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. Verizon 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 wireless 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 Boost Mobile 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% Cricket Wireless 7% 3% Boost Mobile 10% 6% 1% Virgin Mobile 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 audience 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.