Cingular/AT&T Wireless added 1.8 million subscribers, the most in the industry.

[jones]

Investor's Business Daily
Mobile Firm Cingular Tweaks Family Plans To Boost Its Revenue
Thursday March 3, 7:00 pm ET
Reinhardt Krause

At Cingular Wireless, much of its growth is all in the family. And rivals are paying attention.
Cingular, the nation's No. 1 wireless phone company, tweaked its popular FamilyTalk plans last month for two reasons: to gain more users while also boosting the key industry metric of average revenue per user, or ARPU.

Yankee Group estimates that roughly 30% of all wireless phone users are on family plans, which let family members and friends share minutes.

Analysts say the percentage is likely highest at Cingular, which is owned by SBC Communications (NYSE:SBC - News) and BellSouth (NYSE:BLS - News). Carriers don't disclose their family plan numbers.

The hot seller in family plans these days are plans that let subscribers add extra users, who can share minutes, for $10. Cingular, along with T-Mobile USA, have been the most aggressive carriers in marketing family plans with $10 extra-line options. The typical extra-line price is $19.99.

Now Cingular has raised the bar. Its new FamilyTalk plan gives two subscribers 1,100 minutes for $80 a month. The old plan gave 850 minutes for $70 monthly.

This tweak could boost Cingular's average revenue per user, which lags rivals.

"It does help offset ARPU dilution to some degree, but there's still some dilution," said Adam Guy, an analyst at market research firm Compete.

Reduces Customer Turnover

Guy estimates that average revenue per user for family plan members ranges from $20 to $30 vs. more than $50 overall.

But he says family plans help Cingular and other carriers lower customer turnover, another key for phone carriers.

Wireless phone users who share minutes switch service providers less often.

Cingular bought AT&T Wireless in October. In ended 2004 with 49.1 million subscribers. In the fourth quarter, Cingular/AT&T Wireless added 1.8 million subscribers, the most in the industry.

In the same period a year ago, Cingular added 642,000 customers and a struggling AT&T Wireless only 128,000.

While Wall Street applauded Cingular's late-'04 subscriber growth, analysts noted Cingular's average revenue per user fell 5.8% to $49.67 in the fourth quarter.

The new family plan is Cingular's latest answer.

"Cingular will continue to target the lower-hanging fruit through family plans and reseller (deals)," David Barden, Banc of America analyst, said in a note to clients.

Interest Level At $9.99

Cingular spokesman Clay Owen says consumers like family plans.

"The big seller industrywide has been the $9.99 rate plan," he said. "That's where all the interest is."

While the new plans costs another $10, "consumers get 30% more minutes," Owen said.

Cingular's Rollover policy, which lets customers carry over unused minutes into the next month, also applies to family plans.

Cingular's success with Rollover has bred copycats.

In Japan, NTT DoCoMo (NYSE:NTT - News) rolled out a rollover policy for its family plans in late 2004.

Some of Cingular's U.S. rivals also have been tweaking family plans lately.

In January, Verizon Wireless lowered its price for extra lines from $20 to $10. In the fourth quarter, Verizon lost market share for the first time in three years. It nevertheless added 1.7 million subscribers, giving it 43.8 million overall. It's the nation's No. 2 wireless carrier, and is owned by Verizon Communications (NYSE:VZ - News) and U.K.'s Vodafone (NYSE:VOD - News).

Acting Or Reacting?

Verizon's price cut was not any response to Cingular, says Brenda Raney, a Verizon Wireless spokeswoman. And Verizon hasn't stepped up its family plan advertising, as some analysts have claimed, she says.

"Family plans are an important part of our product portfolio; we always advertise them," she said.

Cingular's family plan success is partly due to effective use of its Web site to sell such plans, says analyst Guy.

He says that in the fourth quarter Cingular signed up more than 4% of its new subscribers online. The industry average is 2.7%. He says almost 25% of Cingular's online customers ordered family plans.

Still, analysts say family plan pricing can confuse consumers. Some plans, for example, add more roaming fees.

Cingular's biggest plan offers five users 6,000 minutes for $250 a month, but analysts say it attracts far fewer users than the three-line plans.

Cingular/AT&T Wireless added 1.8 million subscribers, the most in the industry

[CingularGSM!]

Wow... go Cingular. 1.8 MILLION in JUST one quarter. Man Cingular MUST be doing something right.

I have heard that Cingular will be launching its push-to-talk network in the near future...

I love my Cingular GSM!!!!

[Andy]

As far as I remember this is old stuff, sorry guys.

[Fire14]

I personally don't like there new Family plan rates, I think they should have stuck to the 59.99 plan for the 9.99 add a line as a starting point as well as added this 69.99 plan, even better would have been 49.99 as a starting point.
This would have given people more options in plans & they would sign up more customers having bigger flexability in 9.99 additional lines.
Alot of people are mad with these new rates & I know alot of Blue customers refuse to migrate because of this.

I was told Blue customers could get the older 59.99 + 9.99 share plans to migrate over, but found it not to be true. The good thing is I was able to get the 59.99 + 9.99 plan with Blue when i added a 4th line last week, so even thought in North Jersey I could have gotten coverage on the JV network, I will not migrate over until they force me to or let me keep my current plan.