Size doesn't matter when it comes to winning at least one key battle in the wireless carrier wars, a new study concludes.
Smaller carriers such as Nextel and VoiceStream Wireless have more success using the Internet to lure new customers for wireless Web services or new cell phone subscriptions than the biggest players in the industry such as AT&T Wireless, Cingular and Verizon Wireless, according to the new Jupiter report.
"These smaller carriers are spending less to get new customers," said Jupiter wireless analyst Dylan Brooks. Smaller carriers "are proving that spending dollars intelligently can be a cheaper way to acquire customers," he added.
The reasons for this are varied, Brooks said.
For one, Nextel has offered wireless Web services longer than anyone in the business, giving it an edge, Brooks said. There's also a problem of perception and message. Cingular, which has 20 million subscribers and ranks among the top three carriers, advertised during the most recent Super Bowl, but just what it was advertising wasn't clear, Brooks said.
"They started with this strategy of 'make everybody wonder what we are,'" Brooks said. "It was like those Infiniti car ads 10 years ago, with birds flying through the air. People were wondering 'what is this?'"
Of course, small is a relative term. Nextel and Sprint, which have done well according to the Jupiter study, are among the largest carriers in the world, yet rank fourth and fifth respectively in terms of the number of subscribers in the United States. Still, their subscriber totals trail those of wireless giants Verizon, Cingular and AT&T.
Representatives for Cingular and AT&T, the nation's third-largest carrier, did not immediately return a phone call for comment. In general, carriers rarely comment on the business practices of their competitors.
Verizon spokesman Jim Gerace said he "discounts the entire study." He said Verizon launched a redesign of its Web site to be more "buyer friendly." Sales have tripled since the redesign, he said.
Marketing new services on a budget
Nearly all carriers have Web sites that offer ways to sign up for phone service or access to the wireless Web, including Verizon, which redesigned its Web site earlier this year to make it more focused on sales.
The larger players such as Cingular have also set up retail stores, a more expensive alternative to the Web because it means staffing with employees and buying or renting commercial real-estate locations.
Carriers are also on a spending spree to buy equipment to construct the high-speed telephone networks necessary to offer services they hope will bring in billions in cash, such as e-mail and watching videos.
As a result, cost-cutting has become the mantra for most of the wireless industry, which is weathering a slowdown in handset sales this year. Wireless industry watcher Gartner on Monday said that there will be 410 million handsets sold this year, 200 million less than some industry estimates.
New services offer wireless carriers a way to increase their revenues, and using the Internet to attract customers is a cost-effective way.
Jupiter's conclusions were deduced by examining the percentage of Web site visitors who surf from the front page of a carrier's Web site into the area of the site where goods and services can be purchased. The term of art is being "converted" from casual Web wanderer to consumer.
Visitors to the Internet Web pages of Nextel, perennially lowest on the subscriber leader boards, are three times more likely to buy services than visitors to Web pages of Verizon Wireless and Cingular, whose subscriber numbers make up a quarter of all wireless users in the United States, Jupiter found.
For instance, 38 percent of the visitors to the Web site for AT&T are converted. Voicestream, which is the nation's smallest carrier, converts 53 percent of the visitors to its Web site.
However, Sprint PCS, a large carrier and one of the most successful at offering mobile Internet services, manages to convert 66 percent of the visitors to its Web page, which is among the highest.