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How Can AT&T Continue to Combat Poor Service?

Surveys put AT&T at bottom of customer satisfaction rankings


Almost every legitimate wireless service customer satisfaction survey that covers the four large wireless carriers — AT&T (NYSE: T), Verizon Wireless (NYSE: VZ), Sprint (NYSE: S) and T-Mobile, a subsidiary of Deutsche Telekom (NYSE: DT) — continues to show AT&T at the bottom of the rankings. And new research from ChangeWave shows that AT&T’s numbers are likely to get worse. The research company’s June survey of 4,028 consumers showed that only 20% of AT&T Wireless customers were “very satisfied” with the service provider. That compares to 50% for Verizon, 33% for Sprint and 25% for T-Mobile.

Dropped calls numbers are a major reason for customer attitudes toward AT&T. During the 90 days before the survey was taken, 5.8% of AT&T Wireless customers had at least one dropped call. The figure was as low as 2% for Verizon versus Sprint-Nextel at 2.5% and T-Mobile at 3.5%.

The ready answer for the reason AT&T can keep customers is its exclusive relationship with Apple for the iPhone and iPad. Changewave shows that only 8% of AT&T subscribers were likely to change providers in the next 90 days. That figure is not meaningfully different from the 8% for Verizon and 7% for Sprint-Nextel. Android-based phones have become popular enough that iPhone exclusivity may be losing some of its power as previous ChangeWave research has shown.

AT&T faces three significant problems in the next year. The first is that there is almost no growth left in the cellular provider industry, at least in terms of customers. The CTIA says that there are 290 million wireless subscribers in the U.S., just short of the total publication of 315 million. Verizon Wireless has slightly over 92 million subscribers, and AT&T has just over 90 million. The carriers can only gain ground by taking business from one another. If the iPhone is offered to Verizon customers as well at AT&T’s, the loyalty factor that the smartphone brings AT&T goes away. There are rumors that Verizon will start offering the iPhone next year.

Secondly, AT&T is also up against the adoption of 4G, which has already been built out across the country by Sprint using its Wimax technology. AT&T and Verizon Wireless trail Sprint. Each will offer 4G on the competing LTE platform but will trail Sprint in terms of when they can offer the service. In the meantime, AT&T faces defection of its customers to Sprint, who has begun to offer 4G in most cities.

AT&T’s last major problem is that the company has become its own worst enemy. Stories about service trouble compound themselves in the press. A brand reputation takes a long time to build but only a brief time to tear down.

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