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Consumer Cellular To Add Step-Up Smartphones, LTE Service

2/25/2013 07:04:00 AM Eastern

New York - MVNO Consumer Cellular, which targets the 50-plus age group with no-contract postpaid service, will move into high-end smartphones, launch 4G LTE service, and launch its first own-brand cellphone in 2013, co-founder and CEO John Marick told TWICE.

The Portland, Ore.-based MVNO will also boost is consumer-advertising spending by 30 percent this year to $65 million, in part by expanding its TV-ad schedule into prime time for the first time.

Consumer Cellular sells its service direct to consumers, through more than 800 Sears stores, and through 265 RadioShack franchise stores, having expanded beyond direct selling in 2010 with the launch of sales through the RadioShack franchise locations. The MVNO is also looking to expand to an additional retailer by the end of the year.

The company’s first high-end smartphones will be from LG, all with 4G LTE, big screen sizes of 4.3 to 4.7 inches, and retail prices from around $300 and up. Three current 3G HSPA smartphones from Consumer Cellular are priced from $100 to $150, and a refurbished 3G iPhone 3GS sells for $175.

The LG phones will be available direct from Consumer Cellular, available through Sears, and available to RadioShack franchise stores if the individual stores choose to assort them, Marick said.

To help customers reduce the up-front cost to buy one of the LG LTE phones, Consumer Cellular for the first time will offer a financing program to its direct-to-consumer purchasers, enabling them to pay $100 up front and $25/month for eight months through their monthly service bill.  Consumer Cellular also hopes to offer a similar deal through Sears using Sears’s credit card.  In either case, consumers will have the option to pay the full phone price up front, Marick said.

 The first LG phone, the $300 P930 with 4.3-inch screen, is targeted for March or April availability, followed at the end of April by the $300 LG Escape. Both are already available in the U.S. from AT&T.

By the end of the year, a third LG smartphone will be available.

The LG phones will operate in 4G mode as soon as Consumer Cellular turns on LTE service in the second half. LTE service prices will be the same as 3G HSPA prices, Marick said.

In June or July, the MVNO will launch its first own-brand phone, a flip phone made by Huawei with the MVNO’s input. The $35 Snap will be a 3G feature phone that will become the MVNO’s entry-level phone. “It’s harder to find manufacturers who make flip phones,” Marick said of the need to partner with Huawei to develop the private-label phone.

 The Snap features large raised buttons and comes out of the box with such defaults setting as large-font type and high-volume ringer.

 By year’s end, the MVNO’s phone selection will consist of the Snap, a Doro-made phone designed specifically for seniors, and four to five smartphones starting at $100. That compares to a year-end 2012 selection consisting of a feature phone and three smartphones, Marick said. By the end of 2013, the Motorola Bravo smartphone will be phased out, two current Huawei smartphones will continue, and the refurbished iPhone 3G3 will be replaced by a refurbished iPhone 4, he noted.

The company will continue to sell a SIM card that consumers can buy to insert into their existing phone to obtain Consumer Cellular service. The card, which will work in LTE phones, is free when purchased directly from the MVNO and $10 when purchased through Sears, though consumers get a $10 credit on the phone bill if the card is purchased at Sears.

In expanding retail distribution, Marick said future retail partners would have to be “where our demographic is comfortable going in,” and the retailer would have to accommodate most of the company’s SKUs, Marick said.

Consumer Cellular has grown to the point that “we pull in enough traffic to interest retail partners,” Marick said. The company’s has also become well-known through its advertising, and the company has its EDI integration down, so taking on Consumer Cellular products is “not risky” for retailers, he added.

Consumer Cellular’s advertising budget has grown 30 percent per year for the past six years, tracking 30 percent annual growth in revenues, Marick noted.

This year’s $65 million ad budget, as in previous years, will include direct mail, print publications, on-line and daytime TV ads, but this year, TV ads will expand into prime time, Marick said.

The company, which resells AT&T-network airtime, had 961,000 subscribers at the end of 2012 and $260 million in 2012 revenue. Marick projects 1.25 million subscribers at the end of 2013 with $335 million in 2013 revenues.

In Walgreens stores in Florida, the company has offered one Doro senior-targeted phone, but the effort is winding down because the phone was just one product of many electronics products on a Walgreens electronics display, Marick noted.

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