Exclusive Yankee Group report examines the carrier relationship with the enterprise. Check out how the Big Four U.S. wireless carriers stack up in business-class services.
Competition among wireless carriers in the United States has continued to heat up as overall subscriber penetration peaks and operators struggle to grow share of gross additions while maintaining their current base. Aggressive smartphone rollouts (iPhone, Droid, BlackBerry Storm, et al), all-inclusive voice and data pricing plans, touting of 3G network capabilities and coverage have all been part of the carrier arsenal. Most of these initiatives are aimed at the general consumer market and can be seen in mainstream media marketing.
However, a key portion of the subscriber base for the Big Four carriers (AT&T, Sprint, T-Mobile, and Verizon) is within the business segment. In fact, approximately 78 million U.S. wireless subscribers are business users, and this figure will grow to more than 90 million by 2013, according to Yankee Group. Business subscribers are particularly attractive to wireless carriers: compared to their general consumer counterparts, business users offer the allure of higher voice and data usage, along with the potential for higher monthly revenue and lower churn. The penetration of smartphones and wireless broadband connectivity on laptops remains low, representing a growth opportunity for wireless carriers.
Given that the business segment remains a critical component in the overall U.S. wireless market, and many business leaders are making strides toward re-evaluating their enterprise mobility strategies, Yankee Group and Mobile Enterprise Magazine joined forces on this exclusive research project to see how well carriers are doing today in providing voice and data services to their corporate customers.
We compiled a survey of business decision makers to understand their current carrier relationships, satisfaction with their wireless providers, and selection criteria for choosing a provider for both wireless voice and data services. The survey was conducted in November 2009 with respondents from both Yankee Group's Anywhere Enterprise panel of business decision makers and Mobile Enterprise Magazine's readership, and totaled 274 large business respondents (in companies with more than 500 employees), and 292 small and medium business respondents (in companies with 500 employees or fewer).
Examining Overall Satisfaction
Our survey examines overall satisfaction and specific satisfaction across 10 categories for wireless voice services, and 11 categories for wireless data services. In general, large enterprises and SMBs have moderately high satisfaction levels across both voice and data services.
For voice services (see Exhibit 1), carriers scored strong marks overall for ease of activation, voice quality, account management, and device selection for both large businesses and SMBs. Perhaps unsurprisingly, businesses of all sizes were least satisfied with pricing on both voice services and devices. And carriers lagged on international capabilities, particularly among SMBs.
Another indicator of overall satisfaction is the percentage of companies evaluating switching from their primary service provider. Only 12% of large businesses are considering switching their primary provider for wireless voice compared to 16% among SMBs. Voice service pricing, voice coverage, and voice quality are the top criteria large businesses are using when evaluating a new service provider. For SMBs, the criteria change: with voice coverage, voice service pricing, and device pricing are their top three reasons to change.
Data service pricing and international capabilities are cited as carrier shortcomings on the data side (see Exhibit 2). While data coverage satisfaction can be viewed as adequate for large and small businesses, companies overall view data speeds and throughputs as still lacking, perhaps showing a strong opportunity for future 4G data services.
Potential for switching wireless data providers is similar for both large businesses (10% considering), and SMBs (12%). Large businesses indicate that data speeds/throughput is their No. 1 evaluation criteria for a new provider, followed by data service pricing and customer service/support. SMBs rank data service pricing, data coverage, and throughput/speeds as their top 3.
A Closer Look at the Carriers
Of course, overall satisfaction scores tell only part of the story, and the survey clearly indicates that some carriers shine in areas where others falter. For this analysis, we examined the "big four" U.S. wireless carriers, which dominate the business market, controlling 99% of the primary carrier voice relationships among large businesses, and 92% of those relationships among SMBs. Exhibits 3 and 4 show the market share of AT&T, Sprint, T-Mobile and Verizon Wireless among enterprises and SMBs for voice and data services. The market share shown here represents those relationships cited as "primary" by the business decision-maker respondents.
Not surprisingly, the largest two U.S. wireless providers, Verizon Wireless and AT&T, command the top two spots for both voice and data service providers. Among large businesses, these two carriers are neck-and-neck for both wireless voice and data service relationships, and Verizon holds a slight advantage in the SMB voice space.
Both Sprint and T-Mobile, with heavier focus on consumer markets, lag significantly behind. However, largely due to its legacy with Nextel push-to-talk services, 30% of large businesses and 19% of SMBs are using Sprint among their total portfolio of wireless voice providers, and 26% of large businesses are using Sprint for data services as well. T-Mobile also has potential to make greater inroads in the business market, with 20% of large businesses and 13% of SMBs using the carrier.
Voice Service Satisfaction
For our carrier satisfaction scores, we asked respondents to indicate their satisfaction with their primary wireless service provider for both voice and data, with a score of 1 being the lowest level of satisfaction, and 10 being the highest. Charts 5 and 6 show voice service satisfaction rankings of the big four carriers across 10 different categories and overall satisfaction for large enterprises and SMBs. Sprint and Verizon show the greatest consistency across the board, while T-Mobile and AT&T lag in almost all categories.
Sprint ranks first in overall satisfaction and ranks either first or second in nine of the 10 categories among large businesses. Sprint's scores among SMBs are not quite as impressive, with the carrier ranking third in overall satisfaction, but still finishing first or second in five of 10 categories. Perhaps not surprisingly as a market laggard, Sprint appears to be making aggressive moves on pricing to improve its positioning among business customers. Not all the news is good however: despite their high satisfaction scores, a troubling 22% of Sprint's large business customers are evaluating switching to a new primary wireless voice provider. This could indicate wariness on the part of enterprise customers about Sprint's overall corporate health in light of its recent financial troubles.
Verizon Wireless ranks second overall, and either first or second in eight of 10 categories within large enterprises. However, Verizon Wireless shows why it leads market share among SMBs, scoring the top satisfaction ranking and finishing first or second in all 10 categories among smaller firms. Business decision makers across the board rank them first in voice coverage and quality.
T-Mobile appears to be in much worse shape than Sprint in gaining ground in the business market. The carrier scored highest in only one category, international service capabilities. The lack of business focus for T-Mobile shows across the board, from service and device pricing to device selection and ease of activiation/fulfillment.
AT&T, the business communications leader, and significant wireless market share holder, scores poorly in almost all categories, and finishes last among its peers in overall satisfaction within both the large and SMB segments. The only category in which AT&T shines is for international service capabilities. While AT&T still holds a commanding share of primary business relationships, its low satisfaction scores opens the door for co-leader Verizon Wireless, as well as Sprint. AT&T (along with T-Mobile) ranks highest among its peers for churn risk among SMBs, with 19% of its customers saying they are evaluating a new provider for wireless voice.
Data Service Satisfaction
Our data services satisfaction rankings were conducted similarly to voice, this time with respondents scoring their satisfaction with their primary data service provider for overall satisfaction and within 11 other categories. While Sprint and Verizon dominate voice service satisfaction, data services present more of a mixed bag. The market share leaders AT&T and Verizon lag behind Sprint and T-Mobile in overall satisfaction among large businesses. But Verizon again takes the top spot and shows clear market leadership within the SMB segment.
Verizon's leadership is not as pronounced among large businesses for data as it is for voice. The carrier takes the first or second spot in only six categories, and finishes a close third behind T-Mobile's second in overall satisfaction. However, Verizon again shows its strength among SMBs, claiming the top spot in overall satisfaction, and nine of the 11 categories (and finishing second in another). Verizon claims the top spot for data coverage and data speeds within both segments.
Sprint again earns strong satisfaction scores, finishing first in overall satisfaction among large businesses, and second among SMBs. As in voice services, Sprint appears to be positioning itself as a lower-cost alternative to AT&T and Verizon.
T-Mobile scores strong numbers for data services considering that it significantly lags behind the other three competitors in 3G network deployment. Like Sprint, T-Mobile is positioning itself as the low-cost provider, which is reflected in its top scores in data service and device pricing among large business. However, as 3G competition heats up, T-Mobile's low scores in data throughput will hinder its ability to make up ground in the long term.
AT&T again shows disappointing satisfaction results, finishing third or fourth in nine of 11 categories, and last in overall satisfaction among large businesses. Satisfaction among SMBs paints a slightly better picture, but improvement will still be needed to catch Verizon's lead in the segment.
As mobility becomes an increasingly strategic initiative among all businesses, decision makers will need to re-evaluate their deployment strategies from top to bottom.
As wireless data connectivity and mobile applications continue to gain importance for mobile workers, businesses will need to use new evaluation criteria to choose their key service provider partners. Business leaders should begin to use tools such as the wireless voice and data satisfaction indices highlighted here to benchmark wireless carriers across a wide range of key performance indicators.
With wireless and mobile technologies continuing to evolve at a rapid pace, the market leaders of today are not assured of long-term success unless they continue to deliver and innovate in these key areas. Yankee Group will be publishing a companion report to the carrier satisfaction survey in January 2010 that provides deeper analysis of these results.
Eugene C. Signorini is VP Enterprise Applications & Mobile Solutions with Yankee Group.