One New Way to Raise Customer Satisfaction: Lose Your Most Unhappy Customers

Sometimes “customer satisfaction scores” have to be evaluated carefully, as it is not clear what predictive value such scores actually have. There are often multiple reasons.

Though customer satisfaction logically is related in some way to customer retention and churn, the relationship is complicated.

Even “satisfied” or “very satisfied” customers will churn, because the other providers are perceived to provide equally-good experiences, and might from time to time also offer better prices or features.

But there are other instances where even rising satisfaction scores are perhaps not what they seen. Consider the example of a declining business, such as fixed network voice services, which might shed about half its subscribers over a decade.

As consumers bleed away from fixed network service providers, satisfaction scores are rising, because the unhappy customers are leaving. Those who remain are more satisfied than the customers who have left, according to the American Customer Satisfaction Index (ACSI).

The fixed-line industry’s ACSI score got better nearly six percentage points, reaching 74, with gains for individual companies ranging from four percent to eight percent, ACSI reports. Those are big gains indeed, for the ACSI index.

Verizon improved six percent while Cox gained four percent,  to tie for the lead at 74. AT&T follows closely at 73 while Charter scored 72.

CenturyLink’s score improved eight percent, and Comcast got better by six percent, both reaching a score of 71. Time Warner Cable scored 68.

To be sure, it is possible all the fixed network service providers are doing much better than they have in the past. But ACSI also cautions that the reason satisfaction is growing is that unhappy customers are deserting the service.

That might not be such a great way to earn higher customer satisfaction scores.

ISPs were ranked for the first time in the latest ACSI study, and scored the lowest of any industry studied by ACSI.

Internet service providers were rated for the first time, with an average score of 65, the lowest score among all 43  industries tracked by ACSI, which ACSI attributes to high prices, service reliability, speeds and video-streaming quality.

Only Verizon’s FiOS and the aggregate of all other smaller ISPs break out of the 60s with identical ACSI scores of 71.

Cox beats the average at 68, followed by AT&T U-verse and Charter at 65. The low end belongs to CenturyLink at 64, Time Warner Cable at 63 and Comcast at 62.

Video subscription services offered by cable operators, fixed line voice services and even mobile services traditionally have not scored all that high for customer satisfaction, it might also be noted.

Mobile Will Account for 50% of All Broadband Connections in Asia by 2017

Rational observers have been saying for some time that the smart phone will be the device used to access the Internet, and that mobile networks will be providing the connections. A new estimate by the GSM Association puts some numbers on those assumptions.

By 2017, perhaps half of all broadband connections in Asia will be supplied by mobile operators.

Have LTE Operators Already Found Their First Significant New Revenue Source?

Mobile connections for tablets might be developing as the first new revenue-generating "new app" of any significance for Long Term Evolution networks. In fact, the magnitude of those new revenue streams seems to be occurring faster than has been operator experience with third generation networks.

Mobile service providers, since at least the advent of third generation networks, have hoped for and touted the development of new revenue-generating applications, every time a next generation network is introduced.

That sometimes can take a while to develop. In fact, that has lead some observers to say there is no "killer app" for fourth-generation mobile networks, in the sense of some huge new revenue-generating application or feature.

In fact, in the near term, it might be logical to assume that “faster speed” is the closest thing to a new “killer app” that drives incremental revenue.

But one potentially new trend already might be developing for fourth generation Long Term Evolution networks, namely the additional connections to support tablet devices, and not necessarily new apps for smart phone users.

According to a survey sponsored by the GSM Association, about 33 percent of dongles, tablets or hotspots are 4G-enabled. That doesn’t mean all or even most of those devices are actively using 4G connections, but many do connect to the 4G network.

So some would argue that the first new 4G revenue source is network connections for tablets, which appear to offer a greater prospect for 4G growth than other data devices such as the traditional dongles.

On average, 4G operators surveyed by GSMA offered seven tablets in their data devices portfolio. Operators such as A1 Telekom (Austria), Polkomtel (Poland), MTS (Russia), STC (Saudi Arabia) and Telenor (Sweden) offered twice the number of tablets they were a year ago.

Australia’s Telstra, which launched its first 4G networks in the third quarter of 2011, recently noted a “really big swing in terms of tablet technology”. But tablets represented 24 percent of the operators’ mobile broadband customer base in the second half of 2012.

The introduction of shared data plans in developed markets, which allow, s users to attach several devices to a single plan and data allowance, is accelerating adoption of data devices.

Verizon Wireless CFO Francis Shammo says new customers often buy low end service plans, but then over a period of six months almost double the amount of devices that they put onto shared access plans.

Those additional shared data plans are boosting revenue per account. Even though many tablet users rely on WiFi as their main Internet connection, 4G LTE adn shared data plans will boost growth in broadband tablet data subscriptions, says Strategy Analytics.

Strategy Analytics forecasts global mobile broadband subscriptions on tablets will grow 800 percent from 2012 to 2017, as more than 165 million new tablets get connected to mobile networks.

But it would be odd, perhaps almost unprecedented, for 4G mobile networks to succeed wildly, which is what virtually everybody expects, without the emergence of some new qualitatively different experience or value driver.

It might be more important to say that "nobody knows" what such qualitatively-new experiences will emerge. But some might say it is unlikely 4G will remain "3G but faster."

About a decade ago, when the first commercial 3G networks were introduced, there was much talk about innovation and new applications the networks would enable, and the list looked remarkably similar to what people claim will happen with 4G.   

E-commerce apps, for example, were thought to be an important 3G innovation. That is claimed for 4G as well, with more conviction, perhaps. “The availability of 3G services is going to have a profound effect on electronic commerce,” it was said.

That also is said of 4G. It was said that “3G works better” than 2G, and that was true. It also is said of 4G, and also is true.

3G wireless was sometimes characterized as a wireless version of the Internet, encompassing Web browsing, e-mail and media downloads. That sounds like 4G as well.

Over time, though, a distinctive lead application does tend to develop, though it might take some time. Voice and texting were the lead apps for 2G, while Internet access and email have emerged as the "killer app" for 3G, it can be argued.

For 3G networks, smart phones finally drove significant consumer uptake for broadband data. But it took quite some time for that new driver to be discovered and popularized.

To be sure, there is a line of thinking that the value of 4G might initially accrue in large part from significantly-lower the cost per-bit costs to provide mobile broadband. Verizon Wireless, for example, believes the cost to deliver a megabyte of data on 4G with LTE will be half to a third of the costs of a 3G network.

It now appears that tablets could be the device, and mobile network access the application, that first drives incremental new revenue for LTE networks.

Device type prevalence % in selected LTE operators' data device portfolios (Feb 2013)

Source: Wireless Intelligence

TV Everywhere Hits Snags Related to Rights Deals, Ratings and Advertising | Adweek

Faced with competition from Netflix and Hulu, cable companies have touted TV Everywhere features as a key feature that would blunt demand for streaming services offered by competitors. But, as always in a content business, content availability is a key problem. 

The top 10 ad-supported, paid TV networks offer mobile viewing to only 4 in 10 subscribers, according to the Diffusion Group.

Since most shows that are available on mobile devices are only available inside the home using the at-home Wi-Fi connection. TV Everywhere winds up being only "TV Almost Nowhere" except where it already can be viewed. 

According to a TV Everywhere study from October by GfK, paying TV customers are more aware of the services from networks like HBO than they are of the TV Everywhere services offered by cable providers such as Comcast or Time Warner.

Usage is moderate, as well. About 37 percent of customers used TV Everywhere services of networks such as HBO, and only 30 percent used the cable operator services, according to eMarketer.

But the value is unclear, even to networks or distributors. Supposedly, TV Everywhere adds value to a video subscription. But how much value, when viewing is so restricted, is questionable.

Wi-Fi, Small Cells Will Handle Half of all Mobile Traffic in 2013

Juniper Research forecasts that almost 50 percent of data traffic generated by mobile phones, tablets and other 3G or 4G connected devices will be offloaded to Wi-Fi and small cell networks in 2013. 

Whether those estimates are reasonable is the issue, at least in part because not all smart phone or tablet traffic that uses Wi-Fi was actually "offloaded" from a mobile network. 

In some markets, though, close to that amount of traffic could conceivably be handled by small cells or Wi-Fi. 

Mobile Internet Ad Revenue Grows 100% in 2012, Google Has 53% Market Share

One of the obvious problems with Internet Bubble Era revenue models was that so many application providers believed “advertising” would provide the revenue. 

These days, application providers tend to think commerce and transactions are equally important, which is a good thing, since advertising revenues for Internet and mobile apps tend to be highly concentrated.

Google, for example, earned more than half of the $8.8 billion advertisers worldwide spent on mobile Internet ads in 2012, representing 33 percent of all digital ad dollars spent globally, according to eMarketer.

Google also garnered 52 percent of all global mobile advertising revenue in 2012, and will do better than that in 2013, eMarketer predicts.

Altogether, just  three companies—Google, Facebook and Twitter—account for a consolidating share of mobile advertising revenues worldwide, as other players, such as YP, Pandora, Apple and Millennial Media, see their shares decrease, despite maintaining relatively strong businesses growing at rapid rates, eMarketer says.

Across all digital platforms, Google continues to reign as not only the largest beneficiary of digital ad spending in the US, but worldwide as well, eMarketer  estimates.

Google earned $32.73 billion in net digital ad revenues in 2012, equivalent to nearly 32 percent of total worldwide digital ad spending that year.

In 2013, Google will increase revenues faster than the overall market.

Facebook came in second in 2012 with $4.28 billion in net digital ad revenues, or four percent of the worldwide market. Its share will also grow to five percent in 2013, eMarketer predicts.

While both Google and Facebook are increasing revenues at faster rates than the overall digital ad spend market, dramatic increases in ad revenues are more difficult for companies with substantial existing earnings.

Twitter will post the fastest growth rate in worldwide ad revenues among the companies eMarketer analyzed, with a 102 percent increase expected this year after a 107 percent increase in 2012. The market will grow about 12 percent in 2013, by way of comparison.

Overall online ad spending, like mobile advertising, continues to consolidate among a few major ad sellers. In 2011, eMarketer estimates, 55.6 percent of all digital ad revenues worldwide went to companies in the “other” category. By the end of 2013, that share will drop to 52 percent.

The point is that the stock answer that “advertising” will be the primary revenue model for most application providers likely to prove quite unrealizable. Yes, the markets are growing, but most of the revenue will be captured by just a few firms.

Drip, Drip, Drip: Consumer Satisfaction with Cable TV Declines

Time Warner Cable has more than 300 content contracts, and some of them may bar media outlets from providing content to online pay-TV services, Time Warner Cable Chief Executive Officer Glenn Britt said.

That's one reason why the disruption of today's video entertainment business will take some time. It's all about the content, and the distributors and content owners seem content to keep much of it locked up.

Also, content provider and distributor business interests are not fully aligned. Content owners want to sell to as many distributors, using as many platforms as possible. Distributors want exclusivity.

Still, there are small and persistent signs of change. The perceived value of a video subscription appears to be declining. While close to 90 percent of U.S. broadband subscribers also buy a video entertainment service, the perceived value of the service relative to prices paid has declined.

For example, in 2012, 55 percent of entertainment video subscribers rated their service as a good value.

In 2013, that percentage had declined by 10 percent, down to 49 percent of video subscribers.

More importantly, the percent of subscribers that rate the value of their service as “extremely good” declined from 31 percent to 25 percent, down 18 percent year-over-year.

Smart Phones are Closing Internet Gaps Everywhere

Over 6.6 billion mobile phones will be in use by the end of 2017, according to CCS Insight's new market forecast. About 66 percent  of them will be smart phones, up from less than 25 percent in 2012.

In the first three months of 2013, smartphone shipments exceeded those of non-smartphones for the first time ever. Sales of smartphones have been helped by new, cheaper devices, especially, but not only, in emerging markets. The mobile and media analyst firm expects 1.86 billion mobile phones to be shipped in 2013, of which 53 percent will be smart phones

That means smart phone markets in Western Europe and North America will see penetration levels approaching saturation point in these markets within three years.

More than 50 percent of the mobile phones in use in these regions are already smart phones. CCS Insight predicts this figure will grow to more than 80 percent in 2015. Beyond 2015, much of the growth will come from emerging markets.

At the same time, sales of tablets are rising at a staggering rate. Altogether, global shipments of smart mobile devices (smartphones and tablets) will increase 2.5 times between 2012 and 2017, to reach 2.1 billion units. CCS Insight predicts that by 2017 the combined number of mobile phones and tablets in use will exceed the world's population.

Nor shouild we  underestimate the role of smart phone access in narrowing “gaps” between regions, states and population segments in use of the Internet, either in developing or developed regions.

It now is clear that the ways people choose to use the Internet is becoming more segmented, and that many users prefer to use smart phones rather than fixed Internet connections.

According to a 2013 analysis conducted by the Pew Internet and American Life Project, the digital divide between Latinos and whites is smaller than what it had been just a few years ago.

Between 2009 and 2012, the share of Latino adults who say they go online at least occasionally increased 14 percentage points, rising from 64 percent to 78 percent.

Among whites, Internet use rates also increased, but only by half as much—from 80 percent in 2009 to 87 percent in 2012, Pew researchers say.

Over the same period, the gap in mobile phone ownership between Latinos and other groups either diminished or disappeared.

In 2012, 86 percent of Latinos said they owned a cellphone, up from 76 percent in 2009.

In 2011, 76.2 percent of non-Hispanic white households and 82.7 percent of Asian households reported Internet use at home, compared with 58.3 percent of Hispanic homes and 56.9 percent of black households, according to the U.S. Census Bureau.

Race and ethnicity did not in 2011 seem to be particularly strongly related to  

smart phone use. Although smart phone use was significantly higher for Asian respondents (51.6 percent), reported rates  for white non-Hispanics and blacks

were not statistically different from one another (about 48 percent each, respectively).

In 2011, a plurality of Americans connected to the Internet from multiple locations and multiple devices (27.0 percent).

These individuals were considered “high connectivity” individuals. The second most common position on the continuum was the opposite extreme—individuals without any computer or Internet activity at all (15.9 percent), or “no connectivity”

Mobile Adoption: A Prime Example of Why "Investment" Beats "Aid"

One of the arguable delusions the "aid community" and probably most people have had over the past few decades is that government-to-government actually works. The issue here is not "feeling virtuous," but being virtuous. 

And there is growing evidence that most government-to-government foreign aid actually retards economic development. It is, in other words, a case of "feeling good" instead of "doing good."

Some would argue such foreign aid does not work, or actually has made things worse. 

Some might argue the whole point is doing good, not "feeling good." Most might agree that results are problematic, at best, and harmful at worst. 

On the other hand, there is an argument that some forms of assistance do work, namely the small, non-governmental organization types of aid that have more chance of being put to work by the people the aid is supposed to reach. 

Beyond that, investment, not aid, is what is needed. There's a big difference. Those of you in the communications business might note the huge "development" impact of making it possible for people everywhere to communicate using mobile phones. Since about 2003 or so, the industry has witnessed an unprecedented adoption of communications by people everywhere. 

All that was done with investment, not aid. 

Spectrum Auction Outcomes Might Hinge on Bidding Rules

The Federal Communications Commission in 2014 is scheduled to conduct an auction to re-allocate as much as 120 MHz of radio spectrum from television broadcasters to mobile service providers.

As much as 102 MHz  worth of new usable spectrum is possible, after accounting for guard bands and spectrum adjustments.

But spectrum auctions always entail some degree of friction between rival bidders, and equally contentious thinking about the best policies to govern such auctions.

The U.S. Department of Justice, for example, thinks there are strategic and marketplace advantages to lower-frequency spectrum (below 1 GHz), and that the two weaker U.S. carriers are at a disadvantage in that regard.

The solution DoJ has proposed is preference for Sprint and T-Mobile USA in bidding for those lower-frequency airwaves. But some economists argue that the greatest efficiency and consumer benefit will arise if no restrictions are placed on the bidding.

The upcoming auction will be different than most prior mobile spectrum auctions, though. The most important difference is that current licensees will have to be induced to sell their spectrum. Obviously, the more money they are offered, the greater the odds they will agree to sell.

The FCC will first take bids in a reverse auction in which television broadcasters will set the prices at which they are prepared to sell their spectrum licenses. The Commission then will conduct a forward auction to allocate that reclaimed spectrum to mobile service providers.

For that reason, any rules that limit the amount of money the FCC can raise will decrease the likelihood that the spectrum actually gets sold, and then redeployed to support mobile communications.

And some argue reserving spectrum for firms such as Sprint and T-Mobile USA will have the effect of reducing the amount of money buyers are willing to pay, thereby reducing the amount of spectrum that actually gets reallocated, a new analysis suggests.

That analysis by Robert J. Shapiro, Douglas Holtz‐Eakin and Coleman Bazelon, published by the Georgetown University Center on Business and Public Policy, argues that the best way to deploy the new spectrum is not to bar AT&T and Verizon Wireless, or any other bidders, from the auctions.

Others argue that the spectrum will be most usefully deployed if the entities best positioned to use it are the entities that win the new spectrum, and also barring some bidders will reduce auction revenues, in turn reducing the amount of spectrum that can be shifted to support new mobile service.

It is counter intuitive, but fiddling with auction rules to bar leading providers, or to favor other contestants, might result in worse outcomes than simply letting all bidders compete. In part, that is because market concentration and consumer welfare are not necessarily and always opposites, as Phoenix Center has argued.

It is understandable that either T-Mobile USA or Sprint might prefer rules that favor them, just as AT&T and Verizon Wireless would prefer not to be limited or barred from participating. 

Those obvious economic interests aside, the matter of what policy is "best," in terms of getting the most new spectrum allocated, sometimes requires analysis. As often is the case, different policies will produce different outcomes.

And the desired outcomes might vary. Some might want "more competition." Others will want "maximum new spectrum," or "greatest efficiency" or "fastest investment." Bid rules can affect and shape desired outcomes.

EE Launches Price War in U.K. Fixed Network Internet Access Market

EE (Everything Everywhere) has launched an attack on BT prices for Internet access services, dropping all usage caps on its six home broadband packages, and setting an entry level plan price of £5 per month plus line rental.

Access speed packages start at 14 Mbps and feature additional tiers of 38 Mbps, up to 76 Mbps on fiber to cabinet lines. Calling prices also have been reduced.

The original 38 Mbps fiber-to-cabinet service with a 40 GB usage allowance has been upgraded to offer unlimited usage while remaining at £15 per month for new customers.

BT’s  unlimited-usage price is £23/month, while Sky sells unlimited usage at £20/month, while TalkTalk’s price is £16.50/month.

Clearly, EE is hoping to disrupt the market by offering dramatically lower prices.

Mexico Communications, TV Markets to See Market Share Shifts

Mexico now has become a focal point for potential market change after Mexican President Enrique Peña Nieto signed into law a new framework for competition in the telecommunications and TV broadcast industries that has the express aim of limiting market power and shifting market share  in Mexico’s communications and media businesses.

In essence, the bill allows for something like the 1984 breakup of the AT&T Bell system, though it isn’t clear that is the preferred method for altering market share in the Mexican markets.

At least initially, regulators are likely to try new network unbundling and interconnection rates that will favor competitors. Just how much share could change is the big question. In the U.S. market and in Western Europe, competition has in many cases reduced the former market leader’s share to as little as 30 percent to 35 percent.

But that required asset divestitures. In the absence of such asset disposals, some of the existing competitors might expect to gain perhaps 10 percent to 15 percent share.

What is clear is that the “problem” is seen to be excessive market control by one company, in this case América Móvil, which has 80 percent share of fixed lines and also 70 percent share of mobile accounts as well.

The new law creates a brand new regulatory body, Ifetel, which will have the ability to apply more restrictive regulations on dominant competitors or force them to sell assets.

But Grupo Televisa likewise controls 70 percent of the broadcast TV market, and also is expected to see new competition, ironically from Carlos Slim, who controls América Móvil.

One way or the other, regulators will take actions to reduce the market share held by the leaders of the fixed line, mobile and TV broadcast industries. That, of course, is the whole point of inducing new competition: the leaders lose market share.

Two new national television networks will be authorized, and existing satellite and cable TV companies will be required to carry those signals at no charge to the new networks.

Aside from changes in interconnection rates to favor attackers, foreign businesses will be permitted to own up to 49 percent (up from zero percent) of radio firms, and can increase their stake to 100 percent (up from 49 percent) in other telecommunications operations.