Kevin Hunt - The Bottom Line
The Bottom Line
May 18, 2013
Consumer Cellular remains relatively unknown among wireless carriers despite giving its subscribers what every AT&T or Verizon (or cable television) customer desires: a no-contract, low-cost, buy-only-what-you-need option with basic service starting at $10 a month.
Unfortunately for millions of smartphone power users, Consumer Cellular's core demographic is seniors and its primary phones are inexpensive, and antiquated, flip styles and a no-frills, "senior friendly" devices with larger text, oversize buttons and loud ringers. (Please note that "senior," as applied here, is the modern definition, championed by AARP, as anyone 50 or older.)
Consumer Cellular has been ranked the nation's No. 1 wireless carrier in a Consumer Reports survey the past three years, but it couldn't have done it without AT&T. Consumer Cellular is so small that it's actually a wireless carrier without its own wireless network. It lives like a snail on AT&T's whale tail as a "mobile virtual network operator" that buys and resells space on AT&T's network.
It has the same nationwide coverage as AT&T and the same wireless firepower except for AT&T's new high-speed 4G LTE service.
"But that will be coming shortly," says Consumer Cellular CEO John Marick.
Never heard of Consumer Cellular? The Tigard, Ore., company has only 1 million subscribers, including 15,488 in Connecticut. AT&T had 1.2 million new smartphone subscribers alone in the first three months of 2013.
"They're No. 1," says Jeff Blyskal, a Consumer Reports senior editor, "because of their good customer service, good low price and they give people just as much as they want."
An exclusive partnership with AARP produces about half of Consumer Cellular's customer base — 85 percent of the carrier's subscribers are over 50 years old. Yet Marick co-founded the company in 1995 not for seniors but for all limited-use cellphone customers who disliked long-term contracts.
"We knew there was a void in the marketplace for the more casual and convenience user," says Marick. "Then, out of necessity, we said, 'Who's going to fit our demographic most? It's the senior population.' To be most efficient in our advertising, we quickly shifted and said, 'Let's focus on the senior population.'"
Now it packages "Anywhere" monthly service plans starting with a $10 fee that includes no usage and charges 25 cents for each additional minute. For $15, a user gets 150 minutes with each additional minute 25 cents. The company also packages text messaging and web-browsing in monthly "Connect" plans starting with 100 messages and 10 megabytes of web data (a five-minute YouTube video could consume half, or all, of the allowance) for $2.50.
With the major carriers, says Marick, "there's a focus on the unlimited, which is great if you're a very heavy user. But essentially you're paying for something you're not using."
For chronic users, Consumer Cellular's Connect Max plan offers 10,000 messages and 1 gigabyte of web data each month for $30. That's not the typical Consumer Cellular user.
"We're focusing on a niche they [AT&T] don't want to go after," says Marick. "They're all about early adopters, power users and business users. I'm sure they wouldn't tell you they don't want to service the seniors but it's certainly not a focus for them. When they look at what we do, it's really bringing incremental business onto their network. We're able to support that group in much better way than they are."
Consumer Cellular (www.consumercellular.com) introduced its first smartphone about two years ago, with an all-Android lineup now that starts with the $100 Huawei 8652. The most recognizable smartphones are the just-added Samsung Galaxy Exhilarate and the LG 930, a device running the Android 4.0 (Ice Cream Sandwich) operating system with a 1.5-gigahertz processor and 8-megapixel rear camera.
"The word smartphone scares a lot of people," says Marick, "at last our senior customers. But when you get right down to it, in a lot of ways those phones are easier to use. It's certainly easier to send a text message."
Power users should note that Consumer Cellular is a good candidate for a hand-me-down phone, too. So if you want to set up Grandma or Grandpa with inexpensive cell service, all it takes is a phone once used with AT&T's service — that includes iPhones — or an unlocked GSM phone. Consumer Cellular provides a free SIM card, with no activation fee, that makes the phone operable.
Blyskal, of Consumer Reports, says Consumer Cellular customers are more satisfied with their service, for the price, than with other carriers like AT&T, which finished last in the survey of the top wireless carriers the past three years.
"With AT&T, according to our readers," says Blyskal, "they're not satisfied. But satisfaction is a matter of price and quality. At the prices AT&T is charging, it's a less satisfactory experience. At a lower price, such as Consumer Cellular's, it's more satisfying. You're kind of getting what you pay for."
Will Consumer Cellular's experience get the attention of the major carriers?
"Part of it becomes consumer demand," says Marick, "and companies like us coming in and showing that it can be done differently. [People] start looking for alternatives. If you get enough people doing that, suddenly the industry is going to start taking a look. We're pretty proud of the fact that we're kind of changing the landscape and showing that it can be done differently."
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