CTIA to Spend Tens of Millions Rallying Cell-Caller Lobbying Army

The CTIA wants to bombard policy makers with calls, e-mails and letters from subscribers and employees recorded in a database, he said. The U.S. wireless industry employs one million people, of which 205,000 work for carriers, and they have the most at stake of anyone, Largent said. He said he learned during his stint in the U.S. House the 2 issues that lit up congressional phones were increases in cable rates and gasoline prices, and the wireless industry hopes to harness the same kind of power.

“It’s really about trying to aggravate our customers by saying, ‘Hey - did you know?'” Largent said. He said research showed 88% of cellular customers weren’t aware of efforts to regulate and tax their service, which he said would raise its cost. So much of the CTIA’s initiative will go into “kind of a ‘did you know?’ campaign to inform subscribers, Largent said. In the same research, 25% of respondents said they would contact a policy maker to oppose a measure that would raise bills. If that level of activism materialized, “you're talking about 30 or 40 million people, which would put us on par with the AARP,” he said. “That is a powerful weapon.” Largent said he didn’t expect that much participation, but even a million subscribers would create an influential lobbying force.

This cellular citizen army looked like the most effective way to carry out the mission Largent was given when he started at the CTIA in 2003, to get the group involved in increasingly prevalent legislative and regulatory activity in the states, he said: “More and more, we have been called by our members to be involved at the state level,” a new arena for CTIA. He said one alternative would have been to “hire consultants,” but the CTIA got “very limited or poor results” from spending $4- $5 million that way in Cal., he said. Another approach would have been posting association employees in the states, but that would have been “not very efficient and probably not much more effective” than the hired guns, Largent said. Meanwhile, CTIA research showed 88% of mobile subscribers at least “satisfied” with their service, he said.

The top-down grassroots initiative represents a redirection of an industry marketing campaign that had been in the works, he said. That would have been an institutional image campaign along the lines of those done by the milk and cotton industries, Largent said.

In 2004 sessions, 1,541 pieces of state legislation were introduced to regulate the wireless industry, he said. “I bet 1,000 of those were introduced in the state of California, where we have an acute problem.” Besides raising rates, state measures increase uncertainty, making capital investment less likely, and hurt economies of scale the industry realizes operating nationally, Largent said. In 5 states - Cal., Fla., Ill., Neb. and N.Y. - over 20% of a cellular bill goes to fees and taxes, he said. Largent cited economic research indicating every 1% increase in these charges depresses service demand 1.29%.

If Congress undertakes a Telecom Act rewrite, the most important consideration is to “get it done,” he said. “Don’t drag it out for 2 or 3 years for political reasons,” meaning the legislation would be “a tremendous vehicle” for members of Congress to extract campaign contributions from the telecom industry, Largent said: “I've seen that done.”

On a likely Sprint merger, Largent said it “would help with the profitability of the companies and yet we still would have an intensely competitive industry.” He said the industry consolidation would alter some of his favorite statistics to toss out to policy makers - that 97% of Americans have at least 3 wireless carrier choices and 87% at least 5 -- “but not a lot.” - Louis Trager

Wireless Summit Notebook…

“Verizon’s pretty desperate, aren’t they?” Cingular Network Operations Pres. Edgar Reynolds said Tues., referring to reports the Bell might try to take over Sprint: “They're seeing our ads, too, and they're worried and they think something needs to be done.” He told the Yankee Group’s Wireless Leadership Summit “that’s a more logical combination” than Sprint’s effort to take over Nextel, but “I'm not sure it will ever get done for a number of reasons, not the least of them regulatory.” Asked about the challenges of integrating Sprint and Nextel’s disparate networks, Reynolds said it had been a “tremendous challenge” just to combine parts of the Cingular and AT&T networks with the same technology. He said he wouldn’t say the competitors “can’t pull it off,” but “I would not want to be in the shoes of anyone doing the Sprint-Nextel thing… I think that would be a network replacement job,” not really an integration. Reynolds also spoke of Cingular’s 3G and other plans. The carrier will launch HSDPA service around 700 kbps in some markets before 2006, the year that technology and UMTS are to be rolled out and fully integrated, he said. “This technology is real,” he said, adding that last week the first voice call was completed over HSDPA in the carrier’s Atlanta test bed. The first deployments will be at 1900 MHz, but Cingular has vendors agreements to provide gear that will work at 850 MHZ, which is important for improving and extending coverage, Reynolds said. UMTS is planned for 15-20 markets next year, including the 6 AT&T launched this year and at 200-300 kbps at first, he said. UMTS is particularly significant because it lets people talk while browsing the Web or going over a document together, Reynolds said. “It sort of provides a hedge to us if data is slow to take off,” he said, quoting an industry saying: “Wireless data is the future and always will be.” UMTS’s voice side also provides protection against Wi-Fi, in case that technology turns out less of a complement and more of a threat to 3G than he expects, he said. Otherwise, a combined 3G-Wi-Fi subscription is “a good idea” and “believe me, we've got people working on it.” The goal is a single device that works like a cordless phone at home and a cell phone and Wi-Fi device on the road, so the user can always be reached at the same number, Reynolds said. He said “it’s a challenge putting those pieces together,” but software defined network technology looks like a helpful breakthrough. He said 3G would put Cingular in position for an all-Internet Protocol core, but that will be realized only when customer service quality expectations can be met. He said he didn’t expect VoIP all the way to the device in the next network generation. Reynolds said Cingular would decommission 6,000-10,000 cell sites the merger had made redundant - but it would also add 8,000 sites by 2006 to improve coverage.

--

The demands by carriers for unique cellphones to differentiate themselves is complicating the development of wireless content and slowing the arrival of a mass market, industry executives said. They spoke Mon. on a panel at the Yankee Group’s Wireless Leadership Summit in La Jolla, Cal. The exclusivity requirements Vodafone is imposing on European device vendors will come to the U.S., said Mark Tulkki, Dir.-Siemens Mobile Devices N. America Div. Of Planning & Business Development. Industry evolution is toward carriers aligning with particular manufacturers and involving themselves intimately in device development, he said. The push for device customization and exclusivity cuts against standards and scale, Tulkki said. The consumer market is sliced very thin, said Qualcomm Internet Services Dir.-Product Management Mazen Chmaytelli. For example, the former teen segment is split between girls and boys. But any drive toward uniformity is the “wrong approach” because it will “really alienate consumers,” said Macromedia Senior Dir. Anup Murarka. Standards will never replace the variation of technologies such as BREW, Java and the Symbian operating system, said Robert Betros, Digital Orchid CTO. The key to progress is technology platforms and tools that bridge device differences by abstracting “the whole rendering product” for content makers. “Standardization of functionality will be very important, not standardization of operating systems,” Chmaytelli said.