Cingular Wireless says it wants to move all its cellphone subscribers to its GSM network, which accommodates more than 92 percent of its 57.3 million customers. Toward that end, Cingular will charge subscribers in possession of older handsets — those based on analog or TDMA networks — an extra five dollars per month as a not-so-gentle nudge in the direction of signing up for a new GSM phone and accompanying service plan.
In other words, Cingular is turning to the stick rather than to the carrot in its approach to customer relations. Instead of selling customers on the virtues of superior GSM phones and services, Cingular has chosen to use a monthly surcharge, which will add $23.5 million per month to the wireless operator’s revenues, as a financial truncheon to beat its technology-holdover customers into submission.
But is the goal here really to persuade customers to upgrade their cellphones and services? Or is Cingular just looking to pull down some easy money at the expense of its old-school customers? As the wireless progeny of prospective merger partners AT&T Inc. and BellSouth Corp., Cingular is a telco with a decidedly telco mentality, so we have to wonder about its motives and about its respect for the people who use its services.
Telcos look at their subscribers base and attempt to ascertain how they squeeze them to boost average revenue per user (ARPU), preferably without having to spend money to do so. That’s why signing a contract with a wireless service provider is so fraught with peril. You can be sure the price advertised in promotional campaigns will bear no resemblance to the inflated price you will pay once they’re finished checking as many of those boxes as possible on the service contract.
It’s an abusive relationship, and one that breeds a high degree of consumer cynicism.
Now, though, Cingular has moved the bar higher, so to speak, setting a new precedent: deriving punitive revenue from subscribers who couldn’t be or haven’t been sold on the merits of moving to GSM handsets. It’s a move that’s absolutely breathtaking in its gall.
If Cingular’s objective was to persuade subscribers to upgrade, rather than to pry a few more dollars from their wallets, why didn’t it devise a suitably compelling incentive program for that purpose? It probably would have been more effective than the surcharge, and it would have served to demonstrate that the company appreciated its customers and wished to reward their loyalty. It could have used the carrot and not the stick, and isn’t it just generally better business practice to follow the high road when dealing with customers?
Well, in most other industries, yes, but not in telecommunications, which remains an industry with a profound sense of entitlement and a view that the customer is always ripe for the pocket picking.
And yet wireless operators wonder why they experience "customer churn." When all else fails, blame the customer, but be sure to pluck that five-dollar bill from his hand as he’s heading out the door.