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Cable Technology Feature Article

October 31, 2008

Customer Loyalty on Downswing with Cable Modem Increases

By David Sims, TMCnet Contributing Editor

Cable modem usage is increasing at a faster rate than DSL usage among Internet customers as dial-up use continues to decrease, according to the J.D. Power and Associates 2008 Internet Service Provider Residential Customer Satisfaction Study just released.
Now in its 11th year, the study measures customer satisfaction with high-speed and dial-up Internet service providers based on performance and reliability, cost of service, customer service, billing and offerings and promotions.
The study finds that the percentage of Internet customers who subscribe to cable modem service has increased to 41 percent in 2008 from 36 percent in 2007. DSL penetration among Internet customers has also increased to 30 percent in 2008 from 27 percent in 2007.
The share of Internet users that still subscribe to dial-up service has continued to decrease and now accounts for only 25 percent of Internet subscribers, a decline of 10 percentage points since 2007, the study finds.
“Customers now view Internet service as a necessity - not a luxury - and they’re looking for faster products capable of handling higher bandwidth,” said Frank Perazzini, director of telecommunications at J.D. Power and Associates. “As more movies, television shows and videos are being offered online, Internet users are looking for faster, higher quality connections to view content.”
The study finds that the number of Internet service customers who consider themselves loyal to their provider has decreased significantly among high-speed customers to 30 percent, from 42 percent in 2007 and to 36 percent from 51 percent in 2007 among dial-up customers.
Cost savings is cited by 69 percent of high-speed Internet service customers and 40 percent of dial-up Internet customers as the main reason they would consider switching providers.
“Even when customers aren’t necessarily dissatisfied with their current provider, they’re willing to switch to another provider if they find a better deal,” said Perazzini. “Building customer loyalty should be at the forefront of every Internet provider’s 2009 initiatives.”
EarthLink Net, including EarthLink and PeoplePC subscribers, ranks highest in the dial-up segment with an index score of 633 on a 1,000-point scale, performing particularly well in customer service, billing, and performance and reliability. United Online (News - Alert) (630) and MSN (602) follow EarthLink Net in the rankings.
This May, TMC reported that Atlanta-based EarthLink had its Wi-Fi customers in Philadelphia switch over to other networks as it pulled the plug on its Wi-Fi service there.
In the 2008 study, high-speed Internet providers were examined in four regions. In the East Region, Cablevision ranked highest with a score of 650, followed by EarthLink with 643. For the South Region, with a score of 670, Road Runner (delivered by Bright House Networks) ranked highest, followed by Verizon (News - Alert) (663).
For the North Central Region WOW! ranked highest with 702 and Cincinnati Bell (News - Alert) took the silver with 665, while in the West Region, Cox Communications ranked highest with 641, followed by EarthLink (630) and Verizon (625).
The whole report itself is worth a read, honestly, to learn stuff like customers who use online billing experience fewer billing errors and have higher satisfaction scores compared with the average customer:
“Overall satisfaction among dial-up customers who receive online bills is 47 points higher, on average, than among those who receive only paper bills… the satisfaction scores of high-speed customers who receive online bills are 21 points higher, on average, than those who receive paper bills.”
And among Internet customers, 65 percent report bundling their Internet service with one or more telecommunications services, compared with 52 percent in 2007.
The 2008 ISP Residential Customer Satisfaction Study is based on responses from 16,933 residential customers of Internet service providers nationwide. The study was fielded in July 2008.

David Sims is a contributing editor for TMCnet. To read more of David's articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Stefania Viscusi