Customers switching for better broadband and cheaper mobile
12 April 2012
A nationwide survey conducted for the Commerce Commission on consumer switching behaviour has found that the main reason consumers give for switching fixed-line telecommunications service providers is to obtain better broadband services, and cheaper rates is the main reason for switching mobile phone service providers.
The consumer survey, which is a first for the Commission, was conducted in two stages by Roy Morgan Research. The first stage involved data analysis of Roy Morgan's annual overall survey of consumer behaviour. This survey covers 12,000 consumers across New Zealand and 50,000 in Australia. The second stage in October and November 2011 involved tailored telephone interviews with 1,053 mobile and fixed-line customers throughout New Zealand.
The main reason for fixed-line switching in the telephone survey was to improve broadband service (48.6%). Of those that switched service providers, cost (41%) and the need for a higher data cap (33%) were given as the main reasons for not staying with their provider. Few customers (just 4%) listed faster broadband as a reason.
Nearly 14% of mobile customers reported switching in the last 12 months, and just over 37% of New Zealanders reported they had switched mobile providers at some stage.
The leading reasons given by consumers in all age groups for switching mobile providers were cheaper services (46% overall survey), better network coverage (22%), and being on the same network as family and friends (20%). For those wanting to be on the same network as family and friends, 79% explained that the main reason was cheaper services.
Nearly 80% of survey respondents in the telephone survey said they were unlikely to switch mobile providers in the next 12 months. Inertia and customer satisfaction with their existing provider appear to be the main reasons for not switching mobile service providers.
Respondents who did switch overwhelmingly indicated a positive customer experience (nearly 82%).
The survey is the first Commerce Commission-funded study of customer issues that could affect competition in telecommunications markets. Previous studies have concentrated on service providers.
"We commissioned this survey of customer experience to find out if there were any significant barriers stopping consumers from switching providers. Switching barriers lead to less competition, higher prices, poorer services and less choice," said Dr Ross Patterson, Telecommunications Commissioner.
"The study indicates that switching barriers do not appear to be significant. However, the telecommunications sector is extremely dynamic and these results are a snapshot in time, and the Commission will continue to monitor development in the market," Dr Patterson said.
A copy of the report can be found at http://www.comcom.govt.nz/consumer-switching-survey/
The ability of a consumer to switch telecommunications service providers enhances competition in telecommunications markets. The Commerce Commission is required by Section 9A of the Telecommunications Act (2001) to monitor and report on competition and the performance of telecommunications markets in New Zealand.
The Commission has largely focused on issues around providers as indicators of the extent of competition. However, competition can also be affected by customer issues. If few customers are able to switch their service provider then this would hinder the ability of a new entrant to the market to offer services.