U.S. Cellular Launching Mobile Rewards Program

Carrier aims to address common wireless customer complaints with a one-time contract, earlier phone upgrades, and points that can be exchanged for ringtones, upgrades, and accessories.

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U.S. Cellular is rolling out a "game-changing, first-of-its-kind" phone plan in an effort to earn customer loyalty by offering no extended contracts, earlier phone upgrades, simplified rate plans, and rewards, the carrier said Thursday.

Under the terms of its Belief Project, once a customer signs up for a one-time, two-year contract, they won't have to enter into another contract again, the carrier said. Additionally, every 18 months, phones can be upgraded at a promotional price or between 10 and 11 months with Belief points. Customers will pay no more than $50 in overage charges if they go over their monthly voice minutes on a single line plan or $150 for a family plan, the carrier said.

Other features include a 3% and 5% discount offered to customers who sign up for paperless, auto-pay through their bank account or by credit card, and customers with a Premium or Premium Plus Plan won't have to pay extra if their phone is damaged, lost, or stolen.

"We noticed that wireless customers shared some common frustrations, and we wanted to fix them,'' said Mary Dillon, president and CEO of Chicago-based U.S. Cellular, in a statement. "With The Belief Project, we're elevating the customer experience by emphasizing a human relationship with our customers, not a contractual one. So we believe our customers will stay with us because they want to, not because they have to, and that potential customers will want to be a part of something better."

Consumers are frustrated with their wireless service, the carrier said, and based on their research, 90% believe wireless providers should earn customer loyalty, rather than require it through a contract; 87% believe they shouldn't have to sign a contract in order to stay with their current wireless carrier; 84% feel they shouldn't have to wait two years to get a good deal on a new cell phone; and 80% believe wireless carriers should do something about overages and the bills that result.

The amount of Belief points customers can earn depends on the type of plan they are on and they can also earn them by participating in online surveys and referring people. Points can be used for faster phone upgrades, inexpensive phones and accessories, free ringtones, ringback tones, adding lines, and waiving overage charges, the carrier said.

U.S. Cellular lost 22,000 post-paid customers last quarter, and is "looking to shake things up and figure out a way to get back on a growth path,'' said Weston Henderek, principal analyst, consumer services, Current Analysis. He called the Belief Plan "innovative, but not without risks."

If a customer completes their two-year contract, buys a new device, and then leaves shortly after, the carrier loses their device subsidy without getting the full value of that customer's tenure, he said. "If you leave, then you pay an early termination charge, which offsets the cost of device subsidy, but without a contract they are on the hook for the full value of the device."

Henderek said U.S. Cellular expects to add 75% of its existing customer base to the Belief Plan within two years and 10% more customers as a result of the offer over the same time period. He said it's too early to say if the move will pay off for the carrier. "It definitely should resonate positively with customers," since they are the first carrier to offer a two-year-only commitment. "This is an example of a carrier looking at a non-traditional way to separate themselves from the pack."

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