J.D. Power and Associates Reports: Improvements in Service Offerings and Network Performance Drive Increase in Customer Satisfaction With Wireless Non-Contract Service

WESTLAKE VILLAGE, Calif., Aug. 26 /PRNewswire/ -- Overall customer satisfaction with wireless non-contract service providers has increased considerably since 2009 as customers respond to new service offerings, aggressive pricing strategies and improved network quality, according to the J.D. Power and Associates 2010 U.S. Wireless Non-Contract Customer Satisfaction Study(SM) released today.

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The study, now in its fifth year, measures customer satisfaction with current non-contract wireless service across six key factors (listed in order of importance): performance & reliability (31%); cost of service (21%); account management (17%); initial activation (12%); offerings and promotions (12%); and customer service (7%).

Overall satisfaction improves by 16 index points from 2009 to an average of 766 (on a 1,000-point scale). In particular, new service offerings and more attractive pricing options have contributed to the industry-wide increase. For example, satisfaction with the offerings and promotions factor increases by 33 points—the largest factor-level increase from 2009. Contributing to the increase in satisfaction with service offerings are improvements related to the effectiveness of informing customers about new services and the variety of service options.

"It's encouraging to see that industry-wide service improvements, such as expanded service offerings and aggressive service plan pricing, have resulted in higher satisfaction with wireless service experiences," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "However, customer expectations will continue to rise as wireless users increasingly rely on the communication functions of their cell phones beyond voice calling. With the addition of features such as unlimited text messaging and video sharing plans, non-contract service offerings are beginning to match postpaid offerings, which will contribute further to the increase in customer expectations."

The study also finds that satisfaction with performance and reliability improves by 20 points from 2009, particularly regarding coverage and connection issues, such as the perceived size of the local calling area and the ease of placing and receiving calls outside the local calling area.

"Improvements in performance and reliability are also positive indicators that providers—particularly those that own and operate their own networks—are expanding their coverage beyond the predetermined local calling area to meet the increasing demands of customers who want to use their service while roaming," said Parsons.

In addition, overall satisfaction differs by type of service plan being used. For example, overall satisfaction among customers with pay-as-you-go plans (770, on average) is slightly higher than that of customers with monthly plans (762, on average). However, there are significant performance differences between the two segments, which are driven mainly by performance and reliability, cost of service and account management.

"This is an important shift in the industry, as the proportion of customers who subscribe to monthly plans has increased to 45 percent of the total non-contract market in 2010—a 50 percent increase from just two years ago, when 30 percent reported using these types of plans," said Parsons.

NET10 ranks highest in overall customer satisfaction among non-contract wireless customers for a second consecutive time, with a score of 797. NET10 performs particularly well in three of the six factors that drive overall satisfaction: performance and reliability; cost of service; and account management. Also ranking at or above the industry average are TracFone, Boost Mobile, MetroPCS and Virgin Mobile, respectively.

The study also finds the following key non-contract wireless usage patterns:

• Pay-as-you-go customers spend an average of $37 for each airtime purchase in 2010, an increase of $2 from 2009.
• Monthly non-contract users spend an average of $25 less per month than do users with contracts. Monthly non-contract customers spend $59 per month, compared with an average monthly service cost of $84 for contract users.
• Non-contract customers use 302 minutes per month, on average—a decrease from 320 minutes in 2009. Pay-as-you-go customers use an average of just 191 minutes, while monthly non-contract customers use an average of 441 minutes per month.
• Reported switching intent within the next year averages 15 percent, compared with 12 percent in 2009. Among customers who say they intend to switch, 36 percent intend to switch to contract service, a notable increase from 24 percent in 2009.

The 2010 U.S. Wireless Non-Contract Customer Satisfaction Index Study measures customer satisfaction with current non-contract wireless service. The study is based on responses from 5,426 wireless customers who currently subscribe to non-contract service plans. Findings are based on a continuous fielding period between January and June 2010. For more information, please visit JDPower.com.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is a global marketing information services company operating in key business sectors including market research, forecasting, performance improvement, Web intelligence and customer satisfaction. The company's quality and satisfaction measurements are based on responses from millions of consumers annually. For more information on car reviews and ratings, car insurance, health insurance, cell phone ratings, and more, please visit JDPower.com. J.D. Power and Associates is a business unit of The McGraw-Hill Companies.

About The McGraw-Hill Companies

Founded in 1888, The McGraw-Hill Companies (NYSE: MHP) is a global information and education company providing knowledge, insights and analysis in the financial, education and business information sectors through leading brands including Standard & Poor's, McGraw-Hill Education, Platts, and J.D. Power and Associates. The Corporation has more than 280 offices in 40 countries. Sales in 2009 were $5.95 billion. Additional information is available at http://www.mcgraw-hill.com/.

No advertising or other promotional use can be made of the information in this release without the express prior written consent of J.D. Power and Associates. www.jdpower.com/corporate

SOURCE J.D. Power and Associates