By: Gigaom
To small carriers the iPhone is about prestige, not activations
Midwestern regional carrier Cellcom won't reveal how many iPhones it sold last quarter, but according to CEO Pat Riordan the specific numbers are irrelevant. The iPhone is luring new customers into its stores, it's keeping old customers loyal, and it completes Cellcom's smartphone portfolio.

Cellcom CEO Pat Riordan won’t tell you how many iPhones the small Wisconsin operator has sold since it began offering the device on April 29. He will say that the iPhone broke all of Cellcom’s single-day sales records. He will say that iPhone customers sign up for pricier voice and data plans. He just won’t give specific sales figures, and at the end of the day, those numbers don’t really matter.

The iPhone gives Cellcom a critical tool in competing against the big operators in its little swathe of eastern Wisconsin and northwestern Michigan. Cellcom prides itself in providing better service and coverage than the big national carriers, Riordan said, and that’s allowed it to grow to 300,000 subscribers in a fairly limited territory (it’s largest market is Green Bay, Wis.). The problem is customer loyalty can only carry Cellcom so far if it’s not offering one of the most desired smartphones in the US.

“Customers were telling us they were simply going to leave us because we didn’t have the iPhone,” Riordan said. “We know are sales had been falling between the end of the year and April, and we think not having the iPhone was the reason.”

Cellcom’s 3G footprint

Riordan doesn’t think that it will suddenly start raking in hundreds of thousands of new customers because of Apple, though it is giving Cellcom’s current customers a lot of reasons to stay: 75 percent of its iPhone sales were upgrades.

The iPhone’s other key benefit is its allure, Riordan said. While there are definitely customers that enter Cellcom’s stores and zero in on the Apple display — ignoring all other merchandise — a good deal of customers are lured into a Cellcom retailer by the iPhone only to leave with an Android device, Riordan said.

Of the seven small US operators that landed the iPhone, only two revealed specific sales numbers for the second quarter: Alaska Communications sold 11,000 iPhones (which it gave away free with a 3-year contracts) and regional competitor GCI sold 9200. Considering that Alaska has 120,000 total customers and GCI has 141,000 those are significant returns. But at any of the big three operators, Apple sells millions of devices each quarter.

Apple isn’t going to push the meter on its global device sales through small-fry carrier distribution, but the iPhone will have plenty of tangible benefits for those operators. Many of these regional and rural players already have the network tools and community standing to compete with the big operators in their little corners of the US. Cellcom, for instance, built its own LTE network by leasing Verizon’s 700 MHz spectrum, and it offers nationwide service through roaming agreements. It’s quarterly sales skew between 60 percent and 70 percent toward smartphones, just like the big operators.

The addition of the iPhone, however, gives Cellcom a complete smartphone portfolio and the final reason for Midwesterners to take it just as seriously as Verizon or AT&T.


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