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Study: Price motivates switching carriers

Wed, 09/22/2010 - 8:00am
Monica Alleven, Wireless Week

Operators that are spending billions of dollars on their networks might want to look away. That's because when a survey commissioned by Oracle asked consumers what would most motivate them to switch service providers, network quality was not reason No. 1. Instead, the majority said they would be motivated by price.

Of course, that's not the whole story or Oracle would not have asked more than 3,000 mobile phone consumers worldwide to answer a series of questions. When asked not about switching providers but about what qualities they value most in a service provider, 85 percent said reliability for both calls and data service was their No. 1 desire. In this question/answer, price came in second at 81 percent.

What's up with that? "They're talking out of both sides of their mouth, and I think a lot of consumers do that," says Arturo Pereyra, director of marketing and business development at Oracle, and he's not being dismissive of the survey. Rather, he can relate, having recently evaluated his own cable vs. dish situation. In the end, is it worth the hassle to switch providers? Consumers may desire reliability, but all things being more or less equal, they might say they would switch providers if it made a big enough difference in the pocketbook.

One big takeaway for service providers from Oracle's report, which is called "Opportunity Calling: The Future of Mobile Communications," is they "really need to focus on the basics," Pereyra says.

There's a lot of hype around the next Droid or iPhone, but at the end of the day, consumers care about the simple things. In that same question about most important qualities in a service provider, consumers gave "state-of-the-art technology" – meaning phones and apps – a 49 percent ranking. Qualities like ease of use and responsiveness (as in customer care and technical support) ranked higher, at 75 percent and 70 percent, respectively.

The report says consumers still prefer unlimited data, and they're willing to pay for it: 61 percent are willing to increase their monthly bill by 7 percent to maintain unlimited data, and 59 percent are willing to increase their monthly bill by 5 percent for unlimited text. 

Pereyra says Oracle did the survey in part because telecom and media are two of its largest target segments, and the more educated it is, the better and more trusted it is as an advisor. And with so much talk about convergence, smartphones and mobile apps, "we wanted a better understanding of the quantifiable metrics around that."

Oracle conducted the online survey with mobile phone users around the world in June. Participants came from North America, Europe, Asia Pacific, Latin America and the Middle East.

Here are a few more findings:

  • Brand matters – Eighty-three percent of consumers said they would be willing to consider purchasing mobile phone services from a non-traditional (non-telecom) provider, and their top choices are Google (51 percent), Sony (48 percent), Apple (44 percent), Facebook (15 percent) and American Express (15 percent).
  • Consumers see the future – Fifty-four percent of respondents believe that five years from now, they will use their phones as a GPS device; 31 percent believe they will use it as a credit card and 24 percent to start their cars.
  • New revenue opportunities – Sixty-four percent are willing to receive ads on their phones in exchange for price discounts or added services. Younger consumers, ages 18-33, are nearly three times as likely to use their phones as an entertainment device and twice as likely to use their phone as a personal computer compared with their baby boomer counterparts.
  • Privacy rules – Only 33 percent of respondents expressed interest in receiving location-based advertisements on their phones, while the majority was uninterested in the option due to privacy.
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