Historical Strategic Issues
When it comes to wireless carriers in the United States the most common historical strategic issues revolves around price, performance, and customer service.
The key players in this industry had to mindful of all three factors because the consumers in the U.S. market can easily switch to another carrier if they are not satisfied with the value they are getting for their money and the kind of service that they believe they deserve.
Take for example the ability to SMS or to text one another. There was a time when this type of service was non-existent in North America (Gow & Smith, p.58).
The key players in the industry had to balance all three in order to increase their market share. Their strategists cannot afford to simply focus on price because their competitors are willing to lower their own prices as well in order to attract more customers and yet at the same time make their offer much better by improving the customer service aspect of the business.
Among the key players in the industry, a reliable service is already a given, and yet users of wireless communications technology are also looking for cheaper rates and if possible the capability to buy a mobile phone at a lower cost.
The price of the plan or the service is affected by the operational costs incurred by the wireless carrier. Thus, streamlining the operations and finding ways to lower overhead costs is a permanent fixture of a company-wide strategy. There are many things to consider in this regard such as technology and regulations stipulated by the Federal Government.
There is a need to acquire the appropriate technology in order to maintain a certain level of performance. This is a major source of expenditure for the company. Furthermore, new laws regarding tariffs and other forms of taxes can easily limit the capability of wireless carriers to offer cheaper plans and better rates for their consumers.
In order to maintain quality service, wireless carriers had to be contented with relatively lower profit margins (Abell, p.1). This explains why the wireless carrier business is a very competitive industry. Key players in this industry may be forced to accept a smaller profit margin. On the bright side, these firms are not expected to slow down in the next few years because of the phenomenal growth in the number of people using mobile phones (Kavoori & Arceneaux, p.155).
Key Players and their Operations
According to a respected market research agency there are four major players in the wireless telecom carrier industry and these are: Verizon Wireless; AT&T Inc.; Sprint Nextel Corporation; and Deutsche Telekom AG (IBISWorld, p.1). The rankings change all the time because of the competitive nature of the industry there is a constant need to do mergers or buy-out the competition. But as of March of March of 2011 AT&T is considered the largest wireless company in the United States (Abell, p.1).
AT&T earned this distinction when it decided to purchase T-Mobile USA from Deutsche Telekom for $39 billion and as a result the combined entity is now one third larger than former number one Verizon Wireless (Abell, p.1). The significance of this new development is seen in how AT&T has now more than twice the subscriber as Sprint Nextel (Abell, p.1). Nevertheless, AT&T cannot afford to rest on its laurels so to speak because subscribers can easily change carriers if they believe they can get a better deal.
Strategic Change
Consumers should expect constant change when it comes to the strategies employed by wireless carriers. Strategic change is always dependent upon price, performance and customer service; there is a need for constant adjustment in order to please as many subscribers as possible. It is imperative to retain loyal customers while at the same time attract new subscribers and take a bigger piece of the market.
Wireless companies had to skillfully balance price, performance and customer service. The CEOs of these firms knew very well what is expected of them and it is to deliver the best value to increase the profitability of the company and achieving all of that without spending too much.
The most dreaded scenario is to see loyal subscribers transfer allegiance to another wireless company. When it comes to the price war it can be argued that wireless companies already demonstrated their willingness to lower the price of their plans. Thus, the crucial battle is all about performance and customer service. The significance of these two factors can be seen when a wireless company begins to experience success and the increased number of subscribers puts a toll into their infrastructure.
As a result the most common strategic change taking place in recent years is the ability to consolidate, to merge with other companies and to buy-out the competition. According to one analyst the primary reason why AT&T had to acquire T-Mobile USA is due to its connectivity issues and the perception that it is not a reliable wireless company (Abell, p.1)
This is of course due to the fact that AT&T has an existing business partnership with Apple and this has resulted in the 80-fold increase in its wireless-data usage (Abell, p.1). By acquiring T-Mobile USA, AT&T hopes to address this perception problem.
Strategic change in the U.S. wireless carrier industry is heavily affected by the mobile phone phenomenon (Grant & Meadows, p.316). Consider the following research findings: “Adolescents use the cell phone to network with peers. For adults, family and security drive use” (Grant & Meadows, p.316).
The mobile phone is not only a communication tool but has now become a mobile computer and in turn became a reliable source of news, information, entertainment, social networking using wireless applications and the World-Wide-Web to interconnect and download information.
In addition, the mobile phone has become a status symbol and an extension of the self. For instance, “adolescents are the most active in reinventing wireless technology as a personal medium and a social prop for self-presentation … fashion attentiveness affects the purchase, use and replacement of cell phones” (Grant & Meadows, p.316).
This observation was corroborated by an interesting discovery made a research group. In their study they found out that Verizon Wireless is the leader when it comes to customer service and performance in 2008 (Carton, p.1).
Respondents were interviewed with regards to dropped calls. Respondents also provided feedback when it comes to cellular service provider satisfaction rating. In both instances Verizon Wireless came on top and yet subscribers are switching over to AT&T.
The major reason why AT&T has more subscribers than Verizon Wireless in 2008 is attributed to what the company can offer in terms of mobile phones. AT&T subscribers can choose a deal where the company enables them to own an iPhone and this is the main reason why revenue is up.
Strategic change must be focused on price, performance and customer service. But competitors in the wireless carrier industry must also focus on how they can provide better phones on top of the great deals they are offering their subscribers and potential clients. These firms had to realize that “the cell phone is characteristically identified with new modes of mobility, personalization, identity, and individual and group relations” (Kavoori & Arceneaux, p.155).
This is nothing new because Nokia in the past decade made a statement with regards to their unconventional designs and made the realization that mobile phones must be associated with lifestyle and emotional appeal (Gow & Smith, p.60). This is a feature of the wireless communication business that should become a major focus of strategic change.
It is therefore crucial to consider how a wireless carrier can provide more services related to the personalization of the mobile phone. Subscribers are no longer contented with having a mobile phone. They also wanted the device to express their identity and personality. The ability to download applications to enhance the usability of the mobile phone should be a major source of income for telecom companies.
Strategic change must be done in such a way that a firm continues to eliminate any form of waste; it is imperative to streamline operations to increase the profitability of the company. On the other hand these firms must realize the power of the consumers to switch carriers in an instant.
This is the beauty and challenge of wireless communication technology. It is no longer enough to provide a reliable communication platform it is also important to understand how mobile phones had revolutionized 21st century living and therefore all the CEOs working within this industry had to acknowledge that style and substance goes hand-in-hand when it comes to wireless telecommunication services.
Works Cited
Abell, John. AT&T to Buy T-Mobile, Becomes the No.1 U.S. Wireless Company. Web.
Carton, Paul. Verizon Wireless Leads in Performance, but AT&T Takes Market Share. 2008. Web.
Gow, Gordon and Richard Smith. Mobile and Wireless Communications: An Introduction. New York: McGraw-Hill, 2006.
Grant, August and Jennifer Meadows. Communication Technology Update. Vol. 10. MA: Focal Press, 2006.
IBISWorld. Wireless Telecommunications Carriers in the US. Web.
Kavoori, Anandam and Noah Arceneaux. The Cell Phone Readers: Essays in Social Transformation. New York: Peter Lang Publishing, 2007.