Safety Issues Cited As Key Motivators for Consumers Looking for Wireless Services

A new study on wireless services released by Compete, the predictive analytics firm and Bear, Stearns & Co. finds that while the USA wireless industry has room to grow, untapped market segments may not prove as lucrative as early adopter segments. This finding is based on consumer intentions to spend on average only US$30 per month on wireless services, and other key motivators for potential and current wireless subscribers.

"In this study we found that new adopters of wireless services will generate less revenue than experienced subscribers," said Adam Guy, director of Compete's wireless practice. "Understanding the unique characteristics of these late adopters will be key to focusing on squeezing profits out of new customers," added Guy.

Compete and Bear Stearns surveyed over 1,200 consumers to gain insight into the different characteristics between wireless subscribers and consumers who don't currently have a mobile phone (non-users). The study assesses the growth potential of the wireless industry, not just in terms of interested new subscribers, but also in how much these subscribers intend to pay for wireless service.

Among the study's findings are:

• Potential Subscribers Care About Safety and Connecting. Safety reasons and family motivations are the primary drivers for consideration among non-users who think that they will adopt wireless sometime in the future. Safety and emergencies account for half the reasons non-users want to get a wireless service and family and friend considerations were cited 19 percent of the time.

• Addressing Potential Subscribers. Creativity around business plans and service offerings will be needed to reach many customers in the non-user base. Carriers have recently emphasized hybrid plans over traditional prepaid, addressing lower end customers but also leaving room for upward migration of service usage. The study finds that family plans may be the best way to directly address many non-users and that carriers should leave true prepaid to the mobile virtual network operators (MVNOs), which have the capability to provide significant value in addressing the more economically sensitive potential subscriber.

• Current Subscribers Care About Network Quality and Pricing. Service pricing and network issues are seen as the most likely reason for customers to change service providers over time. Interestingly, the study found that the longer consumers had been wireless subscribers the less impact price had on their choice of providers. Experienced subscribers have learned that being able to get and maintain a signal when wanting to use the phone is worth some premium over the low-end network experience.

"As the industry's 'acquisition' stage winds down, carriers will need to fundamentally shift from 'hunting' new subscribers to 'farming' their existing subscriber base. Increasing the utility of wireless services and growing/deepening existing customer relationships will drive growth and success," said Philip Cusick, wireless telecommunications services analyst with Bear Stearns."

Posted to the site on 4th March 2005