* Customers would not need to renew after first contract
* Customers could collect points for early upgrades
* Sees lower churn, boost to revenue in coming quarters
NEW YORK, Sept 29 US Cellular Corp (USM.N) aims
to boost subscriber growth by 10 percent and improve customer
loyalty with an unusual new option promising more frequent
cellphone upgrades and removing requirements for contract
renewals every two years.
The No. 6 U.S. mobile service hopes to stand out from
bigger rivals that typically subsidize phones for customers who
sign a two-year contract, which they have to renew the next
time they upgrade their phone.
Instead of contract renewals, U.S. Cellular hopes its new
so-called Belief Project points system will convince its
customers to stay long after their initial contract expires.
The program, due to launch on Oct 1, is similar to airmiles
or retailers like coffee shops that keep customers coming back
by giving them a free beverage after they have earned points
U.S. Cellular customers will put points toward a discounted
early phone upgrade or toward avoiding overage fees when
customers talk longer than their service plan allows per
Analyst James Brehm of Frost & Sullivan said the program
may cause the country's biggest carriers AT&T Inc (T.N) and
Verizon Wireless, a venture of Verizon Communications (VZ.N)
and Vodafone Group Plc (VOD.L), to follow suit.
"It looks like something that could change the way some of
the U.S. service providers do business," said Brehm. "Right now
customers stay with providers because they have to, not because
they want to."
There is a risk that customers will take the subsidized
phone and switch to another provider before they have been with
U.S. Cellular long enough for it to recoup its investment.
But Chief Executive Mary Dillon said this would not happen
as the points are incentives to stay.
"If they were to leave us they'd have to sign a new
contract somewhere else." Dillon said in a telephone interview.
"Our prediction is they'll actually stay."
Dillon also hopes some will upgrade their service to plans
with higher monthly fees because these plans offer more loyalty
points in addition to more calling minutes or mobile browsing.
For example, customers of the company's highest priced
plan, $109 per month, would be able to get phone upgrades
several months earlier than users of its $69.99 a month plan.
The company said it expected the project to increase new
customers by at least 10 percent and to reduce its customer
cancellations or churn rate, currently among the lowest in the
industry at 1.4 percent.
Dillon said she also expects average revenue per user and
profits to increase as new customers and existing customers
sign up for more pricey plans.
"Over multiple quarters, we expect to see this happen,"
said Dillon, noting that it would take time for investors to
see the resulting change in U.S. Cellular's numbers.
(Reporting by Sinead Carew)