Cellular services reseller Ameritel Communications Inc. and its parent company, USCI Inc., Norcross, GA, plan to build a direct marketing cellular service channel on the Internet that will let their subscribers activate cellular service online.
In a bet that it can streamline service, cut the cost of bringing in customers and boost its rate of return per subscriber, USCI recently signed a letter of intent to form a joint venture with Internet services firm Rare Medium Inc., New York, that will develop strategy and lend technical expertise to the effort. The Web site, which USCI expects to have operating in the first quarter of 1999, is slated to include online sales, marketing and customer service for USCI national mass-market wireless services distribution.
“This is something that to our understanding has not been done in the industry,” said Mario Martinez, USCI's president and chief operating officer.
As a nonfacilities based carrier, USCI resells as a single offering the services of 25 different facilities-based carriers — companies that actually operate a cellular network. USCI's coverage can reach about 240 million people in the United States, considerably greater than the reach of any facilities-based carriers. As the Web site is envisioned, subscribers will be able to use it both to activate service and to get customer service support. Customers will be able to pay for the transaction online as well.
“We have the ability to go and activate service virtually anywhere service is offered through these underlying carriers, and the e-commerce aspect would allow us to actually do the financial transaction over the Web site … as opposed to [customers] having to go into a retail store, purchase the phone and then go to the Web site to activate service,” Martinez said. “We would be able to take the order, process the information, take the payment and ship a phone directly to you as a consumer without you having to go to a physical retail location.”
To activate service, customers would enter the same information on the site that they would put on a regular application for service. Activation would take place in a few minutes or a few hours, depending on which carrier the customer chooses.
USCI has traditionally sold its services through mass-market retailers like Radio Shack, Officemax and Staples, and has used both direct response television through QVC and direct catalogs to drum up business. With its foray into e-commerce, the company expects to eliminate costs associated with support of third-party advertising, overhead and customer acquisition.
The company plans to offer phones from one or two separate makers, depending on which manufacturers are offering the best price point that USCI can market through the site, Martinez said. He anticipates possibly switching from one manufacturer to another periodically as prices fluctuate.
“But the key to the success of our Web site will be making the purchasing decision very simple, very straightforward,” Martinez said. “We have very simple rate plan descriptions. We have maybe three to five different rate plans for consumers to choose from. So we believe that a simple offer is critical to our success; and along those lines, we'll have probably three to five different phones to choose from.”
To handle its online endeavor, USCI turned to Rare Medium, which will build, maintain and market the site. The firm, formerly known as ICC Technologies Inc., has a five-year exclusive outsourcing relationship with USCI to handle its online marketing.
The marketing effort is in a business strategy stage now, but will go into production soon, said Glenn S. Meyers, Rare Medium president/CEO. The firm plans to drive potential customers to the site through an online ad campaign and other promotions, and also will handle the full marketing package, from media buying and tracking to return-on-investment analysis.
For its own part, Rare Medium sees the deal as a step in its ongoing effort to cultivate long strategic partnerships with clients and move away from work-for-hire jobs. Doing that means providing business and creative strategy in addition to actual production, hosting and maintenance of the Web site.
Meyers declined to discuss budget figures on the USCI deal, but said Rare Medium will receive a development fee for its efforts and will receive a portion of all activation fees from product sales as well as shared revenue from customers' online activation use.
“For every user that activates online that has air time usage, we'll be getting a percentage of that revenue stream,” Meyers said. “For us, and a lot of other developers in this space, [the deal] really raises the bar, giving us a long-term contractual relationship.”
USCI has not decided on a Web-site address. Martinez expects the development of the site to take the better part of 90 days, with testing taking place through the end of the year.