Time Is On His Side

Every day, people try to beat the clock. Athletes compete for the fastest race, students hustle to meet deadlines, and people rush to get to work on time. Until Aerial Communications introduced its per-second billing program, wireless customers also had felt the need to race against time. But time is on Don Warkentin's side. Now that customers have relaxed about the idea of using wireless phones, they are using them more and more each month.

This president & CEO of Aerial Communications does not take credit for the idea of per-second billing. He is, however, responsible for the strategy behind it. When Warkentin joined Aerial in July 1995, three months after the company secured six MTA licenses, the company began a study to find out what potential customers wanted from a wireless company. The answer was simple: They longed for a fair company that would treat them right. Whether he meant it to happen or not, Warkentin's straightforward, genuine manner has become the model for Aerial Communications' marketing strategy. He describes the "Aerial Attitude" as energetic, lighthearted, enthusiastic and innovative, laced with an underlying desire to do the right thing. Coincidentally, his employees regard him the same way.

"It's kind of old-fashioned in some ways, but all of those 'do the right thing values,' which have never gone out of style in my book, certainly have never gone out of fashion in the heartland of the United States, which is the market that we primarily service," he said, "although it is working very well in Tampa, Orlando and Houston, which are sophisticated cities."

A Time-Honored Notion Devotion to customers is not a new idea. Warkentin noted that for years companies such as Saturn, Gateway 2000 and Southwest Airlines have based their business philosophies on a fierce commitment to customers. Their products are nothing new, but their service stands out. In the wireless communications world, however, no one had tried that approach, he said.

"It was revolutionary in this industry because cellular was perceived to be less than those things," he said. "There was a lot of sentiment that cellular nickeled-and-dimed customers, and we saw that our best opportunity, in terms of building a brand, would be to set ourselves in stark contrast to those things. It fit our own gut feeling of how you should do business."

In all its advertisements, Aerial tries to convey the feeling that it is a different kind of wireless company designed around the customer. Aerial's success may not lie in its strategy as much as in its ability to keep its promises. Warkentin knows the best ad is good service, so he endeavors to make sure Aerial is the company that its marketing materials claim it to be.

To prove its fairness, Warkentin said, Aerial needed to back up its claim with something tangible. He asked his positioning team to come up with pricing that would bring the idea to life. The result was True Per-Second Billing, which means customers are charged only from the time they say hello to the time they say goodbye.

"I think it's brilliant," he said. "The extra credit was that it is an idea that other people aren't likely to follow. It's so rare in this life of modern marketing to come up with a differentiator that is going to last you more than a month or two."

Even if customers begin to demand per-second billing options from all carriers, Warkentin is confident Aerial will be remembered for having pioneered the idea. He doubts, however, that other providers will copy the idea because to do so overnight would decrease their returns by16% to 23%. Traditionally, carriers have come to rely on rounding up usage to the nearest minute, he explained. Changing the policy would mean lost profits. When Aerial came on-line, it had zero market share, so it had nothing to lose. Skeptics told the company it was leaving money on the table with this new tactic, but Warkentin said that the company has made up its losses by adding more customers than it would have otherwise. So far, per-second billing is the most often-mentioned part of Aerial's service by customers.

"There are people in the industry who are livid with Aerial for doing this," he smiled. "Great! We struck a nerve. In the competitive market, it's the kind of attitude you have to have. That is what competition is all about -- putting the other guy in a box."

Per-second billing had another, more unexpected, impact. Because Aerial customers only have to pay for the number of seconds they use, they are starting to make more calls than they normally would. It has given people a sense that they can use their wireless phones all of the time, he said, so it's driving up both usage and revenue. Average call lengths are in sync with the industry norm, about two minutes on the outbound, but they are making calls more frequently. A typical Aerial customer averages seven outbound calls a day and uses approximately 350 minutes a month.

In its quest for customers, Aerial has not ignored the commercial sector. Warkentin believes Aerial's feisty attitude appeals to small businesses because they see themselves in Aerial. The whole idea of treating customers right and dealing on a handshake rather than a contract attracts them, he said, because that's how small businesses work.

"Those sorts of ideas are very well-understood by a country that is, at root, fairly entrepreneurial," he said. "So we think that people buy into Aerial and like our story not just on the consumer side, but on the business side, because they can relate to us and because that's the way they look at their business."

Time for a Change Warkentin's goal, naturally, is to propel Aerial to the top, but his work in the industry goes beyond his own company. He hopes to work with various carriers to sway all wireline users toward wireless.

"Companies have to develop the market in a way so that they are going to compete more and more with wireline," he said. "I think that's what PCS companies are going to have to do if they are going to be successful. That's what we're trying to do here."

He hopes Americans will follow the trend in Scandinavia. There, a critical mass formed where enough people had wireless phones that it almost became a social requirement to have one, he said, and peer groups started hassling their friends if they didn't own one. Scandinavians ask for their friends' wireless, not their wire-line, phone numbers because they don't want to talk to voice mail; they want to talk to people.

To get to that point, U.S. carriers need to help break people's habits of using wireline all of the time by getting them to feel socially comfortable making wireless phone calls in public. Part of that effort can be achieved through advertising, depending on how they show people using wireless phones in commercials.

"If you think about it, it's a little bit weirder to stand inside a phone box and make a phone call than it is to stand on the street," Warkentin said. "There is this huge level of habit that has developed over two or three generations as people have used their phones in fixed places. There is no logic to that; it is just habit."

In addition to changing the wireless image, carriers need to offer something substantial to customers that makes them want to use their phones more, he said. By re-pricing the cost of airtime to make it more affordable to customers, PCS providers in general have broadened their appeal to the price-conscious and to certain portions of the business market. In the consumer sector, people have wanted to use their wireless phones all along, but the cost to do so was so high that they used them only for emergencies. In the business sector, management did not allow some individuals to get wireles s phones because they were so expensive. As the price barriers break down, people are able to use their phones freely and have found that doing so offers a good value.

For example, as the only PCS provider in Columbus, OH, Aerial has an opportunity to be the chosen wireless carrier for more than 48,000 Ohio State University (OSU) main campus students. Almost 80% of the students are from Ohio, so besides local calls, most calls go to family and friends back home. As part of its proposition, Aerial offers statewide local calling in its plan at no additional cost, so students pay the same for in-state long-distance calls as they do local wireless calls.

Warkentin said people under 35 years old, like the OSU students, are an important group for wireless carriers to serve. They not only are the most mobile, but also they live alone or with roommates. Few of them reside with multiple family members.

"People are realizing they can have that phone and never have to line up a wireline phone for their apartment or dorm room," Warkentin said. "Roommates can each have one, so there are no disputes over the phone bill. But the ultimate advantage is that you can be wherever your mother wants you to be!

Already, more than 50% of Aerial's residential customers are under age 35, while for most carriers, that same group makes up only 35%. Warkentin said this group is more likely to choose PCS over cellular or wireline because it has grown up in the information age. The teenagers that are hooked on pagers and the toddlers that play on computers today will demand PCS features tomorrow. It is just a matter of time, parental permission and money, he said.

Warkentin pointed out that though younger customers have lower incomes than older ones, their usage is still quite high. If a wireless device is someone's only phone, as in the case of many OSU students, he will use it frequently. Aerial's average usage in Ohio stretches beyond 200 minutes a month.

"The under-35s know how they want to use their phones. They are the ones with the mobile lifestyle," he said. "Their motivation to buy it is to keep in touch with their friends and family. Those are the ones we want. This is, to me, what PCS is about."

Warkentin's Time Line Warkentin has been involved in startups for most of his career. He came into the cellular industry in 1988 as director of product marketing at U.S. West Cellular, having previously worked for a Silicon Valley startup. Two years later, he moved to London to head up marketing for a U.S. West venture, which turned out to be Mercury One 2 One, the world's first PCS service. The most important lesson Warkentin learned during his tenure in the United Kingdom was the importance of coverage. The company's owner would only let One 2 One build out one area at a time. Meanwhile, Orange, a competitor that launched seven months later, established networks in several areas. From the time it came on-line, Orange had an advantage over Mercury One 2 One.

"I vowed never again to be in that situation," he said. "When I came here, I worked it out with Ted Carlson, president & CEO of TDS, that we would build a big footprint because I saw that Orange was able to come in -- even though it launched later -- and leap-frog to coverage, and then it gained advantage."

When the FCC's A and B auctions were over, Aerial had secured licenses to provide PCS in Columbus, OH; Houston; Kansas City, MO; Minneapolis-St. Paul; Pittsburgh and Tampa-St. Petersburg-Orlando, FL. If he had one wish, Warkentin would see other GSM networks build out in cities near its present markets rather than increase coverage in them. For instance, he'd like to see St. Louis, Dallas and Cleveland built quickly to enhance the Kansas City, Houston and Columbus markets, respectively. Doing so would grow GSM's footprint.

A Time to Every Purpose As standard operating procedure, Warkentin travels to each market at least once a quarter to visit his troops. He holds roundtable discussions with employees from all levels of management and gives thorough presentations to show where they are and where they are going. He always said he wanted to be free from politics and other "big company stuff" that he encountered at large companies, so he does his best to keep it out of Aerial. This interaction is also part of Aerial's recruiting appeal, he said -- an image that says, "This is a new company where we don't have to follow all the rules."

Warkentin makes up his own rules, one of which is that he does not wear his title on his sleeve, said Gary Ballard, marketing director in the Kansas City office. He competes right along with his employees in the corporate Olympics. At company meetings, he greets everybody individually at the hospitality desk. On sales recognition trips, he goes jet skiing with an Aerial sales representative.

Involvement in the community is important to Warkentin as well. Aerial has redefined PCS to stand for Partners in Community Service. Through this program, employees in each of Aerial's six markets are encouraged to give back to their own communities.

But Aerial's success has come from giving something else back -- time. Although Warkentin and his staff never slow down, per-second billing has made customers feel like they can. The ability to loosen up about their wireless bills and just chat with family and friends on a wireless phone is new to subscribers, and they welcome the thought that time is on their side, too.

It's never too late for market share. As a leader in three startup companies, Don Warkentin, Aerial Communications president & CEO, has learned more than a little about marketing a new business. Here is some advice for new wireless carriers that feel they are coming in way behind the others:

* "Any time you are a new entrant, you always have challenges, but you have to find a way to take advantage of your status. As the new entrant that no one had ever heard of before, we had the freedom to be whatever we wanted to be. You also have to be who you say you are, or people will see right through it."

* "If you are a late entrant, don't hang your head in shame. Figure out where the advantages are of being a late entrant, and exploit those."

* "It's very important to build a brand. Your brand is probably best defined as a name that stands for something. It should be one that customers recognize and understand you to stand for."

When he's not trying to push Aerial Communications to the forefront of the wireless industry, Don Warkentin, president & CEO, is a strong advocate for GSM, his company's chosen technology. Before the North American GSM Alliance formed, American GSM carriers already were working together through the GSM MoU to further GSM technology. Warkentin hoped to further cement the group by also making the companies commercial allies with an agenda that would benefit each business.

Powertel is clustered in the Southeast, Omnipoint along the eastern seaboard and Great Lakes, Pacific Bell in California and Nevada, and Western in the West. Aerial's six markets, on the other hand, are more spread out.

"Aerial has the most fragmented footprint geographically," Warkentin said. "Though we were opportunistic when bidding, we are also the most reliant on positive GSM neighbors. It was in Aerial's interest to do what we could to bring them together."

Warkentin became the catalyst that set the Alliance in motion, investing his time and his staff in the endeavor. Other GSM companies welcomed the idea, and today the group, with Warkentin as chairman, has defined three areas of development. First, the GSM Alliance works to establish GSM roaming capabilities to move carriers from a disadvantage in coverage to a roaming advantage.

"Some in this industry think we are hopelessly disadvantaged in GSM, but the reality is that in three to five years, we are going to get this filled in," he said. "We are not at all sleeping at the switch in looking at the future of GSM, and we think that we have got tremendous future opportunity to create an advantage in the area of roaming."

The GSM Alliance developed a logo and a tag line, "GSM Alliance, World Smart," to identify an affiliation on product packaging. Additionally, the Alliance's structure allows it to offer a solution for marketing to national retailers. For example, if a large retailer wants to carry wireless products for the first time, it naturally will consider national carriers; Warkentin wants to be sure it thinks about the GSM Alliance, too.

"We're not sure they would consider us if we were seven small regional companies if there is already a choice of three national operators," he said. "It's easy to do business with national players when you're a national buyer."

The third focus area deals with common technology development and cost reductions. The advantage to the group structure is that each of the seven companies doesn't have to separately staff product development activities. If the group wants to develop calling party pays, for example, it may choose to develop one solution. It already has collaborated to sign international roaming agreements through a coordinated approach.

"If we can do something in common on these new feature capabilities, that saves us time and money," he said, "and we can pool our purchasing power to get a better deal on long distance or to buy phones."