Customers of all major wireless phone carriers continue to be largely unhappy with the service they’re getting, but analysts say consumers probably aren’t nearly disgruntled enough to slow the growth of the mobile industry.
Consumer Reports said its annual survey of cell phone users found a majority had experienced recent problems with service, billing and complaint handling with every national wireless carrier. Wireless companies rank among the worst in terms of customer satisfaction when compared to almost every other industry, the magazine said in a statement.
Complaints stem from both operational issues and attempts to reach customer service in order to have questions answered. A full 35 percent of those surveyed said they were seriously considering a switch of carrier, and most of those who had already switched said they did so because of the service they were getting.
About 70 percent had experienced a dropped call and 60 percent had experienced a bad connection in the week before answering the survey, which was conducted last September.
“Our survey findings are particularly troubling in the context of the recent spate of mergers within the wireless industry, which we believe will lead to decreased competition and increased prices,” said Consumers Union President Jim Guest. “Consolidation is not a panacea to the service and customer satisfaction problems that continue to plague the industry.”
Guest noted that both Cingular and AT&T Wireless, which merged last year, experienced problems that seemed to stem from overloaded circuits. “We don’t see how a merger could improve that,” he added.
The fact that consumers have relatively limited choice is one reason why even if companies fail to meet customer expectations for service levels, mobile use is still poised to grow sharply in 2005 and beyond. In fact, subscriber growth is expected to be robust this year in the U.S. and continues to soar overseas.
Wireless carriers are aware of the problem, however, and recognize that unhappy customers can dent profits by forcing companies to lower prices or take other steps to attract new customers in order to replace revenue lost when unhappy ones flee. For that reason, many major carriers have made reducing their churn rate — or the number of customers who flee to competitors each year — a main priority.
“Finding ways to reduce churn is the number one initiative for just about every wireless carrier,” Yankee Group director Paul Hughes said.
Cell Phone a Necessity
However, as frustrated as they might be at times, the vast majority of consumers now consider the cell phone a necessity.
That’s because the convenience of having mobile connectivity outweighs the inconveniences that customers complain about, Gartner senior analyst Tole Hart said. “The fact is that the phones work the way they’re supposed to the majority of the time,” he said.
Still, poor performance could hurt mobile carriers as they seek to expand their menu of offerings into mobile commerce and enhanced services such as data transmission and streaming media. “Fuzzy or dropped calls or the inability to get answers to my billing question would probably make someone much less likely to pony up extra money for added services — at least from that same provider,” Hart added.
The satisfaction problems are nothing new — the overall Consumer Reports satisfaction index for wireless carrier customers has risen just a point from 65 to 66 percent since the annual survey was started three years ago.
Among cellular companies, Verizon scored the best in the survey for the third straight time, but often by a narrow margin. T-Mobile scored the second best in some major markets, the survey showed.
Consumer Reports also looked at voice over Internet protocol (VoIP) for the first time. It said that customers who spend $US60 per month or more on local and long distance calls might save money by using VoIP services.
However, it also said that problems remain, including installation difficulties and sound performance. The lack of a comprehensive equivalent of 911 emergency calling was also cited as a drawback and evidence that VoIP is still “behind landlines.”