The Cingular Sensation

Cingular Wireless enters the wireless marketplace as the No. 2 carrier - but don't expect it to stay there for long.

Stephen Carter turns on his Macy Gray CD, settles into a chair, smiles and starts talking about the name.

"It's about simplifying the wireless industry, offering personal service and standing out among the rest of the industry," Cingular Wireless' president & CEO explained. "I absolutely love this name. I love it because it says what we need said. It speaks to the importance of the individual customer: They are Cingular. It speaks to the unity of this joint venture: We are Cingular. It speaks to our commitment to personal service: Each customer is singularly important. It claims our position in the market precisely, perfectly."

If there are great expectations for Cingular, it's because the carrier is the potential-laden prodigy child born of the joint merger between two powerful, if regional, wireless parents: BellSouth Wireless and Southwestern Bell Wireless.

Last April, the two carriers announced plans to merge their domestic wireless operations to create the nation's second-largest wireless company, a powerful single entity jointly controlled by both companies. (Ownership in the new company is 60% SBC and 40% BellSouth, based on the value of the assets both contributed to the venture.) Cingular shot out of the gate with $12 billion in annual revenue, more than 19 million customers (including 500,000 wireless-data subscribers) in 38 states, the District of Columbia and two U.S. territories, and coverage in 42 of the nation's top-50 markets. As a result of the merger, 11 different brands offered by BellSouth and SBC all became Cingular Wireless on Jan. 1, 2001.

"If I were sitting in Verizon's offices, or AT&T's, or Sprint's, I'd be looking at Cingular and thinking, `They've been really good individually as regional players; now as a national player, we're going to have to take them seriously,'" Carter said.

How serious is Cingular? In only four months, it has announced a new name and logo, carved out a vision and business strategy, and picked up strategic spectrum in New York.

Now, after merging the philosophies, cultures, technologies and products of two strong companies, Cingular is embracing the opportunity, and the challenge, to become the No. 1 U.S. wireless carrier.

Singling Out a Name It all began with more than 6,000 potential names. They were pared down to 200. After five waves of research, including global trademarks and URL searches, about 85% of those were eliminated. Then, finally, after meeting with 18 focus groups, the name and brand Cingular Wireless was born.

According to Virginia Vann, senior vice president of marketing, Cingular is a name that evokes the importance of the individual customer, as well as the unity of the joint venture.

"We had 11 names, every one performed really well, and they have a lot of heritage in terms of reliability and trust," she said. "But we needed one name. You can't market this under 11 (names). The closer you get to the purchase, the more important that parent's name will be to you. We'll work carefully to juxtapose those names until people get real comfortable with Cingular."

Vann and her marketing team considered how competitors positioned themselves by talking about technology, access and freedom, and decided that Cingular should make the wireless experience less technical and more emotional for consumers. That's not easily accomplished by extolling next-generation networks.

"It carves out a slightly different niche from companies that have gone down the `clear technology' route, the `fast service' route or the `we cover everywhere' route because if you have a few billion dollars, you can cover anywhere, you can do things faster and you can do them clear," he said. "What will differentiate you is how well you present your ideas to the public and how useful they are to lifestyles of the public."

To consolidate the products and plans of two companies, and ensure that they are valuable to Cingular's customers, teams spent months re-evaluating, revamping and reinventing everything wireless.

"On Jan. 1, it won't be totally different; we've got some work to do," Vann said. "But you will start to see it. You'll see it with our rate-plan structure, in our portfolio of plans, in how we treat our existing customers. One thing the wireless industry has been terrible at is taking care of the customers they have. Most of the growth has come from people switching. You'll see us putting some efforts toward our existing customers."

Bob Shaner, president of wireless operations, will lead the efforts to provide customers with a new, better wireless experience.

"We're going to be passionate about the customer experience," Shaner said. Industrywide, "the customer-facing experience, whether it's through the stores, service representatives online or direct salespeople - it's just got to improve."

A Cingular team is studying different strategies to improve and simplify things for consumers.

"We'll be testing concepts in stores to see what consumers like," Shaner said. "We're taking a much more targeted database approach instead of using some of the intuition that some of us who've been in this business have built up."

Cingular's plans call for simplifying one of the most confusing areas of wireless: contracts. The carrier will move away from multipage, paper contracts and toward a streamlined, 1-page electronic document that looks the same in every city.

Cingular's national rate plan is another example. Vann said SBC Wireless had just launched its "Digital Edge USA" national rate plan and BellSouth was ready to introduce a similar plan when the merger took place. So the new company will launch the plan under one name with one rate for anywhere, anytime minutes starting at $25.

"We believe that the idea of not having to worry about whether you're roaming or if it's long distance was something that people in all kinds of price brackets care about," she said. "We have the lowest price point for these kinds of national plans because we think it's not about a national plan, it's about no roaming and no long distance."

It's also about distribution points, and Cingular has 15,000, including retail stores and agents, with plans to expand.

"BellSouth and SBC had a little different philosophy on owning vs. not owning our own stores," Vann said. "It's important to have our own stores, but at the same time, it's important for the customer to have many, many points of contact."

Cingular also is emphasizing more ways for customers to contact its sales and service channels.

"We have a real push to meet our customers when and where they want to," said Mark Feidler, COO. "Increasingly, we want to tailor our customer-service experience with people who want to meet us over the Internet. The real focus of the company will be continuing to evolve and grow that e-commerce experience with our customer. The purchase is just one phase of that process. We want you to be able to initiate service with us, maintain your service with us and, obviously, electronic bill presentment and payment is important."

Also important are certain consumer segments of Cingular's coverage area, including youth and the Hispanic market. Cingular recently enlisted a Hispanic advertising agency to help it meet the needs of this particular segment. A full 76% of the Hispanic population in the United States lives in the carrier's territory.

The Technology Path Although it's placing a lot of emphasis on customers, Cingular is certainly not relegating technology to ugly-stepsister status.

"It makes our jobs more challenging: to provide the technology so it is seamless to the customer so they are thinking about the applications of use rather than the technology," said Kris Rinne, vice president of technology and product realization. "It raises the bar for us in terms of being able to provide transparency, ease of use and tailoring it to the individual customer needs. Even though you're trying to downplay the technology piece, it's all we have to sell."

Cingular has plotted a technology path based on GSM, TDMA/EDGE and GPRS.

"The world's standard is GSM, and we've chosen the technology that I think has the backing of all the major players in the world. GPRS is certainly the first packet-based network deployed by wireless phone companies throughout Europe," Carter said. "GPRS then turns into EDGE, which is even faster, and then to WCDMA. That's not to say that CDMA is a terrible thing; it obviously works. But it's got much more minor support around the world, and there's really no clear route to where it goes after the 1XRTT.

That path hasn't been a difficult one so far because BellSouth and SBC Wireless used TDMA and GSM, as well as common vendors (Ericsson, Lucent and Nortel).

According to Rinne, the major tasks still under way include integrating backbone networks in terms of SS7 connectivity and point-to-point connections, and feature-transparency, making sure features work the same way in Chicago as they do in Atlanta.

Also under way is a lab environment for TDMA/EDGE in 2Q01, with the first office applications due in fourth quarter and deployment throughout 2002.

"We would also deploy EDGE in our GSM environments so we have that total interoperability," she said. "The additional benefits of EDGE is it has peak speeds all the way up to 384kb/s. Further, it brings together our two technologies in a packet-data environment."

The world caught a glimpse of Cingular's data future at Comdex 2000 in Las Vegas, where the carrier demonstrated next-generation wireless services over a live GPRS network on Ericsson R520 GPRS terminals.

"The initial introductions will be 9.6kb/s from the customer to the network and 56 from the network back to the customer," Rinne said.

Cingular is deploying circuit-switched data in its TDMA markets and will launch WAP over circuit-switched data in many of its major metropolitan areas before the end of the year and continue to roll out through 1Q01.

Its GPRS-enabled service will be available in California throughout the Pacific Bell Wireless network in 1Q01, followed by roll out in all of the carrier's GSM markets unless handset-restricted.

Cingular and VoiceStream recently swapped spectrum that allowed Cingular to operate, for the first time, in New York City. Cingular also gained 10MHz of spectrum in the St. Louis and Detroit BTAs.

Carter called the additional spectrum a "key objective of Cingular's strategy." The acquisition put Cingular in 43 of the top-50 metro areas, and in all top-10 markets.

Spectrum is especially important to Cingular because it plans to lead the industry in wireless-data services, and trying to become a data leader without good data coverage is like trying to win the U.S. presidency without the electoral vote.

But thanks to BellSouth Wireless Data superscript 1, Cingular has a great head start in the data arena. BellSouth Wireless Data, which is now a part of Cingular Wireless but still based in Woodbridge, NJ, currently is the only U.S. company with a nationwide packet-data network. Its wireless-data service has more than 500,000 customers and covers more than 93% of the urban business population located in 492 MSAs and non-MSAs.

The carrier's MyBiz Interactive services include Interactive Messaging PLUS, news and lifestyle content, business applications and Corporate E-mail PLUS, which is a combination of Interactive Messaging PLUS and corporate e-mail based on the BlackBerry wireless e-mail solution for Microsoft Exchange environments.

The data group's distribution partnerships (it's the network behind the Palm VII and RIM's BlackBerry solution) will be key as Cingular positions itself as a top-tier wireless data provider for mass-market consumers.

"BellSouth Wireless Data brings almost half a million business customers," said Steve Krom, vice president of data and Internet services. "We'll use that as a starting point to create synergy, jumpstart what's going on in the business side and utilize what they've learned to help penetrate the consumer side."

But Cingular won't disappoint business customers, either.

"For a long time to come, this is a huge voice and consumer market, but as data comes to the forefront in the next year or two, and you get faster, more ubiquitous packet data, you'll see the business side of things growing tremendously because we'll begin to offer services to businesses that have eluded them until now," Carter said.

Cingular Success Cingular Wireless' new Atlanta headquarters is, as Carter described it, "a funky building with interesting color schemes with an openness about it that's conducive to the atmosphere we're trying to create. We don't want to walk away from our heritage because people trust the parent companies, but we do want to inject a little bit of newness into the way we project to our customers."

Projecting itself as the nation's No. 2 wireless carrier will go a long way, but not as far as would the title of No.1. For Carter, determining who wears the "No. 1 wireless carrier" crown depends upon which metrics are used to determine the winner.

"If you judge on a pure subscriber basis, to be No. 1, we obviously have to get a lot bigger quickly because Verizon covers everywhere," he said. "Our measurements will be, `How am I doing in Dallas vis-a-vis four or five other guys? How does the public view us? How does our service compare? How's the reliability of our network?' If you ask someone in Dallas to name a national wireless player, I'd want them to say Cingular."

According to Feidler, sales results reflect how subscribers feel about your service.

"Sales are a direct result of how well you've done in executing for existing customers," he said. "Marketing and promotion are important, but growth is dependent on having a large installed base of customers who talk about their good experience with Cingular. All the little things add up to create 20 million uncommissioned sellers of your product."

Carter said Cingular's success will depend on how it treats customers. That's no big revelation, but Cingular has infused that idea in its marketing, vision, customer service, rate plans, technology vision and even its very name.

"You can buy technology; in the end what we bring has to be how we treat people. Every company subscribes to that and aspires to that and the ones that execute the best are going to be winners," he said. "We're really not trying to change the industry, we're just trying to create something that people like."

superscript 1 At publication deadline, the new name for this group still was undetermined.

Steve Krom said data services should follow voice mail's lead.

"Voice mail changed the way people use wireless; now it's embedded everywhere and we can't imagine not having voice mail on wireless phones," Cingular Wireless vice president of data and Internet services said. "It will be the same with data over the next few years."

And, as Cingular completes nationwide wireless Internet build-out in the first quarter of this year, Krom said data services should be embedded in every one of the carrier's offerings. Perhaps he can begin by embedding Cingular's wireless Internet service, My Wireless Window, in every sub-scriber's handset.

Cingular is positioning its wireless Internet service as an extension of the fixed Internet, a consumer's highly personalized "wireless window to their world." It includes services such as real-time directions, shopping information, entertainment and SMS messaging.

"It's not about WAP or technology, but about applications and services customers care about," Krom said. The goal is to "create value in spaces like entertainment and shopping and give customers what they want."

And Krom said those two applications in particular are not only key to Cingular's future, but also will spur data growth for all U.S. wireless carriers.

Cingular recently launched m-commerce services, powered by InfoSpace, that will allow seamless, secure, integrated wireless shopping, rewards and transaction services for consumers. The services will be available in all markets soon.

Cingular customers can access the new m-commerce services, Secure Wireless Wallet, Rewards and Shopping, through the My Wireless Window service, which costs around $7 a month.

Subscribers can register for a secure Wireless Wallet online at the My Wireless Window Web page to store shipping and purchasing information and take advantage of the shopping and rewards services. After the shopper selects items to purchase through the shopping engine, the Wireless Wallet delivers his shipping and purchasing information to the retailer's Web site via a secure online process.

My Wireless Window Shopping allows consumers to search for a product by UPC code, name, manufacturer, category or keyword and quickly receive information such as product descriptions and online pricing from a database containing millions of products including books, music, toys and office supplies.

My Wireless Window Rewards, an electronic, paperless-promotions program, allows consumers to search for deals and receive customized alerts from retailers via their handsets. After they opt-in to receive notifications about specific products, the service alerts consumers about sales or promotions. Consumers then can make purchases with their handsets, online or at a nearby brick-and-mortar store using a payment method registered in their Wireless Wallets. The rewards are matched and automatically credited to the consumer's credit-card statement or another designated account.

"It's not just about being able to purchase something with a wireless handset, it's really about creating a way to enhance the shopper's experience," Krom said. "We're not trying to change how people shop. We're just giving wireless extensions."

Cingular will continue SBC Wireless' national promotional partnership with ESPN that includes the 3Play and Fantasy Football games. The 3Play interactive game, which has 350,000 wireless players a day, is packaged with e-mail, text messaging and information services. It offers daily cash prizes based on the performance of three randomly selected athletes. Users are automatically entered each day and receive a message on their wireless phones with the names of three players. In the evening, they receive another message with their results.

But the ease of accessing information that's valuable to them will attract consumers to such services more than prizes will, Krom said.

"DoCoMo is about user experience and how easy it is to access information," he said. "The challenge is creating a business model that will enable the U.S. industry to grow similar to DoCoMo. The biggest problem is how to make it work when everything has been focused on voice networks. How do you change the mindset that we've had for so long?"

At first glance, "Jack" resembles a big orange child's jack and ball. Then, when you look closer, he looks like a person in a jumping-jack pose. Cingular's logo is unlike any other in the wireless industry - it's a part of the team.

"It looks like a little person who's exuberant," said Virginia Vann, Cingular senior vice president of marketing. "He just brings this whole idea of human expression and the individual to life."

And individuality is the whole idea.

"When (wireless) becomes more of a commodity, it becomes more rational, and that's why you're seeing a lot of churn now," Vann said. "If it's all about you, then it shouldn't be that we just have big promotions, we should make sure that we have a product that meets your needs."

Jack will soon appear in Cingular promotions everywhere.