Cingular will start charging a monthly $5 fee to customers still using its legacy time division multiple access networks in an effort to coerce them into upgrading to a GSM phone and service plan.

Cingular and AT&T Wireless announced their plans to migrate to GSM in 2001 and the following year began to build the networks heavily in their existing footprints. The carriers completed the nationwide GSM networks in 2004--helped by Cingular's acquisition of AT&T Wireless--but the combined company continued to maintain the legacy network for its prepaid services, customers who hadn't yet upgraded and as a resale network.

A Cingular spokeswoman said that many of the operator’s TDMA customers are those whose contracts expired long ago yet continue on as postpaid users using their old handsets. All of those customers will be given the option of upgrading to a GSM phone, and most of them will be eligible for discounts on that equipment, she said. And any customer still in a contract will be allowed to get out of it without termination fees if they choose to move to another carrier, she added.

“We’re maintaining the TDMA and analog networks and supporting the ever-dwindling number of customers that use them,” the spokeswoman said. “The flip side is, the cost per customer of maintaining the network increases.”

As of the end of the June, Cingular still had 4.7 million TDMA customers on its network, far lower than the 20.4 million TDMA customers Cingular had in the third quarter of 2004. According to chief operating officer Ralph de la Vega, those 4.7 million subscribers account for 8% of Cingular's total customers yet only consume 2% of total minutes on the network. Low airtime usage combined with the fact that few if any of those customers had access to data or advanced services make TDMA customers some of Cingular's lowest revenue customers.
Meanwhile, Cingular along with other carriers has been actively trying to add and retain high-value customers, who bring in higher monthly revenues, use data services and are locked in to longer-term postpaid contracts.