NETWORK TEST:FAST FORWARD WITH RUSS BYRD

Given the hyper competitiveness of the wireless sector, which has sliced carrier margins razor thin, and the advent of number portability, one would think carriers would be doing everything possible to cut costs. Though replacement phones represent a huge cash drain for carriers, according to Russ Byrd, Vice President of North American Operations for WillTek, carriers pay relatively little attention to testing them to make sure they are working properly before they hand over a replacement. One of the biggest challenges—and opportunities — in front of test vendors in the wireless sector is educating carriers that spending a little more money on the front end will pay big dividends on the back end. Telephony talked to Byrd about the challenge and how WillTek is approaching the opportunity.

On why carriers aren't more interested in testing handsets: A problem the wireless industry has created for itself is that there is no value in a phone. They give them away for free, so no one wants to pay to fix them. But when a customer's phone isn't working, you have to give him another one for free, and that gets expensive. That's where the value of test and measurement is. If we can show them how to keep a phone in the store, at a minimum, and preferably in the customers' hands, then that saves them a lot of money, because of the inventory deployed. The amount of phones that are in the repair process at any given time can be $5 million for any given carrier. That is an investment that's not making them any money.

On how the process currently works: The phone gets shipped to a triage facility that determines whether it's good or bad. The good ones get shipped to a repair facility, then on to a refurbishment facility, and ultimately back to the storefront to be used as customer replacement stock. But sometimes they won't have a customer's phone in the replacement stock. However, the customer often wants the same phone because he doesn't want to have to learn about a different model, so they'll grab a brand new phone and give it to him. That's another expense on top of all those phones that are in the repair process.

On the cost of handset replacement for carriers: One of the Big Six carriers recently shifted the repair and refurbishment function from its own triage center to an outsourced contractor to cut overhead. The two managers responsible for the decision ended up admitting they had lost the company $17 million, but the lead accountant said it was closer to $70 million when all of the costs were factored in. They hadn't considered the cost of all those new phones they were handing out when replacements weren't available.

On what carriers should be doing differently: They have to find the least expensive test equipment they possibly can at the storefront to determine whether the phone is truly good or bad from the start. That's the most important thing they can do initially. Then the challenge becomes educating the customer that the phone actually works and then finding out why the customer thinks it's bad. That's difficult to do. Sales is never concerned about what happens to a bad phone. They'll use that as an opportunity to talk a customer up to a new phone. If they can get him to extend for another two years, then they're taken care of the problem, right? But really they haven't.

On WillTek's approach: We've created a point-of-sale test platform that can be operated by anyone. We took the problem of finding and hiring good technical people away from the carrier's storefront. Head count is always an issue, and now you can have a sales person also doing testing. They don't have to train and pay for a technician. The biggest problem with wireless still is the fact that it's a radio. What the customer puts in his hand is one of the weakest links. I don't want to offend the phone manufacturers, but it is a statement of reality.