Telecom Report 2017 CONSUMER ATTITUDES AND LOYALTY

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 1 State of the Telecom Market

The telecom industry has seen many changes over the past few years. and AT&T are striving to maintain their status as industry leaders, while T-Mobile is disrupting the marketplace with its Uncarrier movement. Sprint is working hard to attract new customers, while the ever-growing number of pre-paid budget offerings slowly chip away at the post-paid market share. In this report, we explore usage patterns among Americans when it comes to their service, as well as attitudes towards different carriers.

Verizon and AT&T are the market frontrunners and boast the largest numbers of subscribers, with T-Mobile and Sprint close behind given their multi-tiered product offerings. MetroPCS is T-Mobile’s pre-paid business while is Sprint’s – both helping to drive new customers for the parent brands. Verizon and AT&T are more popular with the older, more affluent crowd. Millennials are more likely to embrace T-Mobile as well as some pre-paid carriers, such as Boost Mobile.

Lower income Americans are more likely to have a pre-paid wireless service plan on carriers such as MetroPCS, Boost Mobile and Cricket. As can be expected, those with higher incomes subscribe to the more expensive premium carriers, Verizon and AT&T.

Current Wireless Carrier Current Wireless Carrier

Total US Income Under 50K Millennials (18-34) Income Over 50K Non-Millennials (35+)

25% 19% Verizon Wireless Verizon Wireless 20% 30% 26% 16% 22% AT&T 28% AT&T 17% 24% T-Mobile 11% 11% 12% T-Mobile 16% 10% MetroPCS 18% 6% 11% MetroPCS 15% Sprint 8% 11% 7%

8% Boost Mobile 9% Sprint 10% 5% 7% 5% 7% 3% Boost Mobile 10% 6% 1% 1% 4% Cricket Wireless 5% 13% Other 4% 9% 1% Virgin Mobile 0% 1% 11% Other 9% 11%

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 2 Verizon and AT&T are spending a lot of advertising dollars to However, swaying consumer perceptions can be challenging. convince consumers that they are the best in the business. There is a strong incentive for subscribers to rationalize their For the most part, this strategy has been successful. Verizon wireless carrier choice. When asked which wireless brand they Wireless and AT&T are the top two brands regarded as associate with premium service, great network or affordable “premium” and “top tier”, followed by Sprint and T-Mobile. plans, subscribers for each brand tend to select their current Despite losing consumers for the first time last quarter, Verizon carrier in overwhelming numbers. Even so, T-Mobile and Sprint is still king in terms of quality perception among both, current customers are less likely to classify their carriers as “premium” customers and non-customers. relative to Verizon and AT&T customers.

Which of the following wireless carriers would you classify as premium or top tier?

AT&T T-Mobile Sprint Total US Verizon Subscribers Subscribers Subscribers Subscribers

Verizon Wireless 54% 93% 49% 45% 43%

AT&T 45% 38% 80% 35% 37%

Sprint 29% 24% 28% 24% 73%

T-Mobile 25% 13% 21% 67% 19%

MetroPCS 14% 5% 5% 8% 4%

Boost Mobile 11% 4% 7% 7% 5%

Cricket Wireless 7% 3% 4% 4% 2%

Virgin Mobile 5% 2% 4% 4% 2%

None of the above 15% 5% 14% 18% 17%

Verizon subscribers are extremely positive about Verizon’s network coverage, more than subscribers of any other brand are about their own service.

Based on everything you know, which of the following wireless carriers do you think have great network coverage? AT&T T-Mobile Sprint Total US Verizon Subscribers Subscribers Subscribers Subscribers

Verizon Wireless 50% 92% 38% 45% 40%

AT&T 41% 29% 84% 32% 24%

Sprint 23% 15% 20% 20% 65%

T-Mobile 22% 9% 18% 69% 10%

MetroPCS 12% 1% 5% 5% 6%

Boost Mobile 9% 2% 2% 4% 3%

Cricket Wireless 6% 3% 1% 3% 3%

Virgin Mobile 4% 2% 2% 2% 3%

None of the above 10% 5% 9% 4% 10%

Arrowsindicates indicate top choice significantly for each comparisonhigher than comparisongrouop group at 95% confidence interval Telecom Report 2017 3 Verizon and AT&T subscribers also have the most positive perception of their provider’s high speed network. While consumers naturally tend to favor their current network the most, customers of AT&T, T-Mobile, and Sprint are all more likely to associate Verizon with having a high-speed network.

Based on everything you know, which of the following wireless carriers do you associate with having a high-speed network? AT&T T-Mobile Sprint Total US Verizon Subscribers Subscribers Subscribers Subscribers

Verizon Wireless 48% 85% 36% 38% 31%

AT&T 42% 27% 83% 35% 28%

T-Mobile 21% 6% 14% 74% 13%

Sprint 21% 11% 19% 21% 63%

MetroPCS 11% 1% 4% 3% 2%

Boost Mobile 6% 1% 2% 2% 2%

Cricket Wireless 5% 2% 2% 2% 3%

Virgin Mobile 3% 1% 1% 2% 4%

None of the above 12% 9% 10% 7% 14%

Even when asked about plan affordability, subscribers tend to favor their own carrier. Perceptions of affordability among non- subscribers are fairly low for Verizon and AT&T and are higher for T-Mobile and Sprint. MetroPCS is also seen as a very affordable option overall.

Based on everything you know, which of the following wireless carriers do you associate with having affordable plans? AT&T T-Mobile Sprint Total US Verizon Subscribers Subscribers Subscribers Subscribers

Verizon Wireless 25% 58% 16% 16% 7%

MetroPCS 23% 12% 15% 21% 17%

T-Mobile 23% 20% 19% 69% 10%

AT&T 22% 13% 57% 17% 9%

Sprint 19% 19% 20% 14% 61%

Cricket Wireless 18% 16% 14% 15% 18%

Boost Mobile 17% 8% 11% 17% 14%

Virgin Mobile 7% 5% 5% 7% 8%

None of the above 16% 19% 17% 9% 13%

Arrowsindicates indicate top choice significantly for each comparisonhigher than comparisongrouop group at 95% confidence interval Telecom Report 2017 4 While Verizon and T-Mobile customers are equally happy with their own customer support, Verizon is more likely to be viewed as having strong customer service by non-customers. On the other hand, customer support is a pain point for AT&T and Sprint.

Based on everything you know, which of the following wireless carriers do you associate with having great customer service?

AT&T T-Mobile Sprint Total US Verizon Subscribers Subscribers Subscribers Subscribers

Verizon Wireless 33% 74% 22% 20% 14%

AT&T 28% 13% 68% 18% 12%

T-Mobile 21% 8% 15% 76% 5%

Sprint 16% 9% 14% 12% 65%

MetroPCS 12% 3% 5% 6% 2%

Boost Mobile 9% 1% 3% 6% 7%

Cricket Wireless 7% 2% 3% 7% 4%

Virgin Mobile 4% 1% 1% 8% 3%

None of the above 20% 21% 21% 14% 20%

Arrowsindicates indicate top choice significantly for each comparisonhigher than comparisongrouop group at 95% confidence interval Telecom Report 2017 5 What Do Wireless Consumers Care About?

Understanding one’s is more important than ever now, when there are few new consumers signing up for wireless plans and telecom brands can increase their market share by stealing subscribers from their competitors.

When considering a new wireless service provider, consumers are now mostly concerned with network coverage, the speed of the network, and availability of unlimited data plans.

Brands should also consider that when consumers are thinking of switching wireless plans, they are not always buying another phone at the same time. Since certain networks (such as Verizon) require compatible phones, more than three-quarters (76%) of Americans say that wireless service compatibility with their current cell phone is extremely/very important.

How important are the following when choosing a wireless service provider? (Extremely/Very important) 83% 79% 76% 75% 66% 60%

39%

Network High-speed Compatibility Unlimited Availability Device Overseas coverage network with your Data of the Financing Coverage current cell smartphone Options phone you want

When asked why they chose the provider they have now, consumers mention unlimited data plans and low plan rates as the top reasons, followed by better network coverage. Having a good network is important, but unlimited data deals and low plan rates can help lock in new subscribers.

What are the main reasons you decided to go with your current wireless service provider?

Unlimited data plan 33%

Lower plan rates 28%

Better network coverage 28%

Joined a family plan 23% Good deal on a smartphone 22% Better customer service 19% Faster browsing and downloading speed 17% Carrier offered the smartphone I wanted 11% Carrier compatible with my smartphone 11% Overseas coverage at no additional charge 6% Other 19%

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 6 Millennial Audiences

To reach the coveted millennial segment, it is imperative have their smartphone of choice available. Since millennials on for telecom brands to consider the singular behaviors and average have lower incomes, device financing options are more preferences of this audience. Millennials want features and important to them as well. services that are more in line with their lifestyle preferences, While free overseas coverage is the least important feature on which include constant use of smartphones, streaming video on everyone’s list, it is significantly more important for millennials. mobile, and a desire to travel overseas. According to a recent study by Internet Marketing Inc, 75% A high speed network is more important to millennials, as they of millennials say that they want to travel abroad as much as are more likely to stream video content on their mobile devices possible, compared to 52% for older generations2. Providing (49% vs 31% for older generations1). Younger consumers are free overseas coverage is a differentiating factor that may help also more particular about the smartphone they want; 73% say lure in this younger audience. that it is extremely/very important for the wireless carrier to

How important are the following when choosing a wireless service provider? (Extremely/Very important)

Millennials (18-34) Non-Millennials (35+)

87% Network coverage 83%

86% High-speed network 78%

77% Compatibility with your current cell phone 76%

73% Unlimited Data 75%

73% Availability of the smartphone you want 65%

66% Device Financing Options 59%

52% Overseas Coverage 36%

1 Fluent Streaming Services study 2017 2 Internet Marketing Inc (http://www.internetmarketinginc.com/blog/millennial-travel-trends/)

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 7 While having an unlimited data plan and lower plan rates were the top reasons cited by millennials for choosing their current carrier, better network coverage was more frequently cited by older generations. It makes sense then, that millennials are more likely to have a pre-paid plan or be on T-Mobile, but older consumers are more likely to subscribe to Verizon and AT&T.

What are the main reasons you decided to go with your current Millennials (18-34) wireless service provider? Non-Millennials (35+) 41% Unlimited data plan 31% 34% Lower plan rates 27%

Better network coverage 20% 29% 22% Joined a family plan 24% 25% Good deal on a smartphone 21% 16% Better customer service 19% 17% Faster browsing and downloading speed 17% 11% Carrier offered the smartphone I wanted 11% 8% Carrier compatible with my smartphone 11% 7% Overseas coverage at no additional charge 5% 18% Other 19%

While there are some users who are mainly concerned with talking minutes or data, most (72%) find both equally important. There is a shift when it comes to younger consumers though, many of whom are more likely to prioritize either data or talk and texting capabilities when choosing their plans.

Which is most important to you when you are choosing a wireless service plan? Total US Millennials (18-34) 72% 75% Non-Millennials (35+) 62%

21% 17% 14% 12% 14% 13%

Both are equally Amount of data Talk and text important

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 8 Most importantly, millennials are less loyal to their wireless carriers. While the level of satisfaction with their current carrier is the same for all age groups, millennials report a higher desire to switch their wireless service provider in the next 6 months (18% vs 12%).

Are you planning to switch wireless service providers in the next 6 months? (% Yes)

Millennials (18-34) 18%

Non-Millennials (35+) 12%

Since smartphones are integral parts of millennials’ lives, despite having lower incomes, they care more about their phones than older generations. Millennials are more likely to purchase a new phone in the next 6 months and have a stronger preference for the iPhone.

Are you planning to purchase another in the next 6 months? (% Yes)

Millennials (18-34) 35%

Non-Millennials (35+) 22%

What kind of a mobile phone are you planning to purchase? iPhone Among those who are planning to purchase a new phone in 6 months Samsung Other Android smartphone Other smartphone (Windows, Amazon) 1% Don't know

Millennials (18-34) 55% 25% 10% 10%

3%

Non-Millennials (35+) 36% 27% 17% 17%

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 9 Understanding the Pre-paid Consumer

Pre-paid plans have been gaining popularity, as more and more providers and resellers are entering the space and the stigma of the pre-paid plans is lessening, especially among the millennial population.3 Currently, 18% of Americans say they have a pre-paid plan and this propensity is higher among millennials (23%).

What type of a cell phone plan do you currently have? Family plan Individual plan Prepaid individual plan

Total US 51% 31% 13% 6% Prepaid family plan

Millennials (18-34) 45% 32% 18% 5%

Non-Millennials (35+) 52% 31% 11% 6%

Low price is by far the main reason consumers decide to go with a pre-paid plan. For millennial consumers, flexibility is also a major selling point.

Why did you decide to go with a prepaid wireless service plan? Total US Millennials (18-34) Non-Millennials (35+) 53%

44% 41% 37%

29%

24% 23% 21% 20% 20% 20% 17%17%17% 18% 16% 15% 15% 16% 14% 14% 13% 12% 11%

Cheapest plan Flexibility Good network I could transfer I could get No minutes/ I don’t use a lot Other available coverage my phone the phone I data wasted of data number wanted

3 PrepaidPress (http://www.prepaidpress.com/features/wireless-industry-continues-to-evolve.html)

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 10 Reasons for Switching Carriers

Consumers may be swayed to switch by different offers, largely 50% of AT&T customers say they may be convinced to switch depending on their current wireless carrier. Telecom brands with lower plan rates and another 42% with unlimited data plan should take this opportunity to understand and capitalize on options. any features/services consumers’ current plans may be missing. On the other hand, consumers who are on pre-paid low cost For example, AT&T is one of the more expensive carriers in the carriers such as Boost Mobile and Cricket wireless are very marketplace and only very recently started offering unlimited sensitive to the availability of better smartphones and getting a data plans to all of its customers. Therefore, it is no surprise that good deal on a handset.

What incentives could get you to switch your wireless provider?

Verizon Boost Cricket AT&T Sprint T-Mobile MetroPCS Wireless Mobile Wireless Lower plan rates 50% 42% 37% 41% 50% 29% 40%

Unlimited data plan 42% 32% 33% 34% 44% 35% 37%

Better network coverage 29% 22% 31% 23% 33% 33% 28%

Faster browsing and downloading speed 27% 28% 34% 21% 34% 37% 26%

Good deal on a smartphone 27% 23% 26% 22% 32% 42% 30%

Better phones available 21% 20% 20% 20% 40% 30% 23%

Better customer service 18% 13% 14% 16% 23% 20% 19%

Overseas coverage at no additional charge 15% 6% 11% 11% 15% 16% 12%

Nothing 33% 41% 36% 42% 24% 23% 28%

Incentives that are most likely to get consumers to switch Moderately likely to get consumers to switch Least likely to get consumers to switch

Customers of certain wireless service providers are keener to switch than others. Specifically, T-Mobile customers, as well as customers of the largest pre-paid brands (especially Boost Mobile) are the least loyal and therefore make the best prospects for conquest marketing campaigns.

Are you planning to switch wireless service providers in the next 6 months? (% Yes) AT&T 10%

Sprint 12%

T-Mobile 18%

Verizon Wireless 12%

Boost Mobile 27%

Cricket Wireless 15%

MetroPCS 15%

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 11 Interestingly, satisfaction with one’s wireless service provider is not necessarily correlated with a desire to switch. Instead, it is an indication that consumers are more loyal to certain brands. For example, while T-Mobile and Boost Mobile have some of the highest rates of customer satisfaction, they also have the highest number of customers who are planning to switch. On the other hand, Sprint customers are more loyal to their brand. While 16% of Sprint customers report being dissatisfied with their wireless carrier – higher than most other brands – only 12% are planning to switch in the next 6 months.

Verizon Boost Cricket How satisfied are you AT&T Sprint T-Mobile MetroPCS Wireless Mobile Wireless with your current wireless Satisfied service provider? 81% 70% 81% 87% 81% 73% 76% (very/somewhat)

Neither satisfied 10% 14% 9% 7% 8% 8% 12% nor dissatisfied

Dissatisfied 10% 16% 10% 6% 10% 18% 11% (very/somewhat)

Customer Retention

In a crowded marketplace, retaining current customers is as Lower plan rates are top of mind for many, especially those important for telecom brands as adding new ones. While certain currently on Verizon, T-Mobile and Sprint. On the other hand, 76% features (such as network coverage) largely depend on outside of Cricket Wireless customers and 43% of T-Mobile customers factors such as spectrum auctions, there might be an opportunity to could be persuaded to stay by being offered a good deal on a new appease consumers by offering them features and services that are smartphone. easier to control. Better customer service, while never on the top of the list, can Among consumers who said they are planning to switch wireless incentivize at least 20% of consumers to stay with their current carriers in the next 6 months, features that can convince them to carrier. stay vary by provider.

What incentives could get you to stay with your current provider? Among those planning to switch in the next 6 months Verizon Boost Cricket AT&T Sprint T-Mobile MetroPCS Wireless Mobile Wireless Lower plan rates 47% 55% 61% 68% 43% 43% 17%

Unlimited data plan 53% 56% 61% 48% 45% 66% 31%

Better network coverage 40% 41% 41% 42% 36% 49% 41%

Good deal on a smartphone 39% 42% 43% 30% 34% 76% 44%

Faster browsing and downloading speed 29% 52% 37% 39% 46% 70% 29%

Better phones available 21% 24% 42% 23% 32% 62% 40%

Better customer service 26% 23% 19% 20% 19% 34% 21%

Overseas coverage at no additional 8% 19% 27% 15% 31% 13% 23%

Nothing 10% 9% 20% 2% 11% 0% 13%

Incentives that are most likely to get consumers to switch Moderately likely to get consumers to switch Least likely to get consumers to switch

Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 12 Methodology

Fluent’s “Telecom Survey” was conducted online within the by Fluent, LLC on May 7, 2017 among 1,611 US consumers (aged 18 and up). Due to rounding, percentages may not always add up to 100%. Fluent’s proprietary ad serving technology includes a real-time survey module that was used to facilitate the data collection for this study. Respondents were randomly selected and data was weighted to US Census 2010 population distribution. https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml

ABOUT FLUENT Fluent, LLC, a cogint company (Nasdaq: COGT), is an industry leader in people-based digital marketing and customer acquisition, serving over 500 leading consumer brands and direct marketers. Leveraging a massive reservoir of proprietary audience data, as well as millions of real-time survey interactions with consumers every day, Fluent enables advertisers to more effectively target and acquire their most valuable customers, with precision, at a massive scale. The company is headquartered in New York City. For more information visit www.fluentco.com. fluentco.com I [email protected] I 646.647.2966 Arrows indicate significantly higher than comparison group at 95% confidence interval Telecom Report 2017 13