September 07, 2005 09:00 AM Eastern Time 

J.D. Power and Associates Reports: Satisfaction with Wireless Service Providers Decreases Significantly as Recent Mergers Impact Customers Perceptions on the Service Experience

“Given the number of major changes consumers have experienced over the past couple of years, the gap between customer expectations and actual service experience tends to widen as uncertainty from mergers greatly influences consumer perceptions”

Overall satisfaction performance with wireless service providers has decreased 10 percent over 2004, the biggest year-over-year change since the study's inception, according to the J.D. Power and Associates 2005 U.S. Wireless Regional Customer Satisfaction Index (CSI) Study(SM) released today.

Since the study was launched in 1995, overall wireless satisfaction performance has fluctuated in a downward trend based on a number of industry changes such as competitive expansion, key regulatory programs and mergers. These forces have made it difficult for carriers to meet customer expectations as wireless service gained mass appeal.

Over the past two years, the industry has experienced two of the largest mergers in its history: Cingular and AT&T Wireless in 2004 and the most recent union between Nextel and Sprint. As past experience has shown, mergers, at least in the short-term, negatively impact customer attitudes and perceptions with their wireless service, creating a sense of confusion and uncertainty. Most affected are those carriers that experience a merger. Nextel and Sprint experience the largest declines compared to their overall satisfaction index ratings in 2004. However, even carriers not involved in mergers are impacted, with most experiencing some decline in overall satisfaction from 2004.

"Given the number of major changes consumers have experienced over the past couple of years, the gap between customer expectations and actual service experience tends to widen as uncertainty from mergers greatly influences consumer perceptions," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "Case in point is the impact major market dynamics plays in future switching intent. Between 2004 and 2005, there has been a 5 percent increase in the intent to switch wireless carriers in the next 12 months -- a reverse from the past two years, where future switching intent remained stable."

The study measures customer satisfaction based on 42 specific service-related measures grouped into six key factors that impact overall wireless carrier performance. These are (in order of importance): call performance and reliability (26%); customer service (17%); service plan options (17%); brand image (14%); cost of service (14%); and billing (12%). Carriers are ranked across six regions in the United States.

T-Mobile performs particularly well in the study, ranking highest in all six regions (including four ties), largely by demonstrating a competitive advantage in service plan options, cost of service and billing. Verizon Wireless also ranks highest in a tie in four regions: Northeast, Mid-Atlantic, North Central and West. The carrier's main strengths are in the call quality and brand image dimensions. U.S. Cellular is the only other provider to rank highest, tying with Verizon and T-Mobile in the North Central region.

Study results by region are:

Northeast Region: T-Mobile and Verizon Wireless rank highest in a tie. T-Mobile performs particularly well in the areas of customer service, service plan options, cost of service and billing. Verizon Wireless' main strength is in call quality.

Mid-Atlantic Region: Verizon Wireless and T-Mobile rank highest in a tie. Verizon Wireless outperforms the competition in call quality and brand image. T-Mobile's strength lies in cost of service.

Southeast Region: T-Mobile ranks highest overall. T-Mobile performs particularly well in customer service, service plan options, cost of service and billing.

North Central Region: This is the most competitive region, with T-Mobile, Verizon Wireless and U.S. Cellular all tied for highest customer satisfaction. T-Mobile leads the region in cost of service, while both Verizon Wireless and U.S. Cellular receive the highest ratings in customer service.

Southwest Region: T-Mobile ranks highest overall, with superior ratings in call quality, service plan options, cost of service and billing.

West Region: Verizon Wireless and T-Mobile rank highest in a tie. Verizon Wireless performs particularly well in call quality and brand image. T-Mobile receives the highest ratings in cost of service.

The 2005 U.S. Wireless Regional CSI Study is based on experiences reported by 24,096 wireless users.

About J.D. Power and Associates

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction. The firm's quality and satisfaction measurements are based on responses from millions of consumers annually. 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 is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor's, McGraw-Hill Education and BusinessWeek. The Corporation has more than 300 offices in 40 countries. Sales in 2004 were $5.3 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.