Telcos Butter Up the Churn

But raising some doubt about the wireless companies' unflagging success is the fact that all the key numbers are tallied by the telcos themselves. There is no outside verification or auditing process to bless the findings.

Also, industry consolidation has helped make the numbers even more suspect in some eyes. The merger of Cingular and AT&T Wireless, for example, has added a layer of confusion to an already opaque accounting situation.

But it's not always clear whether the creep of dirty numbers is a function of abuse or neglect.

One person familiar with Cingular says the company adopted a policy after the merger, in at least one region, of counting AT&T Wireless customers that switched to Cingular as new subscribers. Cingular strongly denies that claim and says AT&T Wireless customers who switch to Cingular plans are called migrations, not new customers, and they are charged an $18 upgrade fee.

And though Cingular claims it is innocent of subscriber-counting abuse, the company did recently have to repair some of the problems it may have inherited from AT&T Wireless. Cingular recently restated its fourth-quarter gross subscriber additions, cutting about 200,000 customers from its original 5.7 million figure. That may seem insignificant, but the move helped the company trim its monthly defection rate to a more respectable 2.4% from 2.6%.

Cingular blamed a lot of the difference on "conformity issues" between how it defines a customer and how AT&T Wireless did.

For example, Cingular found that 81,000 AT&T Wireless accounts were nonexistent. About 65,000 of those so-called customers were actually expired prepaid accounts that were never taken off the subscriber rolls. Cingular also cleaned out 12,000 AT&T Wireless customers that the company said had two lines.

Ovum's Entner isn't surprised by the disparity. In one particularly illuminating industry report he put together in 2003 for Yankee Group, Entner found that 10 wireless telcos calculated a seemingly standard and clearly important number -- average revenue per user, or ARPU -- 10 different ways.