensive view of technology markets
and products. This capability relies on a unique ability to cover the entire value
chain from engineering-level technology, through equipment, infrastructure, services
and end-users. In-Stat/MDR is part of the Reed Electronics Group, a division of
Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information
provider. With over 38,000 employees worldwide, Reed Elsevier operates in the
science & medical, legal, education and business-to-business industry sectors,
providing high value and flexible information solutions to professional end users,
with increasing emphasis on the Internet.
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