Teens Ring Up Market Share
By Yuki Noguchi

Devin Walker, 16, is one of the cell phone industry's new best customers.

He lightly sweeps his short-cropped hair with one hand and flicks open a cell phone with the other: "Yo, dawg, wassup?" At least 25 times a day, the junior at the District's Duke Ellington School of the Arts goes through this ritual with his friends.

"I love my phone. I have two," said Walker. The newer model, he said, takes pictures, has a color screen and a flip cover, and rings Three 6 Mafia rap songs. Walker's $75 monthly bill is bigger than the $50 average cell phone charge because of his regular habit of sending pictures to friends and the 99-cent charges each time he downloads new ringtones -- something he does about three times a week.

Teens like Walker -- until recently just an afterthought to wireless companies -- are now considered a gold mine. Wireless carriers are learning that teens are capable of shaking loose their parents' purse strings in a big way.

Four years ago, an estimated 5 percent of teenagers owned cell phones. Last year, that figure jumped to about one-third of teens and preteens from the ages of 11 to 17, and researchers expect the number to reach nearly half by 2007, according to Yankee Group. The Boston-based research firm estimates that by the end of this year, people from age 11 to 24 will generate $21 billion in revenue for wireless carriers -- or nearly a quarter of the total cellular market.

NPD Group Inc., a market-information company based in Port Washington, N.Y., that has studied teen spending, found that cell phones are becoming an important coming-of-age marker. "It's become the most important thing before the driver's license," said Marshal Cohen, chief analyst with NPD, which found in a recent study that teens from the ages of 13 to 17 spent 10 percent less in the past year on clothing, largely shifting their spending to cell phones.

Best of all, say carriers, is that younger audiences are more likely than adults to use costly new cell phone features, such as cameras, games and videos, running up phone bills. For the typical adult, the wireless phone is a device for getting business done, say phone company executives. But among the young, the untethered phone has transcended mere utility and becomes a symbol of freedom to talk without parental intrusion, as well as a way of networking with friends, a form of entertainment and an accessory that reflects social rank.

"They feel they've been given more freedom and respect because they've been given the ability to be reached," Cohen said. "Because not everyone has been given one, it's a competition for respect [among] peers, and it's a status symbol."

"It's a badge, it's a reflection of who they are," and how they are perceived by their peers, no different from clothing, hairstyle or the clique they hang out with, said Barbara Martino, president and chief executive of G Whiz, a unit of Grey Global Group Inc. that specializes in marketing teen brands.

"I think because everyone else had one, I wanted one, too," said Romina Nally, 13, who estimates that 70 percent of her friends and classmates at Connelly School of the Holy Child in Potomac own one. She got her cell phone in August, for her birthday, but now yearns for an upgrade. "I want a flip phone," she said, pulling a flat phone with a floral pink face plate out of her purse.

Nally's friend Megan Bean, 13, who goes to St. Mary's School in Rockville, said that her parents have told her she can't get a cell phone until she enters high school this fall but that "every chance I get I ask for one. If I get a good report card I ask for one."

Companies are now scrambling to win more of this lucrative youth market. Teenagers generally get cell phone service through their parents' plans, since they cannot sign contracts if they are younger than 18. To get around that prohibition, two companies specifically targeting youths are selling prepaid services that don't require contracts.

Irvine, Calif.-based Boost Mobile LLC, which sells a prepaid wireless plan targeted at teens and young adults, is in the process of rolling out service in seven new markets this spring, including the Washington area. Boost, which is wholly owned by Reston-based Nextel Communications Inc., plans to start a national advertising campaign on cable television Monday .

Virgin Mobile USA LLC, a sister company to Virgin Atlantic Airways Ltd., launched a pay-as-you-go service in the United States in 2002. It received a $180 million investment from Sprint PCS Group, which owns about 50 percent of the company.

At the wireless industry's biggest trade show in Atlanta last month, all the talk was of new 3-D games, music videos in high definition and the latest models of phones sleekly fashioned to look like jewelry pendants. Middle-aged, wispy-haired cell phone company executives sported mega-diva Beyonce ringtones on their phones.

"Hey, listen to this," Len J. Lauer, president of Sprint PCS, said during an interview, nodding his head to Beyonce's "Baby Boy" on his flip cell phone.

Ralph de la Vega, chief operating officer of Cingular Wireless, also scrolled through Beyonce hits on his phone during a separate interview.

"It's one of the main focuses at Cingular this year," David Garver, Cingular's executive director of marketing, said of the teen market. He estimates the youth market represents 30 million to 35 million potential customers.

Cell phones, Garver said, use technology to exploit the social network of kids. "Entertainment and fashion and friends are the cornerstones of how we're marketing to youth."

But capturing youth dollars isn't an easy task, said Daniel H. Schulman, chief executive of Virgin Mobile. "Their tastes are constantly changing," he said. It's not enough to slap a logo on the stage during a Britney Spears concert and hope for increased sales, because it smacks of corporate hype, he said.

"The youth market has very sensitive BS meters, and when there's a disconnect, they sense it," Schulman said.

Giselle Benitah, 16 and a sophomore at Washington-Lee High School in Arlington, said she and her friends choose phones based on their features, not on the brand.

"Some kids like the Nextel phones, because they can do the walkie-talkie thing," she said during a recent shopping excursion at the Fashion Centre at Pentagon City with her cousin, Shany Benitah. She's thinking of upgrading her two-month-old phone to one with a camera on it.

"During concerts, they don't let you take in cameras," but recently Giselle Benitah's friend used his wireless phone to send her a picture from a Good Charlotte concert, she said.

Shany Benitah, also 16, ranks polyphonic ringtones -- better-quality sounds than mere beeps -- as high on her priority list. But what she really wants is the latest model -- a phone that can play MP3 versions of actual songs.

To keep track of teen tastes, Virgin Mobile tracks about 10 groups of urban and suburban teenagers around the country, surveying them on a monthly basis to gauge their tastes. The company also runs ads during music and late-night comedy programs or at other times that teenagers are likely to be watching television without their parents. Virgin Mobile thinks teens are more receptive to its message during such "unsupervised moments," Schulman said.

Virgin Mobile also monitors sites aimed at youths, such as Bolt.com, on which it identifies popular teens by studying how many people respond to their messages or forward their comments to other participants. Virgin then asks these teens what they think of certain phone models, features and advertisements.

"We talk to alpha teens out there about why it's cool and why it makes sense," giving them reasons to pass along that message to others, Schulman said. "There's large growth [in sales] because of this viral marketing."

Nina Takahashi, 12, owns a cell phone that she totes everywhere, but she is unhappy with the model, which doesn't take pictures or send messages. "My friend and I were talking the other day, and we were saying it would be cool to have a picture phone so I could send her a picture of what I'm wearing to the party," she said during a recent shopping trip at Westfield Shoppingtown Montgomery mall in Bethesda.

Picture phones are a big thing among her classmates at Stone Ridge School of the Sacred Heart in Bethesda, Takahashi said. "Let's just say that people who do have picture phones -- they aren't shy about talking about it," she said.

Takahashi said she mainly has a cell phone for safety. "Well, that's what we tell our parents to get one," interrupted her 13-year-old friend Lindsey Rayford.

Rayford said the safety argument hasn't convinced her dad, who wants her to wait until she's older. But the safety idea has been a strong selling point with some parents.

"You know, since 9/11, I just don't want them out there and not know where they are," said Nathaniel Walker Sr., a retired government employee and Devin's father. The kids know he is calling because they have caller ID, he said, so if they don't pick up he leaves a message threatening to take their cell phones away. "They call me right back," he said, laughing.

Leroy Frey said he is uneasy when his daughter Diana, a Montgomery Blair High School sophomore, doesn't have her cell phone. "I bought her a cell phone so we can keep in contact," he said.

Frey said that his daughter mainly uses her phone for socializing and entertainment and that he bought her a camera phone as an impulse buy last Christmas. But to him the cell phone has become an important parenting tool. When her cell phone broke and she didn't have it one day, "I was uncomfortable," he said. He does not have her friends' phone numbers because he counts on being able to reach her by cell phone.

Other parents are skeptical. "It's not a good thing at all," said Olive Kwessi, a Gaithersburg resident. "I don't think kids under 18 should have one. I think that leads them into trouble," she said, as her 10-year-old son, Joel, tinkered with his father's cell phone.

Parents also know schools don't like cell phones, and their kids may run up considerable phone bills.

Walker rolled his eyes and fell silent for a moment when asked about his family's cell phone bill. One time it totaled more than $600 because his sons didn't understand the limits of their plans and went way over their allotted minutes, he said.

Now, if they go over, Walker simply deducts the money from his sons' allowance.