Pipeline Publishing, Volume 2, Issue 8

	This Month's Issue:
	UN-WIRED

Why I Hate My Cell Phone 2006

By Tom Wiencko

"One informed consumer examines the wireless industry"

In July of 2004, Tom Wiencko gave readers a glimpse of just why he hated his cell phone. Many months and many mobile rollouts later, we invited Tom back to see if he and his phone have made amends, or if there is still trouble in paradise.

Well, it has been 18 months, and it is time for an update on the state of network quality in the wireless business. In the past 18 months the carriers in North America have spent well over 10 billion dollars to upgrade their network in a host of ways: new cell sites, capacity expansions of network elements, next generation technology to enable a host of new high bandwidth services. Let’s see if we got a better sounding network for all that money.

We have also seen a new generation of handsets and other mobile terminal devices. They offer a dizzying array of new features, from basic data services such as email, to sophisticated video and location-based applications. The Blackberry and its cousins are ubiquitous within the business community. If you “talk” via email or SMS, you had a good 18 months. If you subscribe to the “picture is worth 1000 words” philosophy and send photos, your life is good.

There are even a few new players that disrupt our disruptive wireless technologies. WiFi and its follow-on technologies threaten to redefine what wireless broadband means. VoIP for direct use by consumers is here to stay, and will soon begin to encroach on traditional wireless services as a pure play as well as with hybrid technologies such as UMA.

From the technology side of things, the future looks bright. If you are in the business of wireless at any level – carrier, equipment provider, VAR, OSS provider, consultant/contracting service – you are very busy and probably very profitable. Carriers are posting record subscriber gains and record revenues. Equipment providers who looked to be at death’s door a few years ago are again flush with money and business. In many ways these are the salad days for the wireless industry.

Let’s come down from the heady financial results and come back to a more mundane metric of success – are our subscribers happy? In the end, although the dynamics of the industry and of 21st century life are driving users to our doorsteps in droves, it will be pretty useful at some point to see if we are making them happy with the products and services they provide.

As before, let’s look at those two providers of the gold-standard of consumer opinion; J.D. Power and Associates, and Consumers Union, publisher of Consumer Reports. J.D. Power last published wireless call quality results in August 2005, and overall customer satisfaction in September 2005. Consumers Reports published results just recently in January 2006.

"WiFi and its follow-on technologies threaten to redefine what wireless broadband means."

All of these reports tell a dismal tale: subscribers are not happy, and the trend is bad. J.D. Power reports that overall customer satisfaction has dropped 10 points in the last year, the largest decline in satisfaction since they began the study. This is in spite of the fact that call setup and dropped call problems decreased markedly during the same time. Consumers Reports tells us that satisfaction with wireless services is lower than digital cable and HMOs, and that less than half of the subscribers are happy with their service. Of those who are unhappy enough to want to change carriers, over half cite “poor phone service” (to us, network and/or handset problems) as the reason. Not good news. Let’s look at some industry trends to see if we can figure out what is going on here.

Trend #1: 3G network build-out. Carriers are making multibillion dollar bets that subscribers want lots of high speed data services. They are deploying EDGE, EvDO, MMS, video on demand, and a host of other acronym laden technologies under the assumption that new growth in the industry will come from data intensive, not voice-based services. Many of these new technologies allow or require packet-based transport mechanisms such as VoIP. With these wholesale network overhauls and transport reengineering they are having the sorts of problems you would expect when deploying new technologies – service disruptions, call quality problems, QOS and service level problems, and capacity challenges. The big loser in most of these areas: the lowly voice only user, who sees little or no benefit from the network enhancements, but has to live through the disruptions.

Trend #2: Merger mania. The industry has been through a number of painful merger/acquisition stages, and is now undertaking one of the most difficult. Four of the major players in the wireless space are now two. The subscribers of all four of these carriers routinely report all sorts of problems; some network related, others not.

The AT&T/Cingular merger has been reported to be a particular disaster for former AT&T subscribers, and this was a merger between companies with similar network technologies. Sprint/Nextel will be interesting to watch if only because the two networks are completely incompatible. So far one thing seems to be clear concerning mergers – they are a disaster for your customer satisfaction results.

Trend #3: New feature rollouts. Equipment vendors continue to develop and deploy new ways to add functionality and capacity to the network and tune existing services. A number of these features are working well. In the GSM world, AMR has been nothing short of miraculous in solving a number of

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