Customers Suffer As Wireless Carriers Cut Costs

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July 08, 2004 (2:17 PM EDT)

Customers Suffer As Wireless Carriers Cut Costs

The quality of customer service provided by wireless carriers declined this year, due primarily from the poor use of computer systems to reduce the cost of dealing with complaints and inquiries from cellular-phone users, a market research study released Thursday found.

Based on a survey of 7,469 mobile phone users, J.D. Power and Associates found a surprising 7 percent decline in customer satisfaction this year from 2003.

The biggest contributor to the drop was customer displeasure over automated response systems, which oftentimes use too many prompts and instructions to navigate through a menu of options, and make it too difficult to reach a service representative.

"There are some companies that do a very good job and give you the prompt upfront to reach a service rep," Kirk Parsons, analyst for J.D. Power, said. "But most don't, and the reason is costs. It cost a lot more to have a rep on the line than to have a computer-generated response."

Another big contributor to the decline was the increasing amount of time customers are left on hold. Customers this year reported waiting for a service representative an average of 6.4 minutes, a minute longer than in 2003. As a result, the total average time to address a problem with the carrier jumped more than two minutes in 2004 to 13.3 minutes from 11.3 minutes a year ago, J.D. Power said.

Adding to the troubles is the increasing number of customer contacts, due to more complicated phones, Parson said. Carriers are adding more services, such as messaging, electronic games, video, music and digital photography, which add to the likelihood that customers will need help.

As a result, carriers will have to spend more on training and hiring service representatives.

"That's why you're seeing the trend toward outsourcing of customer service," Parson said. "The way to decrease costs is by outsourcing."

Adding to carriers' difficulties this year was a Federal Communications Commission rule that required carriers to let customers keep their telephone number when switching vendors. In addition, some carriers had to deal with major distractions due to acquisitions, such as Cingular Wireless's buyout of AT&T Wireless.

Nevertheless, the large drop in customer-service quality was unexpected.

"I was surprised the industry went down as much as it did," Parsons said.

Among the seven largest wireless carriers, T-Mobile USA had the top-ranking for customer service, with Verizon Wireless, ALLTEL and Nextel Communications performing at or above average for the industry. AT&T Wireless, Cingular and Sprint PCS were below average, with the latter at the bottom.

The rate in which cellular phone users switch carriers triples among customers who rate their carriers below average in customer care, J.D. Power said.

In other findings, more than half of cellular phone users had contacted the customer-service department for assistance within the last year. Billing and network-quality issues led the list of reasons why customers contacted their carriers.

Nearly two thirds of customers called their carriers by phone, with more than a quarter through the carriers' retail stores and less than 10 percent through the Internet.

The largest increase in type of contact inquiries was in issues related to phone malfunctioning, phone replacement and questions or problems about voice messages and voice-message changes.