No one expected the merger of two of the largest wireless service providers—creating the largest single provider—to go smoothly. But tell that to some AT&T Wireless customers just weeks after the companys merger with Cingular Wireless LLC.
"Can anyone tell me what the merger really means for AT&T customers?" wrote one user at AT&T Wireless user forums. "Ive asked several employees at several stores whether I have to change my plan ... in order to take advantage of the mobile-to-mobile promotion theyve got going and gotten various answers."
Despite this and other similar comments, officials from both companies said things are on track. Analysts, while acknowledging some slowness out of the gate, said the merger is where it should be.
"There have been no big hiccups so far, aside from some complaints on the customer service side—but nothing huge or dramatic," said Phillip Redman, an analyst for Gartner Inc., in Stamford, Conn. "On the public side, theyre changing over the stores, and theyve also made some internal changes. You know they just announced layoffs, but its really still too early to tell how successful it will be. The first six months will be slow, but as they start integrating billing, customer service, sales and retail, they will get a bigger challenge."
Earlier this month, Cingular announced it will cut approximately 7,000 jobs, or about 10 percent of its work force, in the next year and a half. These cuts will come mainly from the administrative level, not from the customer service ranks, said officials.
In the past year, Cingular and AT&T Wireless have lost more customers than Verizon Wireless Inc., their closest competitor. With Cingulars $41 billion acquisition of AT&T Wireless, the combined company now has about 47 million subscribers, topping Verizon, with a little more than 42 million.
However, to preserve its subscriber base, Atlanta-based Cingular will have to correct some customer perceptions, critics said. "Now they have the additional challenge of identifying new customer service problems versus continued problems that occurred before the time of the acquisition," said Redman.
When the merger closed, Cingular CEO Stan Sigman said the new company would provide a "unified customer experience" within 45 days. According to Cingular officials, the company accomplished that ahead of schedule Nov. 14.
However, customer feedback in the companys online forums reveals that at least some people are still confused about their migration options and are hearing conflicting statements from customer representatives.
Cingular said it will integrate the two companies systems and networks within 18 months to two years, but analysts said that goal seems lofty. "I didnt really think that was realistic; its a big challenge, with the number of billing systems, platforms and especially with the launch of any new technologies, like wideband CDMA [Code Division Multiple Access]," said Redman. "Verizon, when it became one company, was only at 90 percent after four years, and Cingular is the largest network integration to date. Can it be done? Certainly it can be done, but Id say at least two to four years—if ever."
As for enterprise customers, some said that the combined company has the potential to offer better services. "I have seen Cingular become more aggressive with the enterprise, and they gained better capabilities with AT&T. If they do the right things, they can increase market share there," said Redman.
Cingular, a joint venture of SBC Communications Inc. and BellSouth Corp., has begun to fulfill the divestiture obligations required by federal lawmakers as part of the companies merger. Cingular announced late last month that MetroPCS Communications Inc. will pay $230 million for wireless spectrum in Dallas and Detroit, while Alltel Corp. will pay $170 million for spectrum and other assets in more than a half-dozen U.S. cities. This will allow Cingular to meet a "substantial portion" of the federal requirements, said officials.
Both deals are expected to close in the first quarter of next year, pending regulatory approval.