Verizon ETF Strategy Is Low Risk with High Rewards - Report

Yankee Group says that Verizon Wireless' recent announcement to amend its early-termination fees (ETFs) is a low-risk but high-reward move for the carrier that will challenge other carriers to launch similar initiatives for the fourth quarter shopping rush. Denny Strigl, president and CEO of Verizon Wireless, made the industry-leading ETF announcement at the recent Yankee Group 2006 Wireless Leadership Summit in New York City.

Verizon Wireless' announcement is groundbreaking in that it has set the bar for flexibility and customer service standards across the industry. It is also an acknowledgement that as wireless operators' networks become commoditized, service providers must begin to focus on more customer-centric initiatives.

According to the Yankee Group 2006 Mobile User Survey, consumers are increasingly looking beyond price and network quality when selecting their wireless carrier. The influential factors that boost customer loyalty are softening--customers want more frequent phone upgrades, reduced contract lengths and loyalty programs. These customer-facing initiatives are particularly critical to carriers as the market reaches saturation and subscriber retention becomes the name of the game.

Verizon Wireless' prorated ETF policy offers the carrier high rewards because it only applies to new or renewed contracts beginning in October 2006. "Verizon's move is more about acquisition than it is about retention," said Marina Amoroso, Yankee Group Wireless/Mobile United States analyst. "The impact will be that other carriers will be forced to follow suit with similar ETF policies and customer-centric initiatives that highlight friendly service terms and flexibility, or risk being the victim of an aggressive fourth quarter marketing campaign."

Posted to the site on 18th July 2006