AT&T Wireless rolls out GoPhone

By : |May 4, 2003 0

CHICAGO: AT&T Wireless Services Inc., the second-largest U.S. wireless telephone company in revenue terms, has rolled out a new service that requires no deposits and sets spending limits, aimed at customers who do not yet own cell phones.

The Redmond, Washington-based company said the service, called GoPhone, will charge customers a fee, ranging from $19.99 to $49.99 every month, in advance for a fixed number of minutes. The service can be activated via a toll-free number.

About half of the U.S. population now owns cell phones, but the wireless industry is struggling to bring that rate closer to the 70 percent to 80 percent in European countries.

Having signed up most of their ideal customers with high incomes and good credit histories, wireless operators are turning to low-end services as a way to attract the other half of the market, including those with risky credit histories.

The new plan by AT&T Wireless comes on the heels of rival Sprint PCS Group’s problems with a similar limited spending plan. Sprint PCS, the nation’s fourth-largest wireless operator, reinstated deposits under its plan last fall after it attracted fraudulent and non-paying customers.

However, AT&T Wireless said its plan was different because it will charge customers before it activates service via credit card, debit card, or electronic bank withdrawal instead of billing customers and risking non-payment. It will also continue to charge customers every month before continuing service.

“We’re not becoming the creditor of marginal credit customers,” said Michael Sievert, chief marketing officer for AT&T Wireless, in a telephone interview. “Always we have the customer’s money before we activate service or before we continue service.”

AT&T Wireless said customers will be able to renew their plan as soon as they use up their allotted minutes even before the end of the month. That way, customers would not incur surcharges by using more minutes than included in their plans.

The monthly price plans, which include 80 minutes to 550 daytime minutes, come with slightly fewer minutes than equivalent subscription plans. Yet all but the cheapest plan come with unlimited night and weekend minutes as well as free nationwide roaming on AT&T Wireless networks.

For an extra $3.99 a month, customers can access AT&T Wireless’ entertainment and information sites using the mMode service. “Economically, we really believe we’ve nailed this,” said Sievert. “Nobody has found a way to serve these customers in big numbers really profitably,” he said.

Sievert said the company was not subsidizing the price of phones under the GoPhone plan and will break even or make money on cell phone sales. The company is selling a Nokia 3590 model cell phone for a suggested retail price of $89.99 through more than 10,000 locations, including Target, 7-Eleven, CompUSA , Staples and its own stores. Its website currently offers a $20 rebate.

© Reuters

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