lecommunications The Telco Churn Handbook distance and international services have been experiencing churn rates of anywhere from 45 percent to 70 percent annually for sever- al years now! Those kinds of churn rates are typical for markets around the world where true competitive environments have been created. In Chile, for example, open market competition resulted in the creation of no fewer than seven long distance carriers in less than two years, all of whom posted losses their first three quarters of operation. In that market, only two of the carriers still remain in business today. CHURN Is INEVITABLE When they hear about churn problems at other companies, most telco executives tend to believe that "it can't happen here." The thinking goes something like this: "Wireless telephony is a region- ally diverse phenomenon. Long distance churn is symptomatic in only certain parts of the world. Every country has its own regulato- ry environment. Every country develops its own culturally unique wireless and telco experience." This leads most telco executives to have a case of what we call "terminal uniqueness." In other words, they believe that their company and their situation is unique and that they will somehow avoid what other companies experience. This is not true in the case of churn. When it comes to telco and wireless, all companies will eventually be forced to deal with seri- ous churn problems. Churn, in wireless and telecommunications in general, is inevitable for a number of reasons. The Technology The first reason that churn is guaranteed to happen is that technolo- gy keeps changing. As long as there are newer, better, more stylish, and less expensive alternatives invented, customers have more and more to choose from. Telco technology, as it stands today, generates its own obsolescence in an unbelievably short amount of time. Chapter 1 The Customers The love affair between consumers and the telephone was the Cin- derella story of the 20th Century. In less than 100 years, better than 60 percent of all ci