Alltel Puts Customers in the Driver’s Seat

WirelessWeek – Monica Alleven – April 1, 2008 – Alltel Wireless long has been associated with race car driving sponsorships. A few years ago, the Little Rock, Ark., carrier even collaborated with LG on a phone based on a race car form factor, complete with engine-revving sounds.

That desire to cater to customers’ needs, even if it was just a portion of the customer base, remains today. In fact, it’s all about the customer, says Alltel Chief Marketing Officer Frank O’Mara.

“On a daily basis, our greatest accomplishment is providing our customers with levels of choice and control that they cannot find anywhere else in the wireless industry,” he says. That includes cutting-edge handsets such as the HTC Touch and the LG Glimmer, applications like Axcess Voice2TXT and City ID, as well as top-notch customer service and flexible calling plans. For those reasons and more, Alltel Wireless snared Wireless Week’s Tier 2 Carrier of the Year title for the third year in a row.

LEAGUE OF ITS OWN
Alltel executives might not like that Tier 2 designation. The company boasts that it owns and operates the nation’s largest wireless network based on geography, as determined by an independent research company. Analysts surmise that a lot of that geography is sparsely populated while also noting that Alltel has benefited nicely through roaming agreements that cover those rural areas.

Indeed, the carrier is in a league of its own. It’s the fifth largest carrier nationwide based on subscribers, with 12 million customers. The fourth largest U.S. carrier, T-Mobile USA serves about 28.7 million customers. US Cellular, the sixth largest, serves about 6 million subscribers. That pretty much puts Alltel smack in the middle.

While it enjoys a unique position in the industry, it was Alltel’s fundamentals that presumably drew the attention of private investors last year, when an affiliate of TPG Capital and GS Capital Partners bought Alltel for $27.5 billion. Going private means Alltel won’t be required to reveal as many financial results as it did as a publicly held company, but the new structure allows the company to take a long-term view instead of constantly being held to shareholder expectations that might have more short-term interests, analysts say. The expectation is Alltel will be able to do even more in terms of product and service innovations.

Before the private equity deal closed, Alltel achieved record growth, surpassing $2 billion in quarterly wireless service revenues and achieving postpaid net additions of 213,000 in the third quarter. Total churn improved compared with the year prior, coming in at 1.9%. ARPU was $55.96, and data ARPU was $6.36.

Based on analysis by Technology Business Research (TBR) as of the third quarter of last year, Alltel was No. 1 in net margin, debt-to-asset ratio and annual return on assets. Its overall TBR benchmark ranking, which takes into account myriad metrics, was No. 3, after No. 1 MetroPCS and No. 2 Verizon Wireless. “Alltel is consistently up there,” says TBR analyst Ken Hyers.

All the while, it has kept up the marketing pressure with an ad campaign that features four fictional sales guys from other carriers who try to disrupt the intentions of Chad, who represents Alltel. The multimedia campaign includes links to MySpace and YouTube and TV commercials on outlets such as VH1, Comedy Central and USA Network. The “sales guys” theme even expanded to include a “Man Cave,” complete with a dedicated Website featuring a “secret lair” where the guys plot against Alltel. A “Man-brary” features a hidden entrance to a phone lab where the guys dissect the latest Alltel phones and features, ostensibly with hopes of copying the carrier’s offerings.

GETTING THERE FIRST
Much to the angst of its larger rivals, Alltel has come out swinging – with its sense of humor firmly in tact. But while it has grown organically and through acquisitions, it has maintained a sense of nimbleness. It can boast a lot of firsts. Alltel was the first to deploy a solution called Celltop, a system of cells on handsets that provide shortcuts to weather, news, sports and other categories for easier discovery. The technology won the top prize in the emerging technology awards at the CTIA Wireless show last year.

Alltel was the first North American carrier to launch mywaves, a mobile video service that allows customers to browse thousands of Web videos and watch them on their phones for $3.99 a month. “I really think they deserve a lot of credit for embracing this application so early on,” says Susan Cashen, vice president of marketing at mywaves.

It was the first carrier to offer City ID, which identifies the U.S. city and state where incoming phone numbers are registered. After less than 10 months on the market, City ID is now on more than 2 million Alltel phones. New Alltel handsets come with City ID pre-loaded; customers get a free 15-day trial of the service before being asked if they want to pay $1.99 a month going forward.

Naturally, vendors trying to get deals with carriers are happy to see Alltel’s willingness to explore new products and services. “They’re a great partner,” says Scott Weller, president of Cequint, supplier of City ID. “Sometimes big ideas come in simple packages, and this simplicity sells in mobile.”

IT’S GOT THE TOUCH
Alltel is no slouch when it comes to handsets, either. Back in 2006, Alltel was the first to enlist Digit Wireless and its Fastap raised keypad technology to make it easier to use SMS and other functions, including for that engine-revving LG race car phone. That tradition has continued, with touchscreen devices like the HTC Touch, a Windows Mobile 6.0 smartphone, and the LG Glimmer, which can access applications such as navigation, search, City ID and Axcess TV.

As for service plans, the carrier recently expanded its My Circle calling plan. Now coming up on the 2-year anniversary of My Circle, Alltel expanded the program this past January with My Circle 5 and My Circle 20, two new options in addition to the usual 10. Customers can now choose unlimited free calling to any five, 10 or 20 numbers, starting with plans as low as $49.99 a month.

Meanwhile, the carrier has continued rolling out EV-DO and started offering a Wi-Fi and EV-DO wireless Internet bundle. It added LBS roaming, so customers can use Alltel’s navigation and LBS applications nationwide, and it offers Voice2TXT service, which gives customers the ability to receive voicemail in text form. Business customers get access to solutions like SalesNOW, which allows them to manage their sales data on their BlackBerries.

O’Meara says there’s no “secret” to Alltel’s success. “We take care of our customers first,” he says. “We believe that there is no other way to operate and we will continue to operate with our customer-centric approach.”

The way Alltel differentiates itself from the competition is through cutting-edge and useful applications, compelling content, superior customer service, cost-effective plans, exclusive handsets and a top-notch network, he says. “We know that Alltel Wireless delivers all this, and more,” he adds.

But it’s constantly looking for the next big thing. So even if its wireless industry designation is No. 5 based on size, its goal is to cross the finish line as No. 1.

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