• by Dana Blankenhorn , April 3, 2003

Cellular phone providers may be about to catch cold. Ad sales staffs may get pneumonia. The cold is coming from "cell number portability," now due to hit the U.S. market in November. Users will be able to change carriers and keep their phone numbers. Increased price competition is certain.

Roger Entner, program manager for The Yankee Group in Boston, said the industry's efforts to become an advertising medium have failed, and will likely continue to fail. "There is very limited room for advertising on cell phones," he said.

Now, as to the pneumonia, look no further than the good news heralded this week by Interep, the radio sales agent.

Cell phone companies were the first, second, and seventh-largest radio advertisers last year. SBC, which has 11.3 million cellular accounts spent over $109 million in radio alone. Verizon spent over $75 million, AT&T Wireless $45 million.

It's not just radio. Cellphone companies are huge TV advertisers, they buy a lot of newspaper and magazine ads, and they're also big in sponsorships.

Many cellular information providers have gone bankrupt, Entner noted. "It's a race that demands a marathon runner. It's not a sprint."

Even new branded providers, like Weather.Com, face "push-back" from customers who may not value the service and resent the advertising.

Add to that the potential liability when data is pushed based on location technology. "What if you subscribe to an alert, and for whatever reason the message doesn't go through and you get killed. Who is liable for that?" Entner asked.

The biggest problem location-based cellular advertising faces, Entner added, is that Americans use cell phones while driving. "If I'm on an Interstate I'm 5 miles away when I get the ad," he said, and the cost to advertisers of checking user locations so they can send the ads will be huge.

The result is that cell number portability could be the start of the "end game" for cellular, the final shake-out of the market into a few strong providers who don't need to advertise heavily to sustain their market position.