Starting Nov. 24, wireless providers will be required to comply with Federal Communications Commission rules allowing consumers to keep their cellphone number if they switch to a new carrier. That represents a "seismic change in the industry," said Dan Wilinksy, public relations director, Sprint PCS, adding that there will be a "raised decibel" on the marketing front as a result.
While providers would not discuss spending specifics, Yankee Group analyst Roger Entner expects a $1.5 billion marketing bonanza centering on fancy handsets, pricing plans and possibly unlimited service as low as $50 or $60 a month. Some 9 million customers are considered "in play" in the industry which has 142.5 million subscribers, according to a variety of industry analysts.
Wireless competitors and their agencies are mum on their plans for the fourth quarter, but observers believe they won't be for long.
"The competition is out of control," said Gary Stibel, founder and principal, New England Consulting Group, Westport, Conn. "Irrational competition in the industry will almost preclude anybody from operating profitably."
Among the top six players in the category, industry-watchers believe Verizon Wireless has the best prospect of holding onto current customers and drawing more subscribers into its ranks. Among mobile-phone carriers, Verizon has long had one of the lowest churn rates, or percentage of customers who have left the carrier in a month. Verizon's rate was 1.7%, second only to Nextel, primarily with a small-business and government base, at 1.6%, Yankee said. Verizon is handled by Interpublic Group of Cos.' Lowe, New York.
Others are betting Deutsche Telekom's T-Mobile USA, with its low-price offer, will end up netting more customers than it loses. T-Mobile last week, via agency Publicis Groupe's Publicis in the West, Seattle, broke spots showing an imaginary impact on a consumer having a photo cellphone. In one, a woman sees a bull run through a grocery store, a literal interpretation of a photo sent to her from a rodeo. Catherine Zeta-Jones is also in the spot tagged "Get more."
But Mr. Stibel likes Sprint PCS's chances, saying its marketing position is solid with the black trench-coat clad Sprint guy in ads and good photo and data phone products. Sprint is handled by Publicis & Hal Riney, San Francisco.
AT&T Wireless is readying an effort from its new agency, Omnicom Group's Goodby, Silverstein & Partners, San Francisco. An AT&T Wireless spokesman wouldn't discuss strategy, but said it's "an opportunity to show customers why it makes sense to stay with AT&T."
Cingular Wireless plans a campaign from Omnicom's BBDO, New York, for its Fast Forward service, which allows home line calls to be forwarded to cellphones. Leap Wireless, with its Cricket service, handled by Butler, Shine & Stern, Sausalito, Calif., plans to focus on the advantage of an inexpensive local service.
Mr. Entner expects a shakeout in the category late in 2004 or in 2005. "I don't think [category competitors] will really kill each other," he said, "but they definitely will bludgeon" one another.