Moreover, this cost decreases as the churn rate increases.
Verizon's churn rate — the proportion of customers who cancel their service — was 1.2percentthethe industry's lowest rate, while AT&T's churn rate was 1.7percentt.
"The churn rate is still very high in this industry," Mr. Belluzzo said.
AT&T's churn rate, a measure of customer turnover, declined slightly during the quarter.
One concern for investors, however, is an increase in "churn" rate, a measurement of subscriber turnover.
Nextel's churn rate is 1.9%, compared with a national average of 2.4%.
This, he says, is the typical churn rate for commercial motor insurers.
This churn rate is faster than that observed in real file-sharing systems such as Gnutella, Kazaa, Napster, and Overnet.
However, there is a churn rate of 20-40 per year, so traditional businesses shouldn't be completely disheartened.
The same research points to a nationwide employee churn rate of 11.3% in 2004, up from 8.3% in 2001.
Goldman Sachs is forecasting an improved "churn rate" – a measure of customers leaving – of 10.5%, from 10.9% a year ago.
