Alltel Expands MyCircle Calling Options for Businesses and Consumers

| Jan 15, 2008 | Wireless Services - U.S., Enterprise Mobility - U.S.
| Competitive Intelligence Report

| Analysts: Bill Ho, Kitty Weldon, Matt Kunkle

Current Perspective: Positive
Vendor Importance: High
Market Impact: High - Moderate

Event Summary

January 14, 2008 – Alltel expanded its My Circle unlimited calling feature, dropping the entry point of My Circle eligible plans to $39.99/month for consumers and SMBs ($70 for businesses), while also doubling the amount of My Circle numbers included with higher priced plans.

Analytical Summary

• Current Perspective: Positive on Alltel’s expansion of the My Circle portfolio from ten unlimited calling numbers to one, five and 20 depending upon plan price points, because the carrier is providing further innovation to an already attractive feature for SMBs. Now that My Circle is embedded in the entire postpaid lineup, it provides the carrier with compelling differentiation against larger national carriers. Moreover, Alltel’s proactive upgrade of existing users to My Circle calling without resetting the contract wins kudos. Still there remains the chance that customers at higher-price points may eventually downgrade plans if they determine that 20 My Circle numbers are sufficient.

• Vendor Importance: High to Alltel, because as the number of new postpaid subscribers shrinks as the industry heads towards 100% wireless penetration, new subscribers will come from customers switching carriers. As such, it will be important to retain existing customers, and stabilize voice ARPU while still growing data revenues. In addition SMBs are an increasingly important customer segment for all carriers and favorable voice plans may be a compelling reason for them to choose Alltel over larger carriers.

• Market Impact - Wireless Services: High on the wireless services segment, because while Alltel is still a regional carrier, any competitive successes from My Circle may not be easily countered. Only Sprint and T-Mobile have regional plans that can provide a basis for competitive modification, but any national plan changes from all four national carriers could require additional billing, regional marketing and really a reversal from the trend of stabilized uniform pricing.

• Market Impact - Enterprise Mobility: Moderate on the enterprise mobility segment, because while Alltel is still a regional carrier, any competitive successes from My Circle may not be easily countered. Only Sprint and T-Mobile have regional plans that could theoretically be modified to meet Alltel’s new options, and any national plan changes from the four national carriers could require additional billing, regional marketing and a reversal from the trend of stabilized uniform pricing.

Recommended Competitor Actions

• National carriers AT&T, Sprint, Verizon Wireless and T-Mobile should monitor market share in Alltel territories in Q1 to gauge whether Alltel’s My Circle is getting traction at the lower and higher price points. Carriers should now consider unlimited calling as an add-on feature, with the caveat of designating specific numbers.

• If Sprint falls under competitive pressure against Alltel, it should consider dropping the $5 Sprint-to-Home add-on and quickly begin offering the new Pick 3 for $5 add-on. Only available through a retention program, Pick 3 can provide an attractive alternative nationally outside the Alltel market areas.

• T-Mobile should include unlimited messaging (limited to myFaves numbers) to its myFaves offering. Messaging can start and be limited to text messaging first with picture messaging (MMS) later to increase pressure on all competitors.

Recommended End User / Customer Actions

• Alltel consumers/SMBs will experience a pleasant surprise as Alltel will proactively upgrade the My Circle features in plans below $59.99 (or $90 for enterprises) and double the number of My Circle numbers in plans greater than $99.99, all without having the contract reset.

• Alltel My Circle subscribers who feel constrained by ten unlimited calling numbers should consider upgrading plans to attain 20 numbers. This is entirely more flexible in the case of family plans where every additional family/business member can enjoy the more unlimited calling.

• Alltel subscribers who pay $99.99 and above for their base plan (exclusive of any additional lines) should look at the next tier plan down given Alltel’s generosity. These savings may be used to purchase data services, including variable deck downloads or Axcess services.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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