The Unwired Consumer: Consumer Telephony in a Wireless World The Insight Research Corporation Hellerstein & Associates logo

The Unwired Consumer: Consumer Telephony in a Wireless World

This document includes an
Executive Summary excerpt from Insight's telecommunications market research report.

This online excerpt is only a small portion of a much larger report which contains in-depth market trends, vendor profiles, business strategies, and five-year revenue forecasts.

Copyright 1999 by The Insight Research Corporation. All rights reserved.

Please review the complete Table of Contents (including Figures and Tables) for the full scope of this report, order this report.

If you are interested in a custom study on this subject, please call Insight at 973-605-1400 to confidentially discuss your specific requirements.

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Report Information

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Electronic Copy Price:  HTML, PDF (Adobe Acrobat), or Word versions available with limited copyright release. Please contact us for pricing details.

Release Date:  September 1999
Forecast Years:  1999 through 2004
Number of Pages in Report:  106
Number of Figures in Report:  33
Number of Tables in Report:  21

Geographic Coverage:  US

Report Description:
Once a luxury only affordable by high income households, wireless cellular and PCS calling is becoming more and more accessible to the general consumer populace. Costs are dropping to 10 cents per minute in some markets and promotional items (such as free weekend airtime) abound. Stories are circulating of customers choosing to disconnect or never sign up for wireline service because wireless is the more attractive alternative. Is wireless becoming a viable replacement for wireline service?

This Insight Consumer Series report will highlight and analyze some of the strategies that large telecommunications companies have used in targeting these wireless customers. A key component of this report will be a survey of 1,000 consumer households, which will provide insight into customer preferences and needs as well as the desirability of the various services and benefits offered by wireless companies.

Report Excerpt:

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Just how quickly will Americans make a wireless phone their only phone? The media publish stories about it at least once a month, but are we looking at a phenomena confined to a college-age cohort group or at something that is spreading more evenly throughout society. INSIGHT’s research found that, depending on the type of household, as many as six out of ten people would consider using their wireless phone as their primary phone if the costs were equal. And with wireless per minute prices falling and penetration rates growing, 2000 is shaping up to become a watershed year for the cellular industry.

Most people who use their wireless phone as their primary phone do not discontinue the use of a wireline phone altogether, keeping it for emergency use or, more often, for Internet access. Actual substitution, where customers disconnect their landline phones, is still years away. What we are seeing is that customers are using their wireless service more and their landline service less.

The reduction in per minute prices for wireless service is one easily identifiable factor driving consumers to use wireless service as their primary means of communication. Nationwide pricing plans are bundling long distance with local service and not charging for roaming. They are effectively bringing the price of wireless service to parity with landline services.

Indications are that when the numbers are finally tallied for 1999, this will be the year when the US will finally see the growth rates in wireless comparable to what European countries have witnessed. A number of factors are converging in the US to stimulate that growth:

  • increased penetration of wireless service,
  • additional competition,
  • larger coverage areas,
  • increased digitalization of wireless networks,
  • lower pricing,
  • creative marketing and distribution packaging,
  • bundling of long distance and local minutes, and
  • increased use of prepaid services.

    The Market

Currently only six percent of all the calls made in the US are made from a wireless phone, but this number is predicted to increase to 9.6 percent by 2000 and to 12.7 percent by the end of 2002. By 2005 worldwide wireless traffic is expected to account for 25 percent of the total traffic, up from five percent in 1998.

Wireless service is shifting from using analog signals to digital. At the end of 1997, only 12 percent of the US subscriber base was digital; today, that figure is at 27 percent. In 1998, more than three out of every four new wireless subscribers chose a digital service.


This report is based on primary and secondary research. Primary research consisted of INSIGHT’s proprietary survey of 1,022 consumers as well as interviews of regulators, industry players, and academicians. The survey was weighed to account for probabilities of random selection of an individual male or female household member and balanced by age, sex, race, and education to match key US Census demographic variables. Secondary research was based on information from various regulators and government agencies, searches of news and periodical articles from newspapers and trade journals, Internet searches, research reports from a number of securities houses, and attendance at conferences and trade shows.

The information contained in this report is as accurate and complete as possible, based on available data. The companies profiled in this report neither officially endorse nor necessarily agree with the contents of this report.

Key Findings of the Consumer Study

  • Wireless penetration in the US is approximately 25 percent and is rising by about four percent a year.

  • Wireless usage will increase as prices continue to fall and as carriers continue to introduce new marketing bundles that effectively bring prices down below 10¢ a minute.

  • Wireless users are predominantly interested in having a wireless service that offers nationwide service with no roaming and no long distance charges.

  • Key drivers to increasing wireless usage are mobility, convenience, and accessibility. Users are willing to pay extra for services that provide them with these qualities.

  • Wireless carriers have not done enough to educate consumers about the benefits of using a wireless phone. As long as wireless phones remain a luxury item, usage will not increase. Although consumers are beginning to perceive wireless phones more as a necessity, more needs to be done to speed up this change.

  • Complete displacement of wired phones will not occur until wireless phones can carry data as smoothly and as fast as today’s wired phones.

  • Usage and penetration of wireless services can be significantly increased by adopting some of the same strategies and market segmentation that European and Asian (predominantly Japanese) wireless providers have been using for the past few years.
Table of Contents:

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Chapter I
1.1 Background
1.2 The Market
1.3 Methodology
1.4 Key Findings of the Consumer Study

Chapter II
2.1 How Wireless Networks Operate
2.1.1 Transmission
2.1.2 Types of Wireless Service
2.2 Growth of the Cellular Market
2.2.1 Wireless Market Share
2.3 Wireless as Primary Telephones
2.3.1 Cost for Wireline versus Wireless
2.3.2 Quality and Connection Reliability
2.3.3 One Number, One Phone

Chapter III
3.1 Wireless Penetration
3.1.1 Description of US Wireless Subscribers
3.1.2 Subscriber Penetration Rates in Other Countries Incremental Growth of Wireless International Trends of Wireless as Primary Carrier
3.2 Factors Hindering US Wireless Growth
3.2.1 No Single Digital Standard
3.2.2 Different Regulatory Structures
3.2.3 Calling Party Pays System
3.2.4 Perception of Wireless As A Luxury
3.3 Market Drivers
3.3.1 Competition
3.3.2 Coverage Areas
3.3.3 Switch to Digital Networks
3.3.4 Pricing Digital One Rate Plans National Coverage Single Rate Pricing Plans Carrier Consolidations
3.3.5 Creative Packaging
3.3.6 Industry Alliances

Chapter IV
4.1 The Wireless Household
4.2 Profiles
4.2.1 Gender
4.2.2 Race
4.2.3 Age Stage of Life Teenagers
4.2.4 Education
4.2.5 Employment Small Offices/Home Offices
4.2.6 Income
4.2.7 Region
4.2.8 Correlation of Wireless Technology with Ownership of Other Technologies Computer Ownership Online Services Multiple Phone Lines Ownership of Computer/Consumer Electronic Products or Services
4.3 Wireless Phones as Primary Phones
4.3.1 Analysis of Survey Data
4.3.2 Profile of People Using Wireless As Their Primary Service

Chapter V
5.1 Targeted Marketing
5.1.1 Marketing of Prepaid Wireless Card Service Prepaid Cards Increase Market Reach Marketing of Prepaid Cards in Europe Pricing of Prepaid Cards Prepaid Services for Those with Poor Credit Prepaid Service Is Not The Same Prepaid Services to Parents and Businesses
5.1.2 Targeted Marketing to Students and Teenagers Marketing Wireless Services to Students in Other Countries
5.1.3 Targeted Marketing to Families
5.1.4 Targeted Marketing to SOHOs
5.1.5 Marketing Phones as Fashion Accessories
5.1.6 Smaller is Better

Chapter VI
6.1 US Trends in Wireless Pricing
6.1.1 Falling Prices For Service Price of Handsets
6.1.2 Digital Wireless Market
6.1.3 Increasing Monthly Usage
6.2 Wireless Service Providers and Their Pricing Plans
6.2.1 AirTouch Communications, Inc. AirTouch’s Pricing Plans
6.2.2 AT&T Wireless Services, Inc. AT&T Wireless’ Pricing Plans
6.2.3 Bell Atlantic Mobile, Inc. Bell Atlantic Mobile’s Pricing Plans
6.2.4 GTE Wireless GTE Wireless’ Pricing Plans
6.2.5 SBC-Southwestern Bell SBC’s Pricing Plans
6.2.6 Sprint PCS Sprint PCS’ Pricing Plan
6.3 The Challenge for Wireless

List of Terms


I-1 Growth of the Wireless Market, 1993-1998
I-2 Market Share of Subscribers by Wireless Technology Used, 1998 and 2003
II-1 Cellular Network Architecture
II-2 PCS 1900 Architecture
II-3 Percentage of US Wireless Subscribers Using Cellular, PCS, and Mobile Radio Technologies, 1999 and 2003
II-4 Growth of the Wireless Market, 1993-1998
II-5 Comparison of US and European Digital Wireless Markets, 1998
II-6 US Wireless Service Providers and Market Share After Pending Mergers, 1998
III-1 US and European Wireless Penetration, 1998 and 2003
III-2 Diffusion Rates of Selected Technologies
III-3 Competition in US Wireless Market, 1998
III-4 Digital Subscribers in the US as a Percentage of Telcos’ Total Subscribers,1997 and 1998
IV-1 Cellular Telephone Penetration, by Gender, 1999
IV-2 Cellular Telephone Penetration, by Race, 1999
IV-3 Cellular Telephone Penetration, by Age, 1999
IV-4 Cellular Telephone Penetration, by Stage of Life, 1999
IV-5 Cellular Telephone Penetration by Households with Teenagers, 1999
IV-6 Cellular Telephone Penetration by Households with Teenagers, by Gender, 1999
IV-7 Cellular Telephone Penetration, by Level of Education, 1999
IV-8 Cellular Penetration, by Employment Status, 1999
IV-9 Cellular Telephone Penetration by SOHOs, 1999
IV-10 Cellular Penetration, by Income Level, 1999
IV-11 Cellular Penetration, by Region, 1999
IV-12 Cellular Penetration, by PC Ownership, 1999
IV-13 Cellular Telephone Penetration by Online Users, 1999
IV-14 Cellular Telephone Penetration by Number of Phone Lines, 1999
IV-15 Cellular Telephone Penetration, by Users of at Least One Computer/Consumer Electronics Product or Service, 1999
V-1 Prepaid Wireless Card Revenue, 1997-2000 ($Millions)
V-2 Profile of European Wireless Prepaid Subscribers, 1998
VI-1 US Wireless Market, by Number of Subscribers, 1998 (Millions)
VI-2 Average Monthly Local Wireless Bill, 1994-1998
VI-3 Wireless Revenue in the US, 1997 and 1998 ($Millions)
VI-4 Average Revenue Per Minute of Wireless Use, 1995-1998


II-1 Digital and Analog Cellular Penetration and Share of US Wireless Market, 1997-2003
II-2 US Wireless Service Providers and Market Share After Pending Mergers, 1998
III-1 Pricing Plans in Plano, TX: Wireless AT&T versus Wireline GTE and SBC Services
IV-1 Cellular Telephone Penetration, by Race, 1999
IV-2 Cellular Telephone Penetration, by Age, 1999
IV-3 Cellular Telephone Penetration, by Level of Education, 1999
IV-4 Cellular Telephone Penetration by SOHOs, 1999
IV-5 Cellular Penetration, by Income Level, 1999
IV-6 Cellular Penetration, by Region, 1999
VI-1 Digital Wireless Market in the US, 1997 and 1998
VI-2 AirTouch’s Wireless Pricing Plans, 1999
VI-3 AT&T Wireless’ Digital One Rate Price, 1999
VI-4 Other AT&T Wireless Pricing Plans, 1999
VI-5 AT&T’s Personal Network Pricing Plan, 1999
VI-6 Bell Atlantic’s Single Rate East and Single Rate USA Prices, 1999
VI-7 GTE’s Wireless Pricing Plans, 1999
VI-8 Cellular One’s Digital Edge USA Pricing, 1999
VI-9 Cellular One’s Wireless Pricing Plans, 1999
VI-10 Cellular One’s Prepaid Phone Kit Pricing Plan, 1999
VI-11 Sprint’s Wireless Pricing Plans, 1999
VI-12 Sprint PCS’ Free & Clear Plan for Business, 1999
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Hellerstein & Associates
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Washington, DC 20037
Phone: (202) 333-6517
or email her at

Copyright 1999 by The Insight Research Corporation.