Wireless Service Provider Trends

Wireless Service Provider Trends

Posted on 19. Jan, 2018 by in Cloud, internet, iPhone, mobile, Programming, T-Mobile, Verizon Wireless, Wireless Service Providers

Wireless Service Provider Trends
Perceived Value Driving T-Mobile’s Growth

Overview: T-Mobile continues to find success by delivering wireless offerings that their subscribers rate as the best overall value. Despite its perceived shortcomings in network coverage and reliability, T-Mobile’s overall satisfaction score leads the industry for the fourth consecutive quarter – not an easy feat in the highly competitive US telecom market.

Verizon Wireless is its closest competitor across several customer experience measures, including subscriber satisfaction and loyalty. Verizon’s premium network remains its core advantage, as it regains the top spot in network speed and registers high satisfaction on coverage and reliability.

A September survey of 3,840 primarily North American respondents from 451 Research’s Leading Indicator panel looked at key performance indicators for wireless operators, along with the continuing impact of unlimited data plans across the industry.

Customer Satisfaction

T-Mobile’s overall satisfaction (40% Very Satisfied) is seeing a downtick after rallying for three consecutive quarters, and this trend closely resembles that which led up to our September 2016 survey. This emerging seasonal correction is likely the impact of promotional offers around new iPhone releases coming to a close and their associated price spikes.

Verizon Wireless (35%) continues to see steady year-over-year declines in this key measure, down 2 points since September 2016.

Taking a closer look at specific aspects of wireless service, T-Mobile outperforms in value (49% Very Satisfied) and cost (45%) perceptions by a wide margin.

‘Very Satisfied’ Ratings on Cost and Value of Plan – By Wireless Provider (Sep ‘17):

Meanwhile, Verizon leads across all three network performance measures – coverage (55%), reliability (53%) and speed of network (40%) – and moreover saw improvements since June.

‘Very Satisfied’ Ratings on Network Performance – By Wireless Provider:

Customer satisfaction with quality of streaming video is relatively unchanged over the past year for T-Mobile and Verizon, while both AT&T and Sprint saw their Very Satisfied ratings decline.

According to Rich Karpinski, 451 Research Principal Analyst – Mobile Operator Strategies:

“The mobile services business in the US remains as much, if not more, about perception than reality. Verizon continues to hold a clear lead in network performance categories – even as speed tests show all four major mobile networks getting closer in performance metrics – while T-Mobile stands out in cost and value despite price competition and promotions offering good deals at the big carriers. Looking specifically at satisfaction over time, T-Mobile’s continued strength is of note. Also notable is the growing gap between the top two performers (T-Mobile and Verizon) and the bottom two (AT&T and Sprint). It’s a gap that’s now solidified over the past few years and bears watching in the future.”

Customer Loyalty

Verizon (10%), which has the fewest subscribers saying they’ll switch providers, is also the only carrier registering an improvement in its customer loyalty ratings. Meanwhile, AT&T (12%) is 2 points worse compared to June.

For T-Mobile and Sprint, the latest findings mark their weakest rating over the past two years, having slipped 4 points since June. The sudden shift in subscriber intentions reflects the industry conditions at the time of survey fielding, when a T-Mobile/Sprint merger was being discussed. Merger talks create uncertainty for subscribers, and they predictably respond by exploring other wireless options.

Results from previous March 2014 and June 2014 surveys show similar reactions among T-Mobile and Sprint customers, when Sprint tried acquiring T-Mobile.

Improving Perceptions of T-Mobile. With the T-Mobile and Sprint merger called off, the survey results measuring the potential impact of a combined T-Mobile/Sprint are now less instructive on future subscription plans, and more indicative of improving brand perceptions of T-Mobile, the stronger performer of the two carriers.

Sprint and Verizon customers were more eager to sign up for a merged T-Mobile/Sprint in the recent survey than subscribers were in June 2014, as measured by a 7 point increase for Sprint and a 6 point increase for Verizon in net likelihood (i.e., Net Likelihood Sep 2017Net Likelihood Jun 2014).

Perception of T-Mobile among AT&T customers is also positive and similar compared to June 2014.

Some analysts expect T-Mobile and Sprint to announce a merger within the next month. Does this development make you more likely to use Sprint/T-Mobile in the future, less likely, or does it have no effect?

Karpinski adds that, “the T-Mobile/Sprint combo is a no-go… at least for now. Not surprisingly, Sprint customers loved the idea. While Sprint offers low-cost postpaid plans, customers seem to have real concerns about their strength as an independent carrier – and hoped that T-Mobile could help. The fact that customers across the board said they’d be more likely to move to a combined T-Mobile/ Sprint can only be viewed as a missed opportunity for those companies. In a would-be merger of that size there are many, many moving parts to consider, but poor customer reaction doesn’t seem to be registering as a negative consideration.”

Reasons for Switching. Turning to reasons why customers switch wireless providers, cost and poor reception/coverage continue to lead all other factors.

In the latest survey, Sprint (6.3%) customers are most likely to cite cost as a factor for switching. Customers who had signed up for one of Sprint’s several aggressive pricing promotions in 2016 are likely experiencing some degree of sticker shock as those deals expire.

Cost is also a vulnerability for Verizon and AT&T, while T-Mobile customers are still more likely to switch because of poor reception/coverage.

Why Subscribers Stay. The top two reasons why most wireless subscribers plan to stay with their current provider are overall value (38%) and provider’s network reliability/coverage (30%).

When we look at these results by wireless provider, there are important differences:

  • More T-Mobile customers (75% vs. 38% overall) cite better overall value than all other wireless customers.
  • Verizon customers are much more likely to point out their provider’s network reliability/coverage (53% vs. 30%).
  • AT&T’s bundling discounts are having a positive impact on their wireless subscribers (14% vs. 8%) who also pay for other AT&T services.
  • Sprint’s policy to continue honoring grandfathered rates for unlimited is helping the carrier hold onto its most loyal customers (24% vs. 9%).

Future Service Provider Preferences. T-Mobile is the preferred wireless service provider among 23% of planned switchers – up 2 points since June and up 11 points year-over-year. The carrier now offers free Netflix access to family plan customers, a move that adds yet another perk to its portfolio.

Verizon Wireless (13%) is second, rebounding 3 points from June. The combination of a strong network, exclusive access to Google Pixel phones and refreshed unlimited data plans are helping the largest US carrier remain competitive.

AT&T (9%) is leveraging discounts/credits to its DirecTV and U-verse video services, along with free HBO access for unlimited customers, to lure subscribers from its competitors.

Sprint (4%) is hoping an offer of free unlimited data for 12 months to BYOD switchers, and more recently including free Hulu access for unlimited customers, can move the needle in its favor.

Lastly, 3% of switchers say they’ll sign up with Comcast’s Xfinity Mobile, up 1 point from June. This is a respectable finding for Xfinity Mobile since only Xfinity Internet customers can sign up for it.

Impact of Unlimited on Customer Experience

Unlimited data plans appear to be improving the customer experience as subscribers to major carriers report being more satisfied with their overall service than customers on tiered/shared plans. It’s also creating stickiness among unlimited users as they are less likely to consider switching to another carrier.

Satisfaction. More unlimited users say they are Very Satisfied with their overall wireless service than subscribers on shared or tiered data plans, but the differences are greatest for Verizon and AT&T customers.

Overall Customer Satisfaction – Unlimited vs. Tiered/Shared (Sep ‘17):

Put another away, T-Mobile customers seem to be satisfied regardless of which data plan they’re on, while unlimited might not be as beneficial in improving Sprint customer satisfaction as it had hoped.

On quality of video streaming, T-Mobile and Sprint unlimited customers rate their experience better than metered customers, but for AT&T the opposite is true. At the time of survey fielding, the vast majority of Verizon unlimited customers were unaffected by recent restrictions on streaming quality, which explains the identical customer satisfaction scores on this aspect across data plan types.

Quality of Streaming Video – Unlimited vs. Tiered/Shared (Sep ‘17):

On network performance measures, AT&T and Sprint unlimited customers report having a better experience than those on their provider’s shared/tiered plans. But for T-Mobile and Verizon, tiered/shared customers say they’re more satisfied with coverage and reliability than unlimited customers.

Coverage, Reliability and Speed of Network – Unlimited vs. Tiered/Shared (Sep ‘17):

AT&T, T-Mobile and Verizon unlimited users rate the cost and value of their plan better than tiered/shared subscribers. But Sprint customers on tiered/shared plans report being more satisfied with the value of their plan than unlimited customers (31% Very Satisfied vs. 29%).

“Starting with the comparison of overall satisfaction – customers of the Big Four carriers are generally happy with their unlimited plans, and they should be. In general, unlimited plans represent a relatively good value, and customers perceive them that way,” notes Karpinski.

“But things become a little more complicated when considering metrics like video quality and overall network performance. The differences are not big or consistent enough to consider the carriers’ ‘optimized’ unlimited networks a problem, but once again the perceived differences in network performance bear watching as that metric is crucial in how customers perceive the value of these relatively new service plans.”

Likelihood of Switching. Unlimited is improving overall retention, as these customers are less likely to indicate they’re switching to another carrier. Naturally, they’re also less likely to explore other data plan options. Both cases are particularly true for Sprint customers more so than subscribers to other major carriers.

Likelihood of Switching – Unlimited vs. Tiered/Shared (Sep ’17):

Reasons to Pay for Unlimited. Best overall value continues to be a key factor encouraging consumers to pay for unlimited data plans, with a total of 38% of unlimited data users citing it. Peace of mind (34%), or not having to worry about incurring overages, is the second most important reason.

A total of 31% of unlimited users say their data plan is shared by multiple smartphones as part of a family plan. This has risen in priority over the past year, up 8 points since a year ago.

Meanwhile, grandfathered cheaper rates for unlimited plans (18%; down 8 points) is waning in priority as several of those customers are being rolled into new pricing.

At the provider level, T-Mobile customers are most likely to cite best overall value, while Verizon and AT&T customers are most likely to say their unlimited data plan is being shared by multiple users.

Top Reasons to Pay for Unlimited Data Plans – By Wireless Provider (Sep 2017):

Bottom Line

T-Mobile’s wireless services continue to rate as the best overall value by survey respondents. Once again, its overall satisfaction score and customer perceptions around cost and value beats the competition, a mark which T-Mobile has now achieved for the fourth consecutive quarter. T-Mobile has parlayed low cost/high value wireless plans into consistent customer acquisition, a strategy often sweetened with free perks such as the recent offer to bundle Netflix access into family plans.

Recent merger talks with Sprint, which have now fallen through, did however increase uncertainty among T-Mobile subscribers, as reflected in the sudden change in their intentions to switch. But those jitters will likely subside as the status quo remains. In fact, confidence in T-Mobile among subscribers from other carriers has further improved, with the share of switchers intending to sign up with T-Mobile reaching an all-time high.

Verizon Wireless is T-Mobile’s closest competitor across several key customer experience measures, including overall satisfaction and has regained the top spot in customer loyalty. And though its network performance scores on coverage and reliability are unmatched by rest of the Big Four providers, the findings show there’s significant room for improvement in value and cost perceptions.

Its recent earnings show that while new unlimited data plans provided a solid tailwind for subscriber growth, the shift to these unsubsidized wireless plans is likely having a negative impact on revenue. The question continues to be whether Verizon’s advantage in network quality will be enough in an environment of increasing network parity.

“The advent of unlimited plans was actually fraught with potential dangers for the Big Four operators. T-Mobile and Sprint had to get out over their skis a bit to launch them in the first place (as well as find creative ways to manage their networks to have the business case make sense). AT&T, and especially Verizon, were reluctant followers, but in the end have fared well in this new pricing world as well,”concludes Karpinski.

Unlimited is absolutely ‘table stakes’ now in the US market, across the postpaid market and in some prepaid sectors as well. We expect a period of relative calm in the market for the next few quarters – abetted by the failed T-Mobile/Sprint merger as operators check their footing, nervously eye their rivals (cable wireless and OTT content providers, in particular) and plot their strategies for 2018.”

Summary of Key Findings

Customer Satisfaction

T-Mobile (40% Very Satisfied) is down 3 points from June
Verizon (35%; down 1-pt)
Sprint (26%; unchanged)
AT&T (24%; down 2-pts)
Cost & Value
T-Mobile continues to outperform in value (49% Very Satisfied) and cost (45%)
Coverage & Reliability
Verizon leads in coverage (55%; up 1-pt) and reliability (53%; up 2-pts) by wide margin
Speed of Network
Verizon (40%) regains lead, up 3-pts
T-Mobile (34%; down 5-pts)
Quality of Streaming Video
T-Mobile (37%; down 1-pt)
Verizon (35%; up 1-pt)
Sprint (30%; down 1-pt)
AT&T (26%; down 4-pts)
Loyalty & Future Subscription Plans

Loyalty – Next 90 Days
10% of Verizon subscribers likely to switch – 1-pt better
T-Mobile (11%, 4-pts worse)
AT&T (12%; 2-pts worse)
Sprint (18%; 4-pts worse)
Reasons for Switching
Cost (4% of all respondents)
Poor reception/coverage (2%)
Get better data plan (1%)
82% of wireless subscribers unlikely to switch
Future Wireless Provider Preferences Among Switchers
T-Mobile (23%) extends lead, up 2-pts
Verizon (13%; up 3-pts) is most improved
AT&T (9%; up 1-pt)
Sprint (4%; down 1-pt)
3% of switchers say they’ll sign up with Xfinity Mobile
Impact of Unlimited Data on Customer Experience

Overall ‘Very Satisfied’ Rating
T-Mobile (43% unlimited vs. 41% tiered/shared)
Verizon (39% vs. 33%) shows biggest difference
AT&T (27% vs. 22%)
Sprint (26% vs. 25%)
Quality of Streaming Video
T-Mobile (40% unlimited vs. 32% tiered/shared)
Verizon (35% vs. 35%)
AT&T (25% vs. 28%)
Sprint (34% vs. 21%) shows widest disparity
Coverage & Reliability
AT&T and Sprint unlimited customers report having a better experience
But T-Mobile, Verizon tiered/shared customers are more satisfied

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