As Number of Wireless Subscribers Increases to 90 Million, Carriers Need to Address Churn.

Business Editors/Technology Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--April 27, 2000

Over the past 15 years, the number of U.S. wireless subscribers has grown from less than 100,000 people to more than 90 million.

Cahners In-Stat Group, a high-tech market research firm, predicts that wireless penetration will more than double over the next 5 years. However, annual wireless churn rates have increased 4% in the last year and will continue to rise if wireless providers do not focus on customer retention issues.

Ken Hyers, Industry Analyst for In-Stat's Wireless Strategies Service, states that "it is debatable whether carriers are sufficiently aware of the problem that churn presents, as it is not high on the priority list of upper level management. For most, the priority is to maintain high customer acquisition rates, often at the expense of customer retention, even when the cost to keep a current customer is a fraction of that to acquire a new one." Those who are aware of churn and are willing to combat its effects have several choices. There are a myriad of companies that offer customer retention solutions, however, carriers must ensure that they select the right solution for their specific needs. In-Stat believes that, in the future, overall ARPU (Average Revenue Per User) is going to hold steady at near current levels and that the price per minute will continue to fall. Bucket plans and additional service sales will be needed to make up the revenue disparity and retention of valuable customers, those that use more minutes and services, will be necessary.

Recent findings from a recent In-Stat report include:

-- Cellular and PCS carriers will add 20 million new subscribers

in 2000. During the same period, 31 million subscribers will

churn off of their current carrier's network. For the second

year in a row, the U.S. churn rate will exceed the new

subscriber add rate by 150%.

-- Because of high customer acquisition costs, as well as

continuing support and service costs, current average billing

rates typically do not allow carriers to make a profit from

customers during the first year.

-- Taking a proactive approach is one of the most effective ways

to combat churn. Marketing campaigns aimed at reaching

customers before they switch to another carrier can minimize

customer attrition.

The report, Stemming the Rising Tide of Wireless Churn (WP0003SP) presents forecasts for wireless subscription and churn rates over the next four years. The report analyzes the factors that contribute to churn, different methods by which carrier's can control and prevent churn and what churn management systems are available. To purchase this report or for more information, please call Matt Woods at 617/630-2139; [e-mail] or visit http://www.instat.com/catalog/cat-mc-asp.htm.

Cahners In-Stat Group (http://www.instat.com) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.