Wireless services get wakeup call from youth

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The ever-so-lucrative youth market has an increasingly zealous suitor: the wireless-phone industry.

Initially, cellular-service providers left much of the college and teen demographic to carriers pitching pre-paid plans with hip, edgy marketing: Virgin Mobile, Virgin's joint venture with Sprint; Nextel's Boost Mobile subsidiary; and, to a lesser extent, Deutsche Telekom's T-Mobile. "Youth and pay-as-you-go were the two most classic stepchildren in the industry. No one valued them," said Howard Handler, Virgin's chief marketing officer. "The target has largely been ignored," agreed David Chamberlain, senior analyst-wireless, In-Stat.

But now, carriers are realizing that while they have been trying to convince America's 180 million mobile-phone subscribers to switch services, they have been overlooking a lucrative opportunity with a younger generation that views mobile phones as their No. 1 possession. In-Stat is now compiling U.S. figures, but it found that among youth in Asia, spending on mobile-phone games and content reached $15.2 billion last year. Growth is estimated at 15.3% by 2010.

That's led big carriers like Verizon Wireless to focus promotions on mobile phone consumers as young as 15 to establish loyalty and seize on their spending power as they grow up. Young adults "have three major components marketers want: disposable income; they've grown up with technology; and the phone is the No. 1 appliance they have," said Peter Fuller, executive director of the Mobile Marketing Association.


While most measurement firms don't break out teens, M:Metrics found that young adults age 18-to 34 are two and three times more likely than average to use advanced-and more revenue-producing-services such as news and information, email, instant messaging and text alerts. The five big carriers are looking to income from those so-called data services now that rates for talk time have leveled off due to large buckets of free minutes.

"The youth segment is no longer virgin territory," said Roger Entner, VP-wireless telecom, at researcher Ovum.

Among newcomers is Amp'd Mobile, partnering with Verizon Wireless. "This space is going to be one of the most sought-after opportunities in years," said Paul Lavoie, chairman-chief creative officer of Boost's agency Taxi. Amp'd plans to launch later this year with customizable phones and aspires to build a phone network akin to a CBS or ABC with "really cool content," he said. "It's going to be much bigger than other mobile services for youth."

ESPN Mobile is set later this year to aim its sports-rich mobile phone at the heart of its young male target with an estimated $30 million campaign via Havas' Arnold Boston.

Virgin Mobile earlier this year rebranded its service, and its pre-paid payment method, in a series of humorist takes on a faux "pay as you go" cult called "Paygoists."

"We're not worried about competition," said Mr. Handler.

The youth opportunity is giving the wireless behemoths reason to reconsider their pre-paid and post-paid service tactics. For the young consumer, pre-paid's upside is that it requires no credit checks and has no contract, while the downside is that per minute charges can be as high as 25ยข. For the carriers, the upside is the ability to gain revenue from prospective customers unable to meet credit requirements.

T-Mobile, which sells both pre- paid and post-paid contracts to its 18 million subscribers, is running a campaign from Publicis Groupe's Publicis, Seattle, titled "Posers," featuring bling-laden urban youths charged for more than minutes, a not-so-subtle attack on Boost Mobile.

T-Mobile, with about 10% of its base pre-paid, has centered its strategy on its SideKick gaming and phone device, along with CallerTunes, tones which ring back to callers. "Sidekick is an aspiration device," said Peter Dobrow, spokesman, who stressed that despite the hype over content services, "We see voice as still the killer app."

Cingular Wireless is also making a major push for its new Go prepaid service. And Verizon Wireless sent 13 Hummers with gaming stations and flat screen TVs out to make appearances at places where 15-to-24-year-olds "work and play," said Brenda Boyd Raney, a spokeswoman.

She said Verizon Wireless' prepaid subscribers are under 10% "and we're fine with that.....Our priority always was post-paid customers."

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