The gift of wireless

Winning customers this holiday season means knowing who you're dealing with

In the December issue of Seventeen magazine, wireless phones made the top ten list of gifts teens are most likely to request this holiday season. For carriers that have stepped up their focus on the teen scene, this endorsement could mean additional revenue. The challenge is to convince teens - and the parents who most likely will foot the bill - that going wireless makes sense.

Rising competition demands that carriers zero in on the services different consumer groups desire - whether they're teenagers or adults - and the distribution channels that best suit them. Carriers are stepping up to the task.

Sprint PCS' holiday catalog includes everything from service credits and seasonal rebates to a breakdown of different plans for various types of users. AT&T Wireless' holiday promotion, entitled "Your Wireless Wishlist," also includes rebates, monthly service packages and a myriad of service offerings.

Although both carriers already market to teens, AT&T Wireless hopes to attract more young adults with its tailored seasonal services. The carrier's holiday text messaging offer will give potential teenage customers the choice of receiving a rebate or an MTV/Total Request Live CD and messenger bag when they buy a Motorola phone and calling plan.

"Young adults are expected to be eager for short message service this holiday season," said an AT&T Wireless spokeswoman.

Prepaid phones also are expected to gain ground with young adults because they are available at places teens might frequent such as convenience stores.

"It used to be that there was one promo for everyone. Now customers want different things," the spokeswoman said.

To hook teens, carriers seem to be spicing up their offerings this year.

"The biggest marketing hurdle for carriers is how to tap into the youth market because there never has been much of a push here," said Elliott Hamilton, an analyst for The Strategis Group. "Offering family plans are the best way to go about it."

AT&T Wireless and Sprint PCS have made teens a higher priority during the last couple of months, with an eye on how carriers overseas have tapped into the market.

"Carriers have been looking at companies in other countries and realized they have mined the business market," said Andrew Cole, head of the global wireless practice at Adventis. "There now is a sense of urgency to target other groups such as the youth market."

In October, Sprint PCS announced a package of wireless services with teens in mind, which included a suite of interactive wireless Web services such as two-way instant messaging services and games. But reaching teens involves getting through to parents, too. Therefore, the carrier began offering a wireless allowance plan, which lets parents exercise spending control. "We are not really targeting a specific segment,... but we think there will be a real spurt in the youth market," said Chip Novick, vice president of consumer marketing for Sprint PCS. "There already has been a lot of early response across all age groups."

The story this year is giving the gift of wireless, whether it is purchased via traditional methods or online. To give consumers an alternative way to shop and to establish another distribution method for themselves, Sprint PCS, AT&T Wireless and VoiceStream Wireless recently teamed with Amazon.com to form the online Wireless Phones store.

"There was a push for offering wireless service online because it is convenient and it makes sense financially to shop online and it is another revenue source for us," the AT&T Wireless spokeswoman said. "We already are seeing more activity from the early adopters who are trying it out because it is easy."

An online store could help Sprint PCS gain additional customers, Novick said. "Amazon.com was a good opportunity because we are using the `gift quick process' so customers can buy and send gifts simply."

By enhancing their presence in the online world, carriers could increase their bottom line this holiday season. "All carriers are faced with the need to expand their distribution channels. Carriers are under pressure to keep subscriber numbers at the same pace as they did in the past because they cannot afford to get too far behind one another," Hamilton said.

Internet sales might increase, but carriers and analysts do not expect wireless Internet shopping to be a substantial revenue generator this year.

"We are bullish about the ultimate potential of m-commerce in the next five to 10 years, but a lot needs to happen in m-commerce first. It will be small this Christmas," Cole said.

AT&T Wireless is holding out for future users, however.

"There is not a huge contingent, but it is a growing trend," the AT&T Wireless spokeswoman said. "People [will continue] using wireless shopping mostly to buy hard goods and to comparison shop until graphics and streaming video are available."

But wireless operators are being cautious not to push m-commerce too soon like they did with the wireless Internet, Cole said.

Sprint PCS has seen steady growth in page views and transactions via the wireless Web, and the carrier will remain at the forefront of whatever might transpire over the next few years, Novick said. "We are trying to catch the early wave, and as it becomes a core offering, we can remain a leader," he said. "As people understand how to use the wireless Web, they will use it more." Sprint PCS began dabbling in wireless commerce in December 1999 and has since added about 95 sites to its offering.

"I am excited about how many Web companies are getting wireless," the AT&T Wireless spokeswoman said. "We are at the beginning of the growth curve and are excited about i-mode and what a wireless Internet site will look like in a year."