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top cell phone makers WIRELESS PHONE MARKET SEES WAR FOR CONSUMERS: DIGITAL CHOICES, WAXING COMPETITION SPARK STRUGGLE IN CELLULAR SEGMENT

By Published on .

Earlier this year, Nokia and AT&T Wireless struck a co-marketing and advertising deal to use a new long-life, digital Nokia phone as the centerpiece in the new AT&T Digital One Rate flat-pricing plan.

While wireless phone makers and service providers had previously joined for smaller co-operative programs, the $35 million effort and subsequent success of the AT&T/Nokia alliance has the wireless industry taking note.

"There is no doubt the sum of the parts is greater than the whole in this case," says Matt Wisk, Nokia VP of national marketing.

`A STRONG CHORD'

The linkup has hit a strong chord with customers. Some are willing to wait three to four weeks for the newest Nokia 6160 phone.

If other companies in the fragmented wireless market follow the AT&T/Nokia lead, customers no doubt will be grateful.

A profusion of choices is creating a noisy marketplace largely traced to two events: advent of digital phone service; auctioning of new licenses by the Federal Communications Commission.

Metro markets now have five or more carriers, ranging from national to regional-restricted local carriers Each region also has at least one of the wireless companies of the Baby Bells. Into the mix, toss the new PCS (Personal Communications Service) systems which offer more technological sophistication, iDEN systems, and a growing number of wireless phone makes.

CELLULAR CUSTOMERS

By the end of '97, cellular had 53 million customers, up 14.2%. Not included in these totals were 2.9 million PCS subscribers (up from 313,000), and 1.3 million iDEN customers, up from 300,000. PCS is digital wireless voice and data services that use the 1900MHz band on the newly allotted (by FCC) radio spectrum. The iDEN technology combines phone with a two-way dispatch system.

Little wonder there has been heavy advertising: The top 10 services and top seven phone makers increased ad spending a collective 58% to $578 million in '97, reports Competitive Media Reporting.

Abetting the intensified marketing are an increasing number of customers who are spending less and a customer base that is becoming more sophisticated. The drop in rates per minute and an increase in non-business (less-frequent) users are two reasons behind the decline in customer spending, says Jeffrey Kagan, president of consultancy Kagan Telecom Associates.

DIGITAL SPURS UPGRADING

Many customers are shopping for a second or a third phone, but this time with particular features in mind, says Jeffrey Belk, Qualcomm group VP-marketing, noting "carriers are spending money to educate consumers about digital."

Analog cellular phones are first-generation and limited to voice calls. Newer digital phones transmit voice and data as packets of information and allow higher-quality voice signal as well as e-mail, instant text messaging and voice mail.

Part of AirTouch's ad message in each of its 19 markets is to cut through customer confusion over phone makers and carriers, according to Carol Kilgore, AirTouch director of brand advertising.

AirTouch could be source of some of the consumer confusion, though. It, and others like Cellular One, buys phones from manufacturers and put their own logos on the handsets.

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