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Just how quickly will Americans make a wireless phone their only phone? The media publishes stories about it at least once a month, but are we looking at a phenomena confined to a college-age cohort group or at something that is spreading more evenly throughout society? Insight’s research found that, depending on the type of household, as many as six out of ten people would consider using their wireless phone as their primary phone if the costs were equal. And with wireless per minute prices falling and penetration rates growing, 2000 is shaping up to become a watershed year for the cellular industry.
Currently only six percent of all the calls made in the US are made from a wireless phone, but this number is predicted to increase to 9.6 percent by 2000 and to 12.7 percent by the end of 2002. By 2005 worldwide wireless traffic is expected to account for 25 percent of the total traffic, up from five percent in 1998. As wireless continues to decline in price, more and more consumers are using their wireless phones as a replacement for wired or landline phones. Actual substitution, where customers disconnect their landline phones, is still years away however. Consumers will keep their regular home telephone as a back-up for voice calls and as a means for broadband access to the Internet. The quality of wireless calls must improve before consumers rely on wireless as their primary service.
The Unwired Consumer: Consumer Telephony in a Wireless World is based on primary and secondary research to achieve balanced, reliable results. Primary research consisted of Insight’s proprietary survey of consumers as well as interviews of regulators, industry players, and academics. This report includes demographic data of wireless
subscribers and those who plan to purchase wireless service in the next twelve months. It presents penetration rates by gender, age, income, level of education, region, and employment status, and correlates use of wireless to adoption of other home technologies. The study concludes with wireless pricing trends, including price
comparisons of five leading carriers with notes about strategies and new subscriber rates.
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The Market
Currently only six percent of all the calls made in the
US are made from a wireless phone, but this number is
predicted to increase to 9.6 percent by 2000 and to 12.7
percent by the end of 2002. By 2005 worldwide wireless
traffic is expected to account for 25 percent of the
total traffic, up from five percent in 1998.
Wireless service is shifting from using analog signals to
digital. At the end of 1997, only 12 percent of the US
subscriber base was digital; today, that figure is at 27
percent. In 1998, more than three out of every four new
wireless subscribers chose a digital service.
Methodology
This report is based on primary and secondary research.
Primary research consisted of INSIGHT’s proprietary
survey of 1,022 consumers as well as interviews of
regulators, industry players, and academicians. The
survey was weighed to account for probabilities of random
selection of an individual male or female household
member and balanced by age, sex, race, and education to
match key US Census demographic variables. Secondary
research was based on information from various regulators
and government agencies, searches of news and periodical
articles from newspapers and trade journals, Internet
searches, research reports from a number of securities
houses, and attendance at conferences and trade shows.
The information contained in this report is as accurate
and complete as possible, based on available data. The companies profiled in this report neither officially
endorse nor necessarily agree with the contents of this
report.
Key Findings of the Consumer Study
- Wireless penetration in the US is approximately 25
percent and is rising by about four percent a year.
- Wireless usage will increase as prices continue to fall
and as carriers continue to introduce new marketing
bundles that effectively bring prices down below 10¢ a
minute.
- Wireless users are predominantly interested in having a
wireless service that offers nationwide service with no
roaming and no long distance charges.
- Key drivers to increasing wireless usage are mobility,
convenience, and accessibility. Users are willing to pay
extra for services that provide them with these
qualities.
- Wireless carriers have not done enough to educate
consumers about the benefits of using a wireless phone.
As long as wireless phones remain a luxury item, usage
will not increase. Although consumers are beginning to
perceive wireless phones more as a necessity, more needs
to be done to speed up this change.
- Complete displacement of wired phones will not occur
until wireless phones can carry data as smoothly and as
fast as today’s wired phones.
- Usage and penetration of wireless services can be
significantly increased by adopting some of the same
strategies and market segmentation that European and
Asian (predominantly Japanese) wireless providers have
been using for the past few years.
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Chapter I
EXECUTIVE SUMMARY
1.1 Background
1.2 The Market
1.3 Methodology
1.4 Key Findings of the Consumer Study
Chapter II
INTRODUCTION
2.1 How Wireless Networks Operate
2.1.1 Transmission
2.1.2 Types of Wireless Service
2.2 Growth of the Cellular Market
2.2.1 Wireless Market Share
2.3 Wireless as Primary Telephones
2.3.1 Cost for Wireline versus Wireless
2.3.2 Quality and Connection Reliability
2.3.3 One Number, One Phone
Chapter III
THE WIRELESS MARKETPLACE TODAY
3.1 Wireless Penetration
3.1.1 Description of US Wireless Subscribers
3.1.2 Subscriber Penetration Rates in Other Countries
3.1.2.1 Incremental Growth of Wireless
3.1.2.2 International Trends of Wireless as Primary
Carrier
3.2 Factors Hindering US Wireless Growth
3.2.1 No Single Digital Standard
3.2.2 Different Regulatory Structures
3.2.3 Calling Party Pays System
3.2.4 Perception of Wireless As A Luxury
3.3 Market Drivers
3.3.1 Competition
3.3.2 Coverage Areas
3.3.3 Switch to Digital Networks
3.3.4 Pricing
3.3.4.1 Digital One Rate Plans
3.3.4.2 National Coverage
3.3.4.3 Single Rate Pricing Plans
3.3.4.4 Carrier Consolidations
3.3.5 Creative Packaging
3.3.6 Industry Alliances
Chapter IV
INSIGHT’S CONSUMER SURVEY OF WIRELESS USERS
4.1 The Wireless Household
4.2 Profiles
4.2.1 Gender
4.2.2 Race
4.2.3 Age
4.2.3.1 Stage of Life
4.2.3.2 Teenagers
4.2.4 Education
4.2.5 Employment
4.2.5.1 Small Offices/Home Offices
4.2.6 Income
4.2.7 Region
4.2.8 Correlation of Wireless Technology with Ownership
of Other Technologies
4.2.8.1 Computer Ownership
4.2.8.2 Online Services
4.2.8.3 Multiple Phone Lines
4.2.8.4 Ownership of Computer/Consumer Electronic
Products or Services
4.3 Wireless Phones as Primary Phones
4.3.1 Analysis of Survey Data
4.3.2 Profile of People Using Wireless As Their Primary
Service
Chapter V
NEW MARKETING CHANNELS & TRENDS
5.1 Targeted Marketing
5.1.1 Marketing of Prepaid Wireless Card Service
5.1.1.1 Prepaid Cards Increase Market Reach
5.1.1.2 Marketing of Prepaid Cards in Europe
5.1.1.3 Pricing of Prepaid Cards
5.1.1.4 Prepaid Services for Those with Poor Credit
5.1.1.5 Prepaid Service Is Not The Same
5.1.1.6 Prepaid Services to Parents and Businesses
5.1.2 Targeted Marketing to Students and Teenagers
5.1.2.1 Marketing Wireless Services to Students in Other
Countries
5.1.3 Targeted Marketing to Families
5.1.4 Targeted Marketing to SOHOs
5.1.5 Marketing Phones as Fashion Accessories
5.1.6 Smaller is Better
Chapter VI
PRICE COMPARISONS
6.1 US Trends in Wireless Pricing
6.1.1 Falling Prices For Service
6.1.1.1 Price of Handsets
6.1.2 Digital Wireless Market
6.1.3 Increasing Monthly Usage
6.2 Wireless Service Providers and Their Pricing Plans
6.2.1 AirTouch Communications, Inc.
6.2.1.1 AirTouch’s Pricing Plans
6.2.2 AT&T Wireless Services, Inc.
6.2.2.1 AT&T Wireless’ Pricing Plans
6.2.3 Bell Atlantic Mobile, Inc.
6.2.3.1 Bell Atlantic Mobile’s Pricing Plans
6.2.4 GTE Wireless
6.2.4.1 GTE Wireless’ Pricing Plans
6.2.5 SBC-Southwestern Bell
6.2.5.1 SBC’s Pricing Plans
6.2.6 Sprint PCS
6.2.6.1 Sprint PCS’ Pricing Plan
6.3 The Challenge for Wireless
Appendix
GLOSSARY
List of Terms
Table of Figures
Chapter I
I-1 Growth of the Wireless Market, 1993-1998
I-2 Market Share of Subscribers by Wireless Technology
Used, 1998 and 2003
Chapter II
II-1 Cellular Network Architecture
II-2 PCS 1900 Architecture
II-3 Percentage of US Wireless Subscribers Using
Cellular, PCS, and Mobile Radio Technologies, 1999 and
2003
II-4 Growth of the Wireless Market, 1993-1998
II-5 Comparison of US and European Digital Wireless
Markets, 1998
II-6 US Wireless Service Providers and Market Share After
Pending Mergers, 1998
Chapter III
III-1 US and European Wireless Penetration, 1998 and 2003
III-2 Diffusion Rates of Selected Technologies
III-3 Competition in US Wireless Market, 1998
III-4 Digital Subscribers in the US as a Percentage of
Telcos’ Total Subscribers,1997 and 1998
Chapter IV
IV-1 Cellular Telephone Penetration, by Gender, 1999
IV-2 Cellular Telephone Penetration, by Race, 1999
IV-3 Cellular Telephone Penetration, by Age, 1999
IV-4 Cellular Telephone Penetration, by Stage of Life,
1999
IV-5 Cellular Telephone Penetration by Households with
Teenagers, 1999
IV-6 Cellular Telephone Penetration by Households with
Teenagers, by Gender, 1999
IV-7 Cellular Telephone Penetration, by Level of
Education, 1999
IV-8 Cellular Penetration, by Employment Status, 1999
IV-9 Cellular Telephone Penetration by SOHOs, 1999
IV-10 Cellular Penetration, by Income Level, 1999
IV-11 Cellular Penetration, by Region, 1999
IV-12 Cellular Penetration, by PC Ownership, 1999
IV-13 Cellular Telephone Penetration by Online Users,
1999
IV-14 Cellular Telephone Penetration by Number of Phone
Lines, 1999
IV-15 Cellular Telephone Penetration, by Users of at
Least One Computer/Consumer Electronics Product or
Service, 1999
Chapter V
V-1 Prepaid Wireless Card Revenue, 1997-2000 ($Millions)
V-2 Profile of European Wireless Prepaid Subscribers,
1998
Chapter VI
VI-1 US Wireless Market, by Number of Subscribers, 1998
(Millions)
VI-2 Average Monthly Local Wireless Bill, 1994-1998
VI-3 Wireless Revenue in the US, 1997 and 1998
($Millions)
VI-4 Average Revenue Per Minute of Wireless Use,
1995-1998
Table of Tables
Chapter II
II-1 Digital and Analog Cellular Penetration and Share of
US Wireless Market, 1997-2003
II-2 US Wireless Service Providers and Market Share After
Pending Mergers, 1998
Chapter III
III-1 Pricing Plans in Plano, TX: Wireless AT&T
versus Wireline GTE and SBC Services
Chapter IV
IV-1 Cellular Telephone Penetration, by Race, 1999
IV-2 Cellular Telephone Penetration, by Age, 1999
IV-3 Cellular Telephone Penetration, by Level of
Education, 1999
IV-4 Cellular Telephone Penetration by SOHOs, 1999
IV-5 Cellular Penetration, by Income Level, 1999
IV-6 Cellular Penetration, by Region, 1999
Chapter VI
VI-1 Digital Wireless Market in the US, 1997 and 1998
VI-2 AirTouch’s Wireless Pricing Plans, 1999
VI-3 AT&T Wireless’ Digital One Rate Price, 1999
VI-4 Other AT&T Wireless Pricing Plans, 1999
VI-5 AT&T’s Personal Network Pricing Plan, 1999
VI-6 Bell Atlantic’s Single Rate East and Single
Rate USA Prices, 1999
VI-7 GTE’s Wireless Pricing Plans, 1999
VI-8 Cellular One’s Digital Edge USA Pricing, 1999
VI-9 Cellular One’s Wireless Pricing Plans, 1999
VI-10 Cellular One’s Prepaid Phone Kit Pricing Plan,
1999
VI-11 Sprint’s Wireless Pricing Plans, 1999
VI-12 Sprint PCS’ Free & Clear Plan for
Business, 1999
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Telecom
Market
Research,
