AT&T Wireless, Sprint PCS and T-Mobile Could Lose Business Market Share to LNP Reports In-Stat/MDR.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Sept. 17, 2003

Still chasing sustainable profitability, wireless carriers have one more thing to worry about: losing market share in key growth segments. According to recent research from In-Stat/MDR (http://www.instat.com), provider rankings in various market segments may shift after the introduction of Local Number Portability (LNP) in November, particularly in the enterprise (firms with 1,000+ employees) and small business (firms with 5 to 99 employees) markets, where LNP may have the most impact on churn. The high-tech market research firm finds that LNP could cause some providers' churn rates to skyrocket in these segments over the next 12 months if they fail to improve retention programs. The providers with most to lose are those with the greatest share: AT&T Wireless -- ranked No. 1 in the enterprise and No. 2 in small business and Verizon Wireless -- ranked No. 2 in the enterprise and No. 1 in small business in terms of subscribers, respectively.

"In-Stat/MDR research suggests that the impact of LNP on small and enterprise business customers' extreme likelihood to switch in the next 12 months will be relatively low for Verizon Wireless, possibly less than 5 percentage points in either segment. However, the picture isn't so rosy for other carriers. For AT&T Wireless, the extreme likelihood to switch may increase by 11 and 15 percentage points among enterprise and small business customers, respectively. For Sprint PCS, the increase may be 10 and 13 points, respectively, and for T-Mobile, 8 and 15 points, respectively," said Kneko Burney, chief market strategist for In-Stat/MDR. "However, the future isn't written in stone. These data give providers a worst-case scenario and they should consider it a call to action to improve loyalty programs for both individual and corporate decision-makers."

In-Stat/MDR believes that the viability of wireless providers will lie in their ability to address the needs of both the individual (consumers and employees) and corporate (group) buyer, and recommends providers segment the market more granularly to offer unique programs to each kind of customer: consumers, individual business users in SOHO, small, mid-sized, enterprise businesses, and corporate contract holders.

In-Stat/MDR conducted interviews with consumer (1003) and business (1490) users of wireless services and combined it with vendor-side research to paint a picture of the wireless market by segment: consumer, SOHO, small, mid-sized and enterprise business. Other findings included:

-- Business users account for about 40 percent of wireless

subscribers in the United States today.

-- Cingular and Nextel also appear to have some risk in the small

business market, with the percentage point increase in

"extremely likely to switch" responses being 15 and 12,

respectively.

-- Wireless services are a growing part of U.S. firms' telecom

budgets. Currently, wireless voice services account for

roughly 22 percent of all telecom spending, with U.S.

businesses expected to spend more than $36.3 billion on

wireless voice this year.

-- Government organizations spend a disproportionately high

amount on both wireless voice and wireless data, accounting

for 9 percent and 18 percent, respectively, while only

accounting for less than 1 percent of firms in 2003.

The In-Stat/MDR dynamic data file, "Segment Churn: Impact of Local Number Portability on Churn for Wireless Voice Services by Provider and Market Segment" (#IN0301259BW), provides detailed end-user data on the impact of Local Number Portability on the propensity to switch carriers, along with other features which might cause users to switch. Data is provided by size of business and by each of the major wireless providers. This press release also references data from In-Stat/MDR's "Evolving US Wireless Market" series and Business Wireless Vertical Market View. To purchase these reports or for more information, please visit: http://www.instat.com/abstracts/IN0301259BW.asp or contact Erin McKeighan at [e-mail] or 480-609-4551. The report is priced at $1,995.

About In-Stat/MDR

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals, and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.