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Communications

Cellular’s Unhappy Customers


Customers are becoming increasingly dissatisfied with their cell phone service as the major wireless operators in the United States merge together, said a J.D. Power and Associates report on Wednesday.

Overall satisfaction with a subscriber’s wireless provider dropped 10 percent in 2004, the largest year-over-year change since the U.S. Wireless Regional Customer Satisfaction Index Study was launched a decade ago.

The findings provide a harsh contrast to the claims of the merging companies and their officials, who hope to smooth over the possible negative effects of industry consolidation on the consumer.

“Given the number of major changes consumers have experienced over the past couple of years, the gap between customer expectations and actual service experience tends to widen as uncertainty from mergers greatly influences consumer perceptions,” said Kirk Parsons, senior director of wireless services at J.D. Power and Associates.

The report, which surveyed 24,096 wireless users, found that forces like mergers, regulatory programs, and competitive expansion have made it difficult for carriers to meet customer expectations.

The companies that underwent major mergers had greater drops in customer satisfaction.

Sprint and Nextel experienced the largest declines in overall customer satisfaction last year after they announced their $35-billion merger, which closed last month.

experienced the largest declines in overall customer satisfaction last year after they announced their $35-billion merger, which closed last month.

Cingular didn’t make the top of the charts in any of the regions after it closed its $41-billion merger with AT&T Wireless last October.

AT&T

On the other hand, the report found that T-Mobile and Verizon Wireless, both companies that avoided big mergers, ranked highest for overall customer satisfaction.

Verizon

T-Mobile tended to rank high with customer service, cost of service, service plan options, and billing. Verizon Wireless ranked high in call quality and brand image.

Conflict Call

The drop in customer satisfaction stands in sharp contrast to the soothing words of the merging companies attempting to ease customer fears of inferior service and higher prices.

“This is a pro-competitive combination that will provide customer choice and create exciting new opportunities for all of our constituencies,” said Tim Donahue, executive chairman of Sprint Nextel, referring to the merger of Sprint and Nextel.

Stan Sigman, chief executive of Cingular Wireless, called the merger between Cingular and AT&T Wireless “great news for America’s wireless users.”

Mr. Sigman said the combination “is expected to create customer benefits and growth prospects neither company could have achieved on its own.” He said the merger “will mean better coverage, improved reliability, enhanced call quality, and a wide array of new and innovative services for consumers.”

But consumer advocacy groups like the Consumer Federation of America have been wary of the big-time mergers since the beginning of 2004, pointing to higher prices and diminished service as fewer companies compete for customers’ business.

“This merger will have a devastating impact on consumers…. It also will gut the incentive for these companies to come out with new and innovative products and services,” said Mark Cooper, director of research at the Consumer Federation of America.

As the number of cellular subscribers continues to rise and wireless operators look to grow larger to survive all the industry upheavals, the carriers will face an increasingly uphill battle to satisfy their customers.