Cellular's Achilles' heel

I've been reviewing my cellular bill, and I'm not happy. Who is? After all, this is the industry that charges exorbitant peak and roaming fees. It is also responsible for spotty coverage, problematic voice quality, dropped calls, limited privacy, personal ID numbers that don't seem to protect against fraud, confusing service plans and indecipherable bills.

But what galls me most is not even listed above. Yet it is something that smart personal communication services providers could use to an extraordinary, competitive advantage, much as some have chosen not to follow their older brothers and instead eliminate monthly subscription fees.

What gets my hackles up is the industry practice of billing for busy signals-air time charges for no value delivered. Worse, for the few seconds of listening to a busy signal, I get the privilege of paying for one full minute of air time.

My sense is that cellular carriers are a bit embarrassed that they do this. For one, they don't itemize busy signals. But the easy way to see how much this is costing you is to eyeball the number of one-minute phone calls made and the frequency at which that number was dialed within a short time span. I've had months where busies accounted for more than 50% of my air time charges. At 65¢ a minute during peak hours, this busy problem can cost a small fortune.

I once gave credence to the cellular industry's claim that because I was using a scarce resource when I occupied a radio channel, I should not object to paying every time I did so. In the face of many free air time promotions I have become a disbeliever. Indeed, wireline carriers could argue that they also have a network that has scarce resources, whether they be switch ports, signaling system equipment or so on. But when their management systems show a pattern of too many blocked calls, they re-engineer the network's calling capacity. The fact is, the cellular industry charges for busies because it can get away with it.

In a fast-growing duopoly desperately in need of capital for continued expansion and strapped by high interconnection and customer acquisition costs, nobody has had a compelling incentive to charge much less than the market will bear. Better yet, demand has been so strong that users have put up with low-quality service based on the notion that inferior service is better than no service. In this growth-crazed, closed environment, maximizing the revenue contributions from subscription and per-minute air time fees has been at center stage, even if this meant throwing in the cell phone and commission dollars for new subscribers.

Save the customer money? Encourage usage with significantly lower per-minute charges rather than periodic promotion fares to readjust market shares? Heresy! As average minutes of use have dropped with more casual users signing up, the thinking seems to be that their subscription fee and a long-term contract are annuities. This is why in cellular we haven't seen basic marketing innovations such as extension phone service for little or no charge, elimination of the subscription fee or no charge for busy signals.

What customers want, first and foremost, is inexpensive, readily available, quality, real-time voice communications. What PCS providers need more than anything is customers. They understand that the big target is getting minutes of use not just from disgruntled cellular customers but by increasingly siphoning traffic intended for wired carriage. Connecting people to people and not to networks is their aim.

Nothing hones the customer focus of a company better than intense competition. In the search for service differentiation, it won't take long for PCS entrants to use elimination of the charge for busy signals as a competitive wedge.

With cellular penetration rates beginning to slow, it would not be a bad idea to eliminate these charges now to demonstrate you really do care about offering customers value, gain a quick advantage on the other cellular carrier and, most importantly, get ready for the inevitable.

Here's some advice from a harried consumer: The future is about the business of making connections, not about attempting to making money from thwarting them. Ditch these connectionless charges before your customers ditch you.

Peter Bernstein is President of infonautics Consulting Inc., Ramsey, N.J. His e-mail address is 714-9256@mcimail.com.