At&T Wireless: Text Messaging

Cost Deferral Policy In the past, OSI had not entered into transactions in which significant up-front costs were incurred in connection with the set-up and origination of its contracts, and, accordingly, OSI has not adopted a policy for accounting for these types of costs. OSI has indicated it plans to adopt a policy of deferring all up-front costs related to this contract including system set-up costs, sales commissions, and other contract acquisition costs. Management of OSI believes they will recover these costs and generate substantial profits through their call revenue (initial term and renewal periods), and the up-front costs incurred are a necessary investment in the contract. Based on customer lifting studies performed by an outside consultant and other industry statistics, OSI expects its contract with Company X to extend beyond the initial contract term and estimates a customer life of approximately 4.5 years. The total fees (set-up fee and call revenue) over the customer life are expected to exceed the direct costs of the contract, including amortization of the deferred costs before any indirect or Selling, General, and Administrative costs.

The Canadian cellular service’s industry is comprised of approximately 15 cellular providers. These operators employ approximately 16,000 individuals and generate more than CAN$10B in revenues annually, which represents almost 30 percent of the Canadian telecommunications market. The Canadian wireless industry has been experiencing an annual growth rate three times that of any other Canadian telecommunications sector. This is very significant as Canada is in the top 10% in the world for broadband penetration.

The future of the telecommunication industry is an exciting future. No longer can these companies depend on telephone service plans to maintain profit. Each company needs to find other avenues, packages and services that can be sold to existing customers while attracting new customers. The companies

8. Threat of New Entrants: “There are a number of low-cost carriers (LCCs) in the domestic market and the Company competes with LCCs over a very large part of its network.”

Consumers have certain types of perceptions of price in correlation to the product quality and service; therefore, company should base their price on the customer’s perceived value (K&K). Some consumers are price sensitive, while others are quality or both. “The key to perceived-value pricing is to deliver more unique value than competitors and to demonstrate this to prospective buyers” (p.183). For example, Dish Network has introductory price for a year or two, then it bounces back to regular price. Also, the company offers different TV packages, which can be customized according to the station most watched or one can pick one of the package the company provides. I have been with Dish Network for more than 5 years and one thing that kept

While Wireless costs went up, Selling, general and administrative expenses went down. This was due to non-operational credits recorded in 2015. A contributing factor of this was a decline in sales commission in the Wireless segment. This drop in commissions was due to an increase in consumers choosing to use the device payment plan rather than point of sale purchase.

CTIA – The Wireless Association reports that the number of text messages sent in the US rose from 362.5 billion in 2007 to an astonishing 2.19 trillion in 2012. In light of

Verizon continues to impress the nation with its impressive 4G LTE network and the efficient coverage it provides across the US. The industry as a whole is under market saturation and with many individuals carrying a smartphone competitors must find other ways to expand. This may be a problem for Verizon because with excellent service comes a price. Many competitors are using this as advantage to gain new competitors.

Price refers to the amount paid by customers to enjoy the products being offered (Perreault Cannon & McCarthy, 2013). The cost of high cost of healthcare is often considered as a major concern by

The setting of ‘fair’ prices to consumers: the company should bear in mind that customers nowadays will shop around to compare the intended products and services. However for the business survival and growth purposes, the company should also maintain its profit margins to ensure its business growth and expansion. The company needs to consider its cost factors and business operation areas to reduce or minimise the costing areas.

The telecommunications industry has steadily rebound since 2009; this is because of the growth of not only the mobile and broadband structures, but also the increase of the video market. In Figure 1, the projected outcome is indicates a steady increase in the new 4G mobile broadband networks which will fuel continued wireless growth. “Business customers in particular will continue to use this technology to expand their capabilities beyond the desktop computer. Emerging markets such as China, India and Latin America are expected to see strong growth,” (Verizon, 2011).

- The smartphone industry is very capital intensive due to high research and development (R&D) costs and expensive manufacturing facilities. This raises the barrier of entry and makes it difficult for small companies to enter. Many of the firms that compete in this industry have existing long-term contractual relationships with mobile carriers and benefit from their significant brand equity. These companies also have a great deal of knowledge and experience through economies of learning, which gives them a major cost advantage over smaller entrants. New entrants will have difficulty getting carriers to adopt their phones because many carriers are already in profitable deals with the large mobile phone manufacturers.

Canadians demand for cutting edge mobile technology and services has shifted the industry to require frequent capital expenditure. Unofficially, Wind Mobile could be potentially the fourth biggest communication service provider to address the evolving nature of technology. The global boom in demand for mobile cellular communications has been increasing exponentially. There is clearly a continued need for investors to invest in new technology within the wireless industry.

This market allows organization a free long term ability to adjust their good services and prices with the changes in the market conditions. Thus AT&T should take advantage of the freedom in this market structure and ensure that their supply and prices are correlated to their demands.

Trends in the market include the growing number of people within the 15-29 age range. Also, phones are being used for much more than just calling, other functions like texting and music playing capabilities have dominated much of a user’s data usage. As for market characteristics, the mobile industry has reached almost 50% penetration with about 130 million subscribers, and reaching its maturity. The cost structure has been very confusing for consumers, with hidden fees, overcharges, and lacks to reward users who do not use their plans to the max. And finally, channels include all service provider stores and retail consumer stores, for example, Target, Walmart, and Best Buy.