Pocket’s pace picking up

Christy and Peter Pohler regularly talked themselves into hundreds of dollars in extra charges on their cell phone bill. At the end of each month, the Pohlers had run through their allotted minutes and had two choices: shut up or pay up.

Fed up instead, the Harlingen couple sought out an alternative and found it in Pocket Communications Inc., a San Antonio-based cellular carrier with service in Laredo and the Rio Grande Valley.

Pocket offers low cost plans with unlimited minutes and no contracts.

The freedom from signing lengthy and binding contracts is the “best part,” Christy Pohler said. “If one month we can’t afford it we just don’t have to have it.”

The Pohlers aren’t alone. Since it’s launch in May 2006, Pocket has collected more than 175,000 customers.

Jim Mickey, chief operating officer for Pocket, expects to reach between 245,000 and 250,000 customers by the end of first quar-ter 2008.

“We’re the fastest growing company in the history of wireless,” Mickey said. “And we’ve grown quicker in the Valley than in any other market.”

When the company launched in San Antonio it had its sights set on accomplishing three goals: Being the industry price leader, of-fering a quality voice network and dominating distribution.

“If we can achieve those three goals,” Mickey said. “We will be successful.”

Pocket made its mark with two plans: one for $28 a month and another for $37 that also includes unlimited text messaging to Mex-ico.

In short order, Pocket has carved out 5 percent penetration in the South Texas market, Mickey said.

However, it will eventually hit a ceiling, said Nasir Assanie, vice president or research for IE Market Research Corp., which cov-ers U.S. and global telecommunication markets.

Pocket appeals to a niche market segment, Assanie said, namely lower end and prepaid cellular customers.

“It’s not unusual for a company with this type of business model to see tremendous growth at first,” Assanie said. “But, eventually it will exhaust the market or bump into mainstream carriers.”

The strength of the prepaid business model is also its weakness, Assanie explained.

The model is attractive primarily to customers who don’t want to get locked into a contract, often because they are prone to cash flow problems.

That sort of business environment lends itself to a high rate of churn.

An average cellular carrier has around 1.9-percent churn, Assanie said, while prepaid companies average 3.9-percent churn.

To ensure growth continues at its current frenetic pace, Assanie concluded, Pocket would likely continue looking for new markets once it saturates South Texas.

Mickey disputes that the prepaid model can accurately define Pocket, describing the company as more of a hybrid.

The majority of the company’s clients, especially in the Valley, fit the profile of the Pohlers, who previously held contracts with major industry players and switched to Pocket.

He anticipates a higher churn than his competitors, but hopes to keep it to a minimum by establishing a quality service.

“We aren’t just competing in the prepaid market,” Mickey said. “We’re competing head to head with AT&T and Sprint.”