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Compete, Inc. Finds Consumers Take Wireless Plunge with GoPhone® from AT&T Wireless

Consumers' Shopping Activities Indicate GoPhone® Effective at Appealing to New Segment

Boston, MA - July 21, 2003 -- The number of consumers who are actively evaluating a mobile phone or service plan online from AT&T Wireless has climbed since the GoPhone debut, according to a new study from Compete, Inc. More importantly, GoPhone is appealing to two under-penetrated wireless market segments: consumers who are credit challenged and those seeking convenience. Further, Compete data indicates that the majority of interested consumers are potential new customers for AT&T Wireless. The bottom line is that the GoPhone appears to be contributing already to the AT&T Wireless vision of achieving profitable growth in a new market niche.

"The launch of the GoPhone signals an evolution of the wireless market," said T. J. Mahony, Compete's senior wireless analyst. "Nearly one third of consumers who want to purchase a mobile phone are currently rejected due to credit issues. In fact, AT&T Wireless rejected four million consumers last year turning away more than $1 billion in revenue," added Mahony. "The GoPhone has created an attractive option for consumers who have been denied a plan due to poor credit or no credit history, bridging the gap between the convenience of postpaid offerings and the flexibility of prepaid plans."

In the study, Compete examined overall interest in GoPhone (following its launch) using early online indicators of purchase intent and total demand to determine if the phone is appealing to consumers in the under-penetrated markets that AT&T hoped to acquire. Compete's findings showed that:

Interest in AT&T Soared. Since the GoPhone debut during the week of May 4, AT&T has been successful at attracting "deliberate" online consumers - those with intense shopping activity and a relatively high inclination to purchase a mobile phone or service plan. Indeed, AT&T's purchase interest levels soared into first place and rose from 20% in early May – on par with Cingular and Verizon – to a high of 28% at the end of May. In other words, more than one quarter of consumer interest in mobile phones or service plans was directed toward AT&T Wireless during the week of May 25.
New Market Segments Were Attracted to GoPhone. GoPhone has attracted a disproportionately high (versus AT&T Wireless overall) percentage of young consumers making less than $30,000 annually. GoPhone's appeal to young, lower income consumers is an early indication that GoPhone has appeal to an under-penetrated market. GoPhone has also attracted a disproportionately high percentage of consumers over 55 years old who make less than $30,000 appealing to a previously untargeted more mature and price-sensitive market.
GoPhone Attracted Potential New Subscribers to AT&T Wireless. In May, only 10% of interested GoPhone consumers were current A&T Wireless subscribers, which suggests that to date GoPhone has not cannibalized AT&T Wireless' highly-valued postpaid customers with its new plan. In contrast, when Cingular launched its Rollover Minutes campaign last August, about half of the interested consumers were existing customers.
GoPhone Siphoned Interest from Both Postpaid and Prepaid Plans. GoPhone consumers were ardent comparison shoppers, evaluating prepaid offerings as well as postpaid plans. Although GoPhone consumers were about two times more likely to consider a traditional postpaid carrier (such as Verizon, Cingular, SprintPCS, T-Mobile or Nextel) than a prepaid one (such as Virgin Mobile, TracFone, FreeUp or BoostMobile), their interest in prepaid offerings was significantly stronger than the average wireless consumer. During their visit to Cingular's website, GoPhone consumers were five times more likely than the average Cingular visitor to evaluate the KIC prepaid plan. Similarly, GoPhone consumers at Verizon were five times more likely to evaluate Verizon’s prepaid plan versus the typical Verizon consumer.

"Early indications are positive for GoPhone," according to Mahony. "AT&T Wireless has succeeded in capturing interest from under-penetrated market segments that are important for its long-term growth. For the wireless industry as a whole, it will be important to assess GoPhone's ability to sustain its momentum and determine if the lifetime value of GoPhone customers merit emulating the strategy that AT&T Wireless has adopted."