Few Say They are Happy with Mobile Service, But Few Leave

If consumer dissatisfaction with mobile services is as significant as some studies suggest, T-Mobile US and Sprint have reason to believe they can disrupt the U.S. mobile market. 

On the other hand, both T-Mobile US and Sprint confront relative stability of consumer behavior, which works against the odds of major change.

Unhappy customers should suggest there is room for an attack. 

But there is lots of evidence that even unhappy customers do not abandon those products. That, for example, was true for decades in the U.S. cable TV business, where almost every survey found significant levels of dissatisfaction, and yet rather low churn rates. 

Even unhappy customers do not change service providers all that often, one might conclude from low churn rates that now seem to characterize the U.S. mobile market.

Of the roughly 326 million U.S. mobile accounts, about one percent a month of AT&T or Verizon Wireless seem to choose another service provider. 

About two percent of T-Mobile US or Sprint customers choose another service provider in a given month. 

That's low for a consumer service. In past decades, it would not have been unusual for more than three percent of a cable company's customers to stop buying service in any given month. 

Even churn among small business customers of most competitive local exchange carriers has run in the three percent a month range. 

To make matters harder for T-Mobile US and Sprint, churn performance has gotten better, for all four service providers. 

It might seem that unhappy customers do not leave, or that happy customers will desert a service provider, but both types of behavior seem rather common.

You might agree that even satisfied or very satisfied customers will leave their current supplier for a better alternative, even if they were happy with their original supplier. "Same features, lower price" typically is a reason for doing so. 

Perhaps the harder behavior to explain is an unhappy customer that does not leave. There could be a number of quite rational explanations for such behavior, though.

Experienced consumers might already have tried the other mobile service providers, and discovered that virtually every network, and every service,  has some strong points and weak points. 

Consumers might perceive one service to be superior, but also resist the higher price such a service carries. 

In other words, some experienced consumers might simply have learned from experience that no service provider does a consistently better job, provides the lowest price and best features. 

Think about the experience most people have with traveling by airline. In most cases, no matter the supplier, most travelers might rate the experience as troublesome on some dimensions. 

On the other hand, travelers might also say they prefer lower prices, and troublesome experiences therefore are caused by the very fact of the ability to obtain lower prices. 

One suspects something of that process is at work for mobile services. One way of putting matters: nobody is happy, but nobody expects any of the other alternatives to be consistently better. 

That is the challenge Sprint and T-Mobile US will face in attempting to disrupt the U.S. mobile market. Something rather more profound than what T-Mobile US, Sprint, AT&T and Verizon have been doing so far will likely be required to make a significant breakthrough.