Online Extra: Getting Cingular Up to Speed

CEO Stanley Sigman talks about the challenges of the AT&T Wireless merger and how he plans to catch up with Verizon Wireless

Cingular Wireless CEO Stanley Sigman has little appetite for taking the megaphone and blasting the good word about his company right now. There's simply too much work to do. Since taking the reins at the joint venture owned by SBC Communications (SBC ) and BellSouth (BLS ) in 2002, he has been, well, singularly devoted to turning a good wireless company into a top-notch one. But Cingular isn't there yet. In metrics like customer service, it's still lagging behind Verizon Wireless, a fact that gnaws at the Cingular chief.

Sigman knows Cingular's parent companies are in serious need of revenue growth, and they're looking to Sigman's business to provide a spark. From his office near the Buckhead neighborhood in Atlanta, Sigman took time to talk to BusinessWeek Chicago Bureau Chief Roger O. Crockett about the progress Cingular is making and when it expects, as he says, to become "best in class." Edited excerpts of their conversation follow:

How do you feel about your position in the marketplace today?

The reason we did the $41 billion acquisition of AT&T Wireless [in the fall of 2004] is we concluded that we didn't have the assets or the scale to be best in class. Therefore, we did the acquisition to take two good companies and make them into one great company, performing as Verizon is today.

And the merger is on track. We've said this is about taking us to best-in-class metrics by the end of 2007. We've come out of the blocks very quickly around marketing and sales integration. Now, we're into the heavy lifting of integrating the networks and the operating systems and taking all the complexities, costs, and inefficiencies out of the business. We're getting our business simplified like Verizon's is. And there's work to be done with that.

How are you doing in key metrics like churn and profitability?

We call the key metrics in this company the Four Rs -- rate of penetration, revenue intensity, return on operations, and reputation. On rate of penetration, we're certainly behind Verizon. We outsell them in gross sales by 20%, but their churn is better than ours, so their net addition of customers is better. In average revenue per user, we were about a dollar better than them -- about $50 vs. $49.

On return on operations, they're the best in class and we're the lowest in class on our margins. And on reputation, they're best in class and we're toward the bottom of the pack.

What's your plan to improve?

It's the integration of the company. We have to integrate the networks to get those expenses out of it. That improves your margins. That will give you a better network performance and better customer-service experience. That will reduce churn. If you reduce the churn, then you take cost out of the business.

What's the strategy for improving your service and reputation?

I don't think it's time for us to go out touting on a national basis that we have the best network until we do have the best network. I know where our network stacks up. There's absolutely no reason why we can't have as good a network as Verizon has. If we don't, we failed to execute.

What's your data strategy?

We have more data customers than anyone else in the market today. We have the most prolific 2.5G data network [which runs at 60 to130 kilobits per second] in the country. We have nearly 47,000 sites.

What services do you offer that have given you the No. 1 spot in data?

[The biggest segment] of the data services is e-mail messaging. We're the leader in BlackBerry (RIMM ). Nokia (NOK ) announced a device with a BlackBerry client on it (see BW Online, 9/22/05, "Few Links for BlackBerry Connect").

Where are you with the rollout of your super swift 3G (third-generation) network?

We're probably 12 to 18 months behind Verizon today. We will roll out in 15 to 20 markets by the end of this year. And then it ought to accelerate. And we'll be close to being in all the top 100 markets by the end of 2006.

How much does being behind Verizon in 3G matter today?

If you believe what researchers say, it doesn't matter today. What the enterprise space wants is broad coverage. They don't want holes. So we have [broad coverage], and so we're winning in the marketplace. But we can't stay where we are.

How would you sum up you strategy?

We have four strategic imperatives for the company, and we're executing on all of them. One: Build the best network.

Two: Develop compelling products and services (see BW Online, 10/21/05, "Wireless Goes Boom").

Three: Deliver the best customer service experience.

Four: Have broad, pervasive distribution. In distribution, we've partnered with RadioShack (RSH ), which brings 5,000 additional [outlets] into Cingular beginning in January. RadioShack claims that 94% of the population is within five minutes from one of their stores.

How are you improving customer service?

Forty percent of customers are likely to call customer care after their first month of usage. We identified what we can improve in the sales process. We call it the service summary. It explains what your first bill is going to look like, it explains the taxation and the fees, it shows you how to set up voice mail.

Also, when you're a Cingular customer, you can press a button on your phone and find out what you owe and how many minutes you used. You can even make a payment.

Will you continue to get exclusives on new phones, like you did with Motorola's (MOT ) Razr and Rokr?

Absolutely. A company of this size gets you scale and leverage. When you have 51 million customers and you're doing more gross sales than anybody else, Motorola and all the stakeholders will listen to you (see BW Online, 10/18/05, "Is ROKR Missing that Special Magic?"). They'll listen and they'll work with you -- and they've been great partners.

Edited by Patricia O'Connell

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