Subject: [NEXTEL-1] Americas Network - Second Look

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Second Look

December 1, 2002

By:
Kirk Laughlin

America's Network

Desperate to be different

How far can Verizon Wireless go with its ‘clear difference’?

You’ve got to wonder how much longer Verizon Wireless will craftily use technical performance data as a platform to make boastful claims about running the best wireless network in the country.

As has been the case for some time, Verizon executives are using every opportunity to characterize the carrier as a cut above the other has-beens and short-timers.

Superior coverage

At the UBS Warburg Telecom Conference a few weeks ago, Verizon Communications’ CEO Ivan Seidenberg remarked that Verizon is superior. “We offer a clear difference in quality of service,” the CEO told the audience of investors, repeating a theme that underlies one of the carrier’s central missions — differentiation based on performance.

The better-performance claim is based on internal and third-party baseline testing done by companies such as San Francisco-based Telephia, which uses network probes to gather data on quality of service. The baseline test results have consistently shown that Verizon has the lowest number of ineffective call attempts among the big six national carriers, Verizon spokesperson Andrea Linskey recently told me.

“The test results also indicate that calls that connect on the Verizon Wireless network are more likely to stay connected for the duration of the call,” she said. Verizon engineers and legal experts pore over measurement data gathered in each of its markets to ensure the carrier can continue to run ads that say Verizon is the best.

Sounds and smells like a slam-dunk, right?

Not in the world of wireless. Claiming to have iron-clad service is tricky. Without question, Verizon’s network has dead spots and capacity choke points — just like all the other carriers. Its use of CDMA to transmit across cellular channels is efficient, but not revolutionary. Sprint PCS and Alltel, among other smaller carriers, enjoy the same technology benefits.

It’s getting tight

But, the issue that has the greatest potential to undercut the Verizon performance initiative is probably spectrum. Verizon wants more, but it will have to wait patiently for regulators to correct and clean up the spectrum train wreck. Until then, the carrier has to find creative solutions to a vexing problem — manage increased usage across a fixed quantity of spectrum.

Verizon has spent close to $8 billion over the last two years, notching up service quality. What has all this spending bought the carrier? Not enough, according to end-user studies, which show Verizon is far from being a universal crowd pleaser.

The Yankee Group’s annual customer satisfaction recently found that AT&T Wireless and Nextel ranked highest in two main categories, overall customer satisfaction and overall carrier performance. Areas of evaluation included in-building and outdoor coverage, voice and sound quality, value for price, feature offerings and customer service. Not surprisingly, Nextel and AT&T executives routinely talk about their high marks as evidence that their customers are satisfied.

Verizon’s strategy is only a shade different: Tilt the basis of persuasion by focusing on technical performance.

To be fair, the “clear difference” claim may also be showing some promise — the carrier added about 800,000 subscribers in the third quarter, a period when Cingular and Sprint PCS were both scorched with major customer losses.

Focusing on network quality, on one hand, is a clever strategy chiefly because when wireless number portability rolls around next fall, end users will logically gravitate and cling to the provider that keeps screw-ups to a minimum. But, it’s more than just good service. Taking risks, creating innovative features and finding value in undiscovered places will play a large part in determining which carrier customers will stick with.

Time will tell whether Verizon can generate differentiated, Nextel-like loyalty in the realm of wireless data — a destination that most carriers are feverishly running toward.

Using tactics that rely on perception and customer satisfaction could also deliver positive results, but a carrier probably needs a politician’s war chest to get the message across. Because balance sheets will be under strain for some time, it may be a long, slow grind for carriers like T-Mobile, which has focused more on customer acquisition than on network reliability.

For end users, the jockeying among carriers is not only confusing, but it seems to lead to a quite sensible conclusion — it is impossible to ascertain which service provider has the best service in one’s city, neighborhood or workplace until one tries the service out.

Yes, Verizon is widely believed to have the best network. And Nextel is known to have the most loyal customer base. But those determinations fail to lend absolute reliability in the real world. They’re more like advisories, which, like weather forecasts and orange crops, are subject to environmental and technical variables.

About
the Author

Kirk Laughlin

Executive Editor, Specialization: Business and Wireless

About Kirk Laughlin

email: [email-masked]

See more articles by Kirk Laughlin

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