They say life moves at a pretty slow pace in the South. That may be true for some things, but when it comes to wireless, nothing could be further from the truth. In fact, one Southern city leads the U.S. race for wireless penetration. At 43%, Atlanta has passed up other major markets in the penetration race, according to J.D. Power and Associates.

That is quite a feat for a city that at one time was not even expected to be a viable market for wireless. According to Craig Sparks, BellSouth Mobility vice president & general manager for Georgia, when early wireless consultants first predicted wireless growth, Atlanta was notably missing from the charts. But Atlanta's carriers -- AirTouch, AT&T Wireless, BellSouth, Nextel, Powertel and Southern LINC -- have proved those early analysts wrong.

In fact, other U.S. markets are looking to the Atlanta model for ideas of how they can reach similar heights. But these six Southern carriers admit they can't take all of the credit for the wireless penetration rate. They attribute most of the success to Atlanta's inherent geographic and demographic factors. They claim to have been in the right place at the right time.

Demographically Correct Atlanta is a sprawling city with one of the longest commute times in the country, said Powertel's Rod Dir, executive vice president & general manager. The average commute time is more than 30 minutes each way. Commuters spend more than an hour a day en route, which means that wireless service becomes a necessity rather than a practicality.

"That alone is a big issue," Dir said.

In addition, the Atlanta population continues to boom as more people move in than out. According to Sparks, "Atlanta is the magnet of the Southeast."

And carriers note that the city is attracting the type of people who are usually interested in wireless services. Typically, new residents are well-educated, highly trained professionals and often from technology-related businesses.

"(They) like the technology; the wireless stuff, and they like to be mobile," said Bob Dawson, Southern LINC president.

These issues, coupled with a good economy, provide a breeding ground for wireless opportunity.

Increased competition also has played a significant role in driving the high penetration rate. As of press time, Atlanta was home to six wireless players offering the full gamut of wireless technologies, including CDMA, GSM, iDEN and TDMA. Carriers agreed that as more players have entered the market, the overall awareness level of wireless services has surged, and the market has expanded.

"Rather than splitting the same pie, the pie is growing," said Bob Levan, AirTouch Cellular director of business development. "Wireless is just starting to turn up at more points of presence and at different types of outlets with varieties (of services)."

Gaining Attention All of this activity has piqued curiosity from carriers across the country. They are closely watching for both successes and failures in the areas of pricing, churn and profitability.

It is challenging because you can't pick up ideas from other big cities such as New York, Levan said. Instead, they are looking to Atlanta for ideas on how to penetrate a market, stay profitable and keep a critical mass of customers satisfied.

"We're ahead of the curve," Levan said. "We are experiencing some things other markets will experience one, two or even four years from now."

So, what does happen to a market that reaches milestones first? Although Atlanta carriers claim no major spikes in churn, they admit there are challenges to address.

Overcoming Obstacles Like other incumbent carriers across the country, AirTouch and BellSouth had to migrate from the 1-sided analog frame of mind to an analog and digital playing field. AirTouch launched its digital migration by segmenting the business users who would most benefit from its new service offering, said Mark Drummond, director of indirect channels. Although AirTouch's sales channels emphasized the digital offering, the carrier continued advertising its analog services as well.

"(We) just recently started changing that mix somewhat," he added. "Now (we have) some promotions around digital to make sure the mid-tier consumers know AirTouch is a digital player."

BellSouth also shifted its advertising and marketing campaigns toward digital.

"We don't want to add more analog capacity unless absolutely necessary," Sparks said.

BellSouth started pro-active efforts to communicate the new digital features to its current analog customer base. According to Sparks, anybody who calls into the customer service line receives a pitch on digital. In addition, BellSouth sends digital information via bill inserts and direct mail pieces. Sales forces even are given incentives to convert customers as they deal with existing accounts.

The push to digital has paid off. Sparks said that it has been "very well-received." At the same time, he admitted, it has been difficult to keep up with demand for capacity and customer-service calls.

"Our biggest problem has been getting enough phones from Nokia and Ericsson," he said.

Meanwhile, new competitors faced their own challenges. AT&T Wireless Services, for example, was the fifth wireless carrier to enter the Atlanta market where four wireless carriers already had established name recognition and a strong customer base. But, according to Emilio Echave, Eastern area president, the entrenched reputation can be a positive or a negative. Customers have had time to evaluate the early service providers, Echave said, which gave AT&T Wireless the opportunity to look at people who had been dissatisfied with other carriers and position itself to take advantage of that. Then, he said, it went to work convincing people that they should buy AT&T's service.

"You just come in differently," Echave added. "People are looking at things differently now than a couple of years ago, so you can adapt to some of those things. I can't say coming in the fifth player hurt us in any way. You just have to do more marketing, and you have to get your message across."

In addition to extra marketing efforts, AT&T Wireless has worked harder to get full coverage in Atlanta. According to Echave, neither BellSouth nor AirTouch will give AT&T in-market roaming agreements.

"They have blocked us out," Echave said. "They are being anti-competitive."

Although the carrier is working through similar issues in Detroit, Echave said the problem is particularly troublesome in Atlanta because both cellular incumbent carriers have taken the same position.

"It is interesting that they both have the same idea that the best way to compete is to make sure no one else can compete," he added.

The FCC is looking at some of these issues, and AT&T continues to approach AirTouch and BellSouth for negotiation opportunities. Meanwhile, carriers agree that coverage is critical. AirTouch's Levan said that "a number of customers have come back" because the wireless coverage was not what they expected from another digital provider.

Wherever They Roam When it comes to roaming coverage, each carrier approaches the market in a slightly different way. For example, Dir said the majority of Powertel's customers are most interested in the Southeast region. With that in mind, Powertel offers Atlanta customers service in 23 cities in the Southeast without additional roaming charges. As more cities are built out, that home service area also will grow. Powertel partners with other GSM providers so customers can roam into other markets for a 50 cents per-minute roaming charge.

Nextel's digital network covers 200 cities and more than 75% of the American population, according to Martin Lock, market president for the Southern region. Customers have no roaming charges and pay 15 cents a minute for long-distance charges. Nextel also partners with other iDEN systems in Mexico, Canada and South America.

"This is a big selling point," Lock said.

Dawson boasts that Southern LINC's "selling point" is its unique, complete coverage of not just the metropolitan area of Atlanta, but full rural service coverage as well. Southern LINC customers purchase zones that cover Atlanta, North Georgia, Alabama, Florida and Mississippi. Subscribers can buy the whole state or just a certain part of the network. When customers choose to purchase just one zone, they simply accrue additional charges when they roam outside of that zone.

Marketing Overload Because each carrier offers slightly different roaming and coverage plans, it is up to the customer to decide what is best for him. Unfortunately, that is not the only decision customers face. They also must base their service selection on a variety of other factors, including technology, features and pricing. And with six wireless players all touting their own selling qualities, Atlanta residents are being overloaded with information. As a result, carriers agree that customer confusion is at an all-time high. Echave said this is a problem the entire industry needs to address. According to Echave, customers have the sense that there is a hidden agenda behind the information the industry is providing.

"Everyone is looking to read the asterisk," Echave said.

In a carrier-saturated market, competition becomes a marketing game, but it needs to be done in a less confusing way without all of the "acrobatics," he added.

Although carriers aren't getting into CDMA vs. TDMA vs. GSM in advertising and promotions, Powertel's Dir said that many customers ask the same question: What is the difference between the digital services?

"That is when it begins to get interesting," he said.

In some cases, this confusion leads to misunderstandings. According to Sparks, Atlanta customers are being misled.

"From a marketing perspective, customers are hearing messages that don't necessarily deliver everything they expect," AirTouch's Levan agreed.

So how do you make wireless less confusing for customers? Dir said that Powertel relies on a consistent message.

"We might discount our handsets," he said, "but our rates don't change."

For BellSouth, a combination of consistent advertising, well-trained employees, a 24-hour customer service center and an informative web site are the keys to providing accurate information. AirTouch is tackling the problem by providing as much information as possible to its sales channels. According to AirTouch's Drummond, proper sales training is an important part of helping customers understand services. It is amazing how little some salespeople know about the competition, he added.

But mostly, Levan said, it will just take time. "The whole industry will get better at that education as we develop," he said.

Down the Road As carriers address current market issues, they also must look toward the future. For example, will there be a day when cellular carriers no longer are balancing analog and digital services? Will there even be a need for analog service in the Atlanta market? BellSouth's Sparks is hesitant to predict the future just yet.

"It is hard to say that someday we won't have analog at all, but at the same time, I don't want to say that analog will be around forever," he said.

As prices go down, Sparks said customers will recognize the digital package has more value, and they will be attracted to that. But "there will always probably be some residual analog customer base."

On the other hand, AirTouch's Levan sees a trend toward analog's elimination. Although having analog as a roaming backup is critical right now, Levan does not expect it to survive more than 10 years. As handset prices drop and usage rises, the balance will shift, and it will be OK to put lower end users on digital.

While cellular carriers are mulling over analog's fate, all of the Atlanta carriers face the issue of long-term survival. After all, at least one more carrier (Sprint PCS) is scheduled to launch service late this year. Can seven wireless carriers survive in one market? And what are the chances of the market ever supporting its full potential for 10 carriers? Atlanta carriers say they doubt the market will support eight or 10 carriers for long. Echave predicts eight players will make it to market and then will consolidate down to three or four.

"Every industry seems to go through fragmentation," he said. "Then there is consolidation because of economies of scale and capital." Atlanta is no different; it is just a matter of when and how it happens, he added.

Although Lock also was unsure of how many carriers the market could support, he offered this analysis: "The cellular incumbents, Sprint and AT&T will be here. Powertel might be a good acquisition target. Nextel's offering is totally different from these, and Southern LINC is somewhat competitive with us."

Regardless of how many wireless players remain in the market, will this telecommunications competition affect wireline? For Atlanta's iDEN carriers, that is not much of an issue.

"We are not trying to be everything to everyone," Southern LINC's Dawson said. "That's just not what we are targeting."

However, cellular and PCS carriers see the potential for wireless vs. wireline.

"The trend is definitely there," Dir said.

Some customers already have moved away from their landline service, he pointed out. According to Dir, a single person does not need a landline phone at his home when he can take a wireless phone with him anywhere. Why should a single person pay $25 for landline access and $25 for cellular if he can get all the minutes he needs within one rate plan?

BellSouth's Sparks agreed that wireline competition does exist, and as wireless rates come down, the competition will grow for use in second phone lines, alarm monitoring and remote metering. However, he doubts that wireless will ever be an all-out wireline replacement.

"The two technologies will complement each other," Sparks said. "Customers will look at wireline for certain applications. There will be some combination of (wireless and wireline)."

Although predicting the future of the Atlanta market or any market across the country is all speculation, these carriers are determined that their approach will take them down the right road. Only time will tell who succeeds and at what level. In the meantime, penetration will continue rising, competitors will continue to enter the market, and wireless services will continue to flourish. After all, studies show that wireless is definitely moving on the fast track in Atlanta.

Although most of the Atlanta carriers claim that churn has not been a considerable problem for them, a J.D. Power and Associates study reports that there is potential for churn problems. According to the 1997 study, 31% of respondents said they intended to switch providers during the upcoming year. So, what is the key to retaining those customers and still winning over new potential customers? Although prices have dropped, and it does play a role in customer decisio2ns, "You can't sustain the price message for too long," said Mark Drummond, AirTouch Cellular director of indirect channels.

Beyond pricing issues, each carrier has its own strategy for success in the Atlanta market. According to Craig Sparks, BellSouth Mobility vice president & general manager, consolidated services and billing will be an important way of distinguishing itself because many competitors do not offer a variety of services such as local, wireless, wireless long distance, Internet access, digital TV and paging. Productive distribution channels also will be critical in the saturated market, he added. The carrier has focused on company-owned stores and kiosks with 273 points of presence in Atlanta.

Southern LINC and AT&T Wireless have discovered that advertising is the key. For Southern LINC, the messenger is critical to its advertising campaigns, said President Bob Dawson. Southern LINC uses actual customers to relay its messages. Dawson said customers are more credible to potential customers than corporate spokespeople.

According to Emilio Echave, AT&T Wireless Eastern area president, it is important to do more than just "beef up" advertising. The message has to be different from the competitors'. Success requires a marketing focus view as opposed to a technology view, Echave added.

"You have to be able to stand up and get through the clutter as to why customers should choose you vs. everybody else," he said. "It is not only the quantity of advertising but also the quality of your differentiating message."

Although AirTouch's Drummond agreed that marketing is important, eventually, he said it will come down to the technology choice.

"We are confident about CDMA technology, and it is getting to be the technology of choice," he said. "It just enables so many other things."

Powertel's Rod Dir, executive vice president & general manager, said that having digital service in 25 major markets in the Southeast will be the key to his company's success. His competitors do not have the licenses to match this, he said.

Nextel's Martin Lock, market president of the Southern region, whose company enjoys a churn rate of less than 2%, thinks his business-customer base will expand quickly to the white-collar segment when a "good mobile data product" is launched later this year.

BellSouth's Sparks added that more than anything, success will hinge on a carrier's ability simply to meet customers' needs by offering them a value package of products and services.

Who is the typical wireless customer in a city with the highest penetration rate in the country? That is an impossible question to answer, according to AirTouch's Bob Levan, director of business development. Now that the penetration rate is increasing, there are no more typical customers. Rather, subscribers come from a variety of groups.

Craig Sparks, BellSouth Mobility vice president & general manager for Georgia, agreed that early cellular customers tended to be in the high-income professional demographic, but now customers represent more of the general population. However, he added, BellSouth is still growing its higher demographic base simply because people are moving into town, and businesses are relocating to Atlanta.

Although Powertel's Rod Dir, executive vice president & general manager, said Powertel also considers both mass consumers and business customers its typical subscribers, he noted that carriers will have to start focusing on certain segments. Only a few carriers can be ubiquitous to all segments, and cater to all, and be the best in all the categories, he said. With that in mind, Powertel will not try to compete with AT&T nationwide. Although it offers nationwide roaming through the GSM alliance, Powertel focuses on Southeast customers. For example, the typical Powertel business customer basically stays in Georgia and the Southeast. He is focused on Atlanta or secondary cities around the Atlanta market because he has satellite offices or he travels to those cities.

Atlanta iDEN carriers also have taken a segmented approach to the market. The carriers offer internal communications features such as group talk capabilities, which appeal to businesses rather than consumers. According to Martin Lock, market president of the Southern region, Nextel's typical customers are in the construction industry or related trades. The carrier offers a variety of networks to different business groups including transportation, medical and legal, but the construction network is the largest group of customers.

President Bob Dawson said Southern LINC's typical customer is any business that operates in the Southeast that has a need for internal communications and external communications. Customers are part of a mobile work force such as salespeople, service people, delivery trucks, public safety and ambulances.

"We focus on the business community," Dawson said. "The equipment and the technology we have are well suited for business applications."

Echave said that business and small business people "are very good customers" for AT&T Wireless. However, he noted too, that they are starting to converge their business and personal use of wireless.

Wireless Stats * Atlanta's wireless penetration is 43%. * An additional 8% (of potential customers) said they will buy a wireless service within the next year. * BellSouth is the overall leader in customer satisfaction. * The two most important factors driving customer satisfaction in Atlanta are credibility and customer communications. * 31% (of current customers) said they intend to switch providers during the upcoming year.