 to the very survival of their organizations. Wireless Churn in the U.S. Wireless Churners & Subscriber Churners Subscribers Figure 1-1: Churn in 2004 The industry research tells the story loud and clear. The graph in Figure 1-1 shows the projections for the number of subscribers that the U.S. wireless industry is expected to have by the year 2004 from the current level of 70-80 million to almost 200 million. As encouraging as those numbers are, take a look at the correspond- ing increase in churn that is expected to accompany this growth. From some 20 million churners today to an unbelievable 60-70 million churners by 2004 - almost as many as the number of sub- scribers those companies have today! Annual Wireless Churn % Figure 1-2: Annual wireless churn Chapter 1 Indeed, as Figure 1-2 shows, the wireless industry in the U.S. an- ticipates an increase in the annual churn rate from the current 30 percent (2-3 percent per month) to 40 percent by the year 2004. CHURN Is PERVASIVE Wireless providers in the U.S. are very much aware of the presence of churn in their market, but what about the rest of the world? Is churn a part of the entire wireless industry or simply a problem in the U.S.? Statistics from around the world all issue the same mes- sage about churn. Churn around the World The chart in Figure 1-3 shows that wireless providers are experienc- ing churn ranging from 30 percent for the older technologies, to 4-5 percent per month (or an annualized rate of 50 percent), to an in- credible 12-13.5 percent rate of churn (or an annualized rate of 156 percent) for prepaid services. Without a doubt, churn has, or will soon, become a major problem for every carrier on the planet. Percent of 30 Europe Customers Churning Annual Return Figure 1-3: Global Churn Rates CHURN FOR LONG DISTANCE CARRIERS As intimidating and frightening as the wireless churn numbers might appear to be, they are nothing compared to the experiences of carri- ers in the long distance industry. In the U.S. alone, carriers of long eXcellence in Te