mLife or Death

For every wireless company large or small, there comes a defining moment — a crucible in which businesses are made, remade or destroyed. Dictated by executive politics, economic demands and survival instincts, these defining moments are the product of design, luck or, most often, a combination of both. For some companies, the turning point is the acquisition of a smaller rival. For others, it's freedom won from a large parent corporation. The critical moment for some organizations is far in the past. For others it's right around the next corner.

Despite their differences, the six wireless companies featured here share the same spirit of risk and reinvention. There are no guarantees, no instant results: Only in hindsight does Alltel's decision to meld its wireline and wireless units emerge as the pivotal moment in the carrier's transformation from regional player to national force. Flarion has only thrived since being spun from Lucent. And the success or failure of the new mLife marketing campaign from AT&T Wireless will be determined only in the months — even years — ahead. But there are lessons to be learned from the common ingenuity and daring. Pay attention: Sooner or later, every company must face its own moment of truth. Including yours.

THE FACELIFT
Neve Savage, AT&T Wireless

 

For a veteran of the ad game, Neve Savage is an anomaly. The understated, serious nature of the vice president of marketing and advertising for AT&T Wireless Services belies the edginess of his field. When asked what they think of him, colleagues and acquaintances typically talk about how skilled he is at his trade. (He's a “true craftsman,” a “great partner,” said one.) They don't spout advertising-appropriate adjectives (daring, controversial, quirky, colorful, etc.) to describe Neve Savage the man. Neve Savage is all about the job. Maybe that's why AT&T Wireless made Savage the point man for its bold and obscure mLife ad campaign. Consider people's reaction to the ads: Nonsensical. Bizarre. Stupid. The mLife campaign seems as out of place in the wireless world as Savage seems in the advertising world.

The mLife campaign not only represents a complete cosmetic makeover for AT&T Wireless, but also a radical shift in the way mobile services are marketed and promoted.

The carrier launched the campaign in mid-January with an enigmatic teaser crusade that included TV, print and outdoor ads posing pointedly baffling questions (“Is mLife fattening?”) and made no mention of the AT&T Wireless brand. The teaser spots culminated on Super Bowl Sunday with a commercial comparing the cutting of the umbilical cord to leading “a wireless life” (which edged out Pepsi's midriff-baring Britney Spears commercial to claim the game's most-talked-about-bellybutton status).

The ad finally connected the campaign back to the AT&T Wireless brand, but for many consumers it still didn't answer a critical question: What the hell does mLife really mean?

“The critic who doesn't understand the ads has been effectively seduced by us.” Neve Savage, AT&T Wireless

“This is more than a slogan,” Savage said. “It's a broad platform that redefines the customer experience.” The purpose is to distance AT&T Wireless from the pricing and “deal-of-the-day” promotions so popular among competitors and instead champion the freedom and flexibility wireless services can add to users' lives. “The ‘m’ stands for mobile, of course, but also modern, multifaceted and managed — all of those ‘m’ words, and the totality that implies,” Savage said.

AT&T Wireless hatched mLife last summer, when the carrier decided to put out to pasture its current advertising campaign — television spots that featured sheep touting the wireless Web. Ditching incumbent agency Foote Cone Belding, AT&T Wireless tapped New York City-based Ogilvy & Mather. Savage and other AT&T Wireless brass (most important, Chairman and Chief Operating Officer John Zeglis) gave O&M a mandate to create something new, dramatic and entirely different.

“It was very clear from Zeglis on down that they wanted to make a bold and dramatic statement,” said Peter Intermaggio, senior partner at O&M. “They continually challenged us to make it bigger and bolder and to not fear controversy.”

A longtime mover in New York advertising circle — he has worked for O&M and Saatchi & Saatchi — Savage first came to AT&T Wireless in 1994. Four years later, he exited to join Internet media and data marketing company Avenue A, only to return to AT&T Wireless in January 2001. The mLife project also allowed him to re-establish ties with O&M in his role as AT&T Wireless' day-to-day liaison with the ad group: “In a sense, I've come back to two homes,” he said.

“Neve has a great knowledge of wireless and the issues in the category,” Intermaggio said. “He allowed us to experiment and was also very tolerant of rethinking on our part.”

If mLife has a precedent, it's “e-business,” the phrase first popularized by IBM five years ago — and in a campaign, not coincidentally, conceived by O&M. “Wireless is a category plagued by sameness,” Intermaggio said. “Customers want someone to step up and assert a leadership position. Customers know the category by voice, but they also know there's more around the corner.” For more insight into their target demographic — primarily young people and enterprise consumers — O&M sent cultural anthropologists to live with customers and observe them using wireless.

Some critics believe the makeover is an attempt to distance the company from the troubled AT&T name or to replace its current brand in anticipation of a much-rumored AT&T breakup, a charge Savage denied. “We're proud of our heritage,” he said. “But we do know and recognize the need to modernize and freshen the qualities of the brand.”

mLife has a lot of living to do. The program encompasses all segments of AT&T Wireless' operations and over time will include new services, renovated retail stores and a redesigned customer Web site. And now that the teaser campaign has run its course, AT&T Wireless can get down to brass tacks: Future ads will be far more direct, spotlighting services like text messaging, e-mail and entertainment applications. “We've found that mLife gives us an organizing principle across all of our platforms and resonates for everything we've got now,” Savage said. “It straddles the 2G, 2.5G and 3G worlds.”

A Jupiter Media Metrix study said unique visitor traffic to the mLife site leaped from 34,000 hits on the Saturday before the game to 681,000 hits on Super Sunday, a 1900% leap that outpaced nearest competitor Monster.com by more than 200,000 hits. More than 36% of all mLife visitors also registered to receive more information about AT&T Wireless services and products.

But consumer dial-up polls showed viewers were still confused by the campaign, and advertising columnists and other media pundits were often harsh in their assessments. Even Regis Philbin expressed his continued puzzlement on his morning talk show, while TV Guide gave mLife a thumbs-down in its Cheers and Jeers section.

But Bob Garfield, editor-at-large for Advertising Age, said consumer polls mean little. “The function is to get curiosity going. Dial-up polls in real time are absolutely meaningless — they are not data, not research, and they have nothing to do with anything. AT&T Wireless is taking a lot of heat, but it's bullshit. Yes, the ad irritated people, but if it's getting under their skin, then it's doing its job.”

“It's going to take months and months to sort out,” agreed New York Times advertising columnist Stuart Elliott. “The whole purpose was to do what Ogilvy & Mather did for the phrase ‘e-business’ for IBM. That obviously caught on, and they want to do it again. But is mLife the next-generation — is it ‘Godfather Part II’ or ‘Grease 2’? People hated the teasers — they thought they were stupid, but they talked about them, and the whole point is generating a buzz.”

But despite the widespread criticism and the grand scale of the mLife campaign, Savage doesn't feel any pressure to shift gears.

“The critic who doesn't understand the ads has been effectively seduced by us,” he said. “The rest of the advertising starts to put substantial flesh on the bones and spell out everything in detail. The real understanding is in the future.”

Sounds pretty convincing. Maybe that's why Savage is the man for the job.
— Jason Ankeny

 

THE ABOUT-FACE
Gail Redmond, Telespree  

One of the most buzzed-about launches at CTIA's Wireless 2001 show was the simultaneous unveiling of a new software company, Telespree Communications, and the disposable phone that embodied the firm's prepaid automatic service activation solution. It was the kind of attention any new company would kill for — and that could easily drive them off course.

San Francisco-based Telespree was founded in 1999 by Alon Segal, whose wife had a habit of losing cell phones and was put off by the difficulty of visiting retailers to activate new service and yet another phone. Segal devised a prepaid service activation solution and linked it with the idea that prepaid users have no use for phones after their accounts are drained.

“The change wasn't internally disruptive. There was no gnashing of teeth or throwing of coffee cups.” Gail Redmond, Telespree

CTIA showgoers were bowled over by Telespree's cigar-shaped plastic thing-a-majig. Media and industry hype seemed sure to follow. The disposable phone's design drew both cheers and jeers from market watchers. But wireless carriers were psyched about what was under the hood.

“When we met with the carriers, the presentation slides they focused on were about the core technology,” said Gail Redmond, vice president of marketing at Telespree. “They looked past the hype about the phone and honed in on the core value the technology could create in other business applications.”

Carriers were particularly vocal about the ability to automate activation of wireless services on all kinds of devices such as portable game systems, PDAs and wireless modems. With little hesitation, Telespree decided to focus its ongoing software development on the 10 kilobytes of micro-code that exists on all portable electronic devices and defines how new services can be activated on them.

“The change wasn't internally disruptive. There was no gnashing of teeth or throwing of coffee cups,” said Redmond. “We changed the business model and the technical model. We never intended to be a device company.” And Telespree had no large-scale manufacturing commitments for the phones, so it didn't have to swallow measurable amounts of inventory.

Thus, the concept of “on-demand session wireless” was born. Telespree extracted the technology specifications for auto activation and created the Secure Instant Wireless Access, or SIWA, protocol, an open standard for enabling a variety of portable devices — anything that has a wireless chip — to initiate wireless service for temporary user sessions.

With SIWA, a wireless modem could sign onto any network and register itself for a temporary session, agree to terms on how to pay for the session, conduct the session and sign off without the complications that data roaming would normally present.

Ultimately, Telespree's strategic shift is indicative of how wireless carriers are trying to move beyond the idea of selling pure minutes of use and cultivate new applications like data and remote networking. It also provides clues as to how U.S. carriers might reach the other 140 million potential wireless users now that they have reached the first 140 million.

Those potential customers might not be ready to buy service for the long term, but a temporary session gives them — and the wireless carriers that are seeking more revenue anywhere they can get it — another option.
— Dan O'Shea

 

THE END-AROUND
Nitin Shah, ArrayComm  

Faced with a rumbling economy and U.S. spectrum values that had outsized its budget, in March 2001 ArrayComm turned its attention to Australia's 3G spectrum auction. By snagging spectrum needed for its portable broadband Internet i-Burst solution, San Jose-based ArrayComm positioned itself to test its technology in a safe but real-world setting before embarking on the stormier and costlier U.S. market.

Nitin Shah, ArrayComm's executive vice president and general manager of business development and strategy, said cheaper spectrum was only part of Australia's appeal. ArrayComm determined that Australia's historically quick adoption of new technologies and well-developed network infrastructure made it almost a microcosm of the U.S. market.

“The depth we've achieved in understanding the Australian and U.S. markets has been huge,” Shah said. “Our level of sophistication about the technology and economics stepped up to a level that I don't believe it would have had we not acquired the spectrum.”

“I expect that we'll have a positive outcome from everything we've initiated in Australia.” Nitin Shah, ArrayComm

Under the guidance of chairman, CEO and venerable cell phone inventor Martin Cooper, ArrayComm uses embedded smart antenna technology to enhance wireless voice and data systems by reducing interference and increasing spectral efficiency. By creating a one-to-one connection rather than broadcasting signals in several directions, carriers can pack five times the number of users into their spectrum. This efficiency allows ArrayComm to use unpaired spectrum while most wireless providers need paired spectrum to drive their technologies.

Unlike the FCC, which auctioned large chunks of paired spectrum last year, the Australian Communications Authority (Australia's answer to the FCC) auctioned its paired and unpaired spectrum licenses separately and in smaller pieces for a fraction of the cost. ArrayComm paid a relatively paltry U.S.$4.5 million for one of four unpaired spectrum licenses. “It's certainly economical when you divide it out by dollars per megahertz,” Shah said. “We're in the few cents range rather than the many dollars range, which is what most people paid.”

With the unpaired spectrum a done deal, ArrayComm developed a complete network and business plan, providing the company with an understanding of cost-efficiency, subscriber growth, pricing and demographics. With actual market experience, ArrayComm could present financiers and operating partners with a full plan based on real numbers, Shah said.

Although the original plan was for Australia to serve as just a testing ground, ArrayComm likely will roll out i-Burst commercially Down Under. The company is planning a commercial pilot in Australia scheduled to begin in the third quarter, with full commercial deployment scheduled for early 2003. Plans for i-Burst's international expansion grew more aggressive last month, when ArrayComm inked a $100 million deal with Japan's Kyocera. The deal calls for Kyocera to sell i-Burst in South Korea and the U.S., with China, Japan and Europe scheduled to follow.

“I expect that we'll have a positive outcome from everything we've initiated in Australia,” Shah said. “It was a little gutsy, but it's worked out very well for us. If that defines a turning point, then I think that's it.”
— Chris Sewell

 

THE SPINOFF
Rajiv Laroia, Flarion  

Flarion's flash-OFDM technology was created within the walls of Lucent Technologies. But its chance to develop any further would have fizzled had Flarion not left the wrong place at the right time.

Bedminister, N.J.-based Flarion broke off as a Lucent subsidiary in July 2000. It was the first spinoff that dealt with a technological area — mobile data interfaces — that was core to Lucent's own business. The problem was that flash-OFDM, or orthogonal frequency division multiplexing, was disruptive to what the company was doing with mainstream technologies such as CDMA and GSM.

“The large company was not necessarily set up toward disruptive technology,” said Rajiv Laroia, Flarion's founder and chief technology officer. “Flash-OFDM would upset things going on at Lucent, and companies don't like to upset their own market. The best way to make sure an idea can succeed is to put it in an entrepreneurial environment.”

“The best way to make sure an idea can succeed is to put it in an entrepreneurial environment.” Rajiv Laroia, Flarion

Laroia worked at Lucent for eight years, and while spearheading a small team of engineers and researchers within Bell Labs Innovations, as early as 1996 he began to conceptualize an alternative mobile data air interface. Luckily for Flarion, independence was to come before the market went sour and Lucent's business began to flounder. Shortly after Lucent cut the cord, Laroia attracted $30 million in venture capital, enough for Flarion to become its own entity. Its staff has since grown from six people to 150.

As a start-up, Flarion is different, said Phil Marshall, senior analyst for The Yankee Group. “It isn't trying to go after a small piece of the puzzle. It is the whole solution from a radio access network perspective.” Marshall said this could prove challenging if the company tries to go head-to-head with larger infrastructure providers without finding a niche of its own, but there is an opportunity if they market the technology correctly and hit the areas where there's the most potential for success.

But Flarion also has something that a lot of start-ups might not: recognition from industry heavyweights like Cisco Systems and Philips Semiconductor and a strong connection to Lucent, which still maintains a minority stake through its New Ventures Group “All of the credibility we have today as a company goes back to our origins from Bell Labs,” Laroia said. “The market looks at us differently than other start-ups.”

And even though Laroia values Flarion's upbringing at Lucent, he has no regrets leaving a giant to launch a start-up. “I think I can say I am not going to go back and work for a large company,” he said. “It is more fun to work with smaller companies. You get more done.”
— Kelly Carroll

 

THE DIFFERENTIATOR
Jonathan Kissane, ViaFone  

“Update the win probability of my sale account with Acme to 80%, with an expected close date of March 1.” Say these words to a trade magazine journalist, and you're bound to bewilder the poor, feeble soul. But speak the same sentence to a software package offered by mobile solutions provider ViaFone — an inanimate object, mind you — and it knows just what to do.

When Bernard Desarnauts and his partners were creating what would become Brisbane, Calif.-based ViaFone in mid-1999, they were looking for a way to make Web applications easier to use over wireless devices. Competitors such as Brience and Everypath spent most of their formative years focused on what Jonathan Kissane, ViaFone's vice president of business development, called screen-scraping — the transfer of Web page information to mostly data-centric mobile devices. ViaFone's idea was to be flexible so customers could use a variety of devices to access data — RIM BlackBerries, pocket PCs, Palm Pilots, WAP phones.

But when the team discovered a fateful demo from speech-recognition leaders Nuance, they realized the one device they'd left out: users' mouths.

By partnering with Nuance, ViaFone made its customers' data voice-accessible from the start. That capability is a pillar of its flexibility and a point of distinction from competitors.

ViaFone's voice offerings are especially attractive to Fortune 500 companies with an armada of mobile salespeople.

“Instead of navigating through a push-button IVR, someone can give a number of complex commands all at once... That makes for a superior experience.” Jonathan Kissane, ViaFone

Navigating a Byzantine database with tens of thousands of records could be hellish with a traditional push-button IVR (interactive voice response) system: “To update win probabilities, press 44. To hear all these maddening instructions again, press 45.” Most salespeople don't have that kind of time.

“Instead of navigating through a push-button IVR, someone can give a number of complex commands all at once. They can say, ‘Update the win probability of my sale account with Acme to 80%, with an expected close date of March 1.’ That command is very complex,” said Kissane. “That makes for a superior experience.”

By simplifying life for large sales staffs, ViaFone ingratiated itself with big-name clients such as Nortel Networks; Hewlett-Packard; Scotiabank Group; and CIBC, the Canadian Imperial Bank of Commerce. And with Nuance's help, ViaFone can ease its clients' security concerns with voice-identification technology that verifies employees' identities by recognizing their voices, a big plus for financial services firms in particular.

While its competitors are targeting smaller businesses, ViaFone is aiming its crosshairs at Fortune 500 companies, leaving the firm in a class by itself. Brience, which partnered with VoiceGenie a year ago to offer XML-based applications using simple voice commands rather than complex grammar, promised that its latest upgrade would let users “focus on business problems and ignore the nuances of networks.” But for ViaFone's customers, nuance is everything.
— Ed Gubbins

 

THE CONVERGENCE
Scott Ford, Alltel  

Late June in Little Rock, Ark., is not a pleasant time to be outdoors. But when Alltel management asked 3200 employees to don matching white T-shirts and gather on the front lawn of the phone company's headquarters in the summer of '96, they were trying to express a key concept: unity.

A youthful executive vice president who had been at the company less than six months took the podium and explained to the sea of T-shirts his plan to blend the company's wireless and wireline businesses into one mellifluous machine. Scott Ford, who would replace his father Joe Ford as Alltel's CEO five years later, had hatched this convergence scheme by locking himself in his grandfather's farm with three other Alltel executives for two days. He was looking for a way to trim costs and tear down communication barriers. What he found was a slippery path to a whole new Alltel.

“[Convergence] saved us four to five basis points of margin a year on the wireless business, which translates into close to $100 million dollars a year in run rate.” Scott Ford, Alltel

One-stop shopping for customers was one of the heralded goals of Alltel's convergence, but Alltel has never disclosed figures on service bundling. Convergence was more a gift for the company itself, allowing it to consolidate management, customer service, marketing and network infrastructure while giving Alltel some of the highest margins in the industry.

“It saved us four to five basis points of margin a year on the wireless business, which translates into close to $100 million dollars a year in run rate,” said Ford in an interview last year. “Today it's probably one of the best things we've done.”

Convergence also greased the bearings for the next big turning point in Alltel's life: the acquisition of Chicago wireless firm 360° Communications. “I remember sitting down with the guys at 360°, who were looking at a wireless-only world and knew they needed to expand beyond that,” Ford said. “I did some overlay maps about where our wireline and wireless properties were and how we could leverage the two against each other. It was the first time they started nodding their heads. They got it. Convergence got us to that point.”

The slick corporate structure allowed Alltel to exploit economies of scale, so as the company grew in size, it also grew stronger. The 360° acquisition transformed Alltel from a regional incumbent local exchange carrier into the sixth-largest wireless company in the country. It also led to Alltel's roaming agreement with Verizon Wireless, which gave it a national footprint and the clout to survive the cutthroat wireless carrier wars. That sea of 3200 employees is now an ocean of 26,000.

Still, with rampant consolidation forecast for the wireless industry, Alltel has said it would shed its wireless self for the right price. “Every day we look at it,” Ford said. “If it were ever to become clear that there was a lot of money to be made separating it, the math is fairly simple.” And the hard part? Getting everyone in T-shirts and on the front lawn again.
— Ed Gubbins