Page Two

By Mark Hachman  |  Posted 2003-11-26 Print this article Print

Analyst Clint Wheelock said customers will have the upper hand in the short term. Wheelock is director of wireless research for analyst firm In-Stat/MDR, in Scottsdale, Ariz., which in a recent study of wireless churn found that small businesses are the most likely to shift carriers, followed by midrange and large enterprise businesses. "I think it gives companies more bargaining power," Wheelock said. "Overall, this is a real win for business customers, and carriers are going to have a lot of difficulty with it."
By being able to shift from carrier to carrier, companies may have some short-term freedom to sign favorable contracts. To date, carrier-to-business contracts have been predicated on simple volume discounts. AT&T Wireless currently controls the market for wireless services sold to business, Wheelock said, followed by Verizon Wireless, Sprint and Nextel. Businesses will likely use the portability rules to consolidate the number of wireless carriers they do business with, placing additional strain on carriers to deliver.
Carriers will more frequently offer a "pool" of minutes that employees can tap into, rather than force employees to sign individual contracts, Wheelock predicted. The pool will help businesses negotiate volume discounts, while at the same time allow carriers to "lock down" hundreds or thousands of employees at once, Mobile Ecosystems Lowenstein said. At some point, most businesses and consumers will likely take the plunge and transfer their service to another carrier, Wheelock said. By that time, both groups will have been able to assess how carriers have handled the portability process, as well as the various wireless packages offered. "I think the impact on portability in business markets will arrive in the Q1 timeframe as companies make their telecom budget decisions and begin renewing their contracts," Wheelock said. At that point, Wheelock said, corporations will likely take the first steps toward integrating cellular phones and services into an infrastructure that can be deployed and managed from a central location. Today, U.S. Steel allows its regional centers to purchase their own cell contracts with local suppliers, Trudell said. However, the $2.4 billion steel producer has also begun developing an internal organization that is being asked to explore all the opportunities for centralized purchasing. "Were going to be there in the future, I can guarantee you that," Trudell said. The impact of centralized billing has also begun to be felt at companies like The San Francisco Chronicle, owned by media giant Hearst Communications Inc., based in New York. Hearst runs The Chronicle as a separate company, although Hearst also negotiates contracts for the paper with the companys two wireless vendors, AT&T Wireless and Nextel Communications. Overall, the newspapers employees use a total of about 500 cell phones, said Henry Sandigo, the telecommunications network manager for the paper. The papers employees can purchase blocks of minutes for their own personal use, as well as make business-related calls, Sandigo said. Employee minutes are monitored with an application called TraqWireless, which also ensures that employees are on the right cellular plan. In the future, carriers will attempt to "lock in" customers through additional services, like Nextels push-to-talk feature and high-data-rate services, analysts said. More value will also be placed in the handsets, as they become centralized repositories for personal and corporate information. "Once youve got contacts, corporate applications, even the VPN stored on your phone, the more you have configured beyond just the voice calls the more painful it is to leave," Lowenstein said.


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