What a teen wants … and what carriers must give them

The value of a wireless minute is still declining, and U.S. carriers are still faced with a tradeoff: Should you grow your subscriber base, or should you make more money from the subscribers you already have?

According to Adam Guy, Strategies Group (www.strategisgroup.com) senior analyst, mobile wireless research, you can do both by attacking a single market segment — teens.

“To meet the first goal that carriers are pursuing at the moment, to grow the subscriber base, the logical place to look at is which market segments are untapped,” Guy said.

“The younger folks, primarily 13-17, and the older folks, the seniors over 65, present a tremendous opportunity for growth. These are the untapped well of the wireless industry in the U.S.”

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A recent Strategis Group study, “What U.S. Teens Say About Wireless,” asked a nationwide sample of 501 13 to 17-year-old wireless and non-wireless users 257 questions about their wireless usage, plan and feature preferences, and attractive handsets and prices.

Many wireless carriers, including Verizon Wireless (www.verizonwireless.com) have introduced plans and services targeted to teens. But carriers may not be doing enough to turn teens into loyal wireless users.

“What’s unique about teens is the potential for lifelong customers,” Guy said. “Establishing any kind of product or plan loyalty is a tremendous opportunity for a lifetime of revenue generation.”

Currently, there are more than 20 million 13 to 17 year olds, 17% of whom have a wireless phone. Guy said teens have an insatiable appetite for information technology, and they use and spend money on the Internet.

“Just under half of the teens we interviewed have actually bought something on the Internet,” he said. “The fact that there is some electronic commerce experience really tees up the opportunity for e-commerce opportunities in the mobile space.”

Most teens have a bank account, but very few actually have access to a credit card. Guy said the wireless phone could be a prepaid and stored-value account that could serve as a financially empowering tool for teens that have money but don’t necessarily have all the tools to engage in various forms of commerce.

“Teens responded really favorably to person-to-person payments and the ability to shop online via the wireless device through some kind of prepaid or stored-value account,” he said.

Even though they’re fickle and change tastes frequently, carriers could capitalize on the changing attitude phenomenon of the teen market and provide opportunities for renewable revenue streams every time a teenager develops a new appetite.

In addition, Guy said wireless devices should complement other media devices in the future.

“Teens who do not own or use a wireless phone but intend to get a wireless phone are much more likely to have other products and services such as MP3 players, pagers and PDAs,” he said. “There’s not so much a substitution effect among communications and IT consumer electronics products, but a real complementary effect where the demand for one of these products and services feeds the demand for the others.”

According to the study, teens will pay for enhanced, value-added services, even voice mail. The more essential the service, the more teens suggest they would rely on it, the more they would be willing to pay a monthly service fee (as opposed to a per-usage fee) and the less they’d like to receive advertising in exchange for free service. As for mobile instant messaging, younger teens (13 to 15 years old) reacted more favorably than older (16 to 17 year old) teens. In addition, teens who spend more money on a weekly basis and those who play video games, download music from the Internet and have bought something online, responded more favorably to mobile IM.