Consumers Not Quite Ready To "cut The Cord"

[Chirag 5]

Consumers Not Quite Ready To "Cut the Cord"

June 24, 2004

INSTAT

SCOTTSDALE, Ariz. - While consumer research from In-Stat/MDR clearly shows that consumers that use wireless phones have significantly decreased their wireline phone usage for both local and long distance service, the high-tech market research firm finds that most consumers are not interested in "cutting the cord" and replacing their landline altogether.

In-Stat/MDR believes that there are a myriad of factors that go into the decision to become totally mobile and that if offered the option to have both wireline and wireless services as part of one rate plan, consumers might take it -- particularly those older than 25. "While the number of people subscribing to wireless services is growing, it does not provide the same type of experience, or more importantly, the same quality of service, as wireline local phone service," says Amy Cravens, a Senior Analyst at In-Stat/MDR. "Furthermore, among those that do subscribe to wireless service, a relatively small percent are willing to give up their wireline, residential phone service." Cravens believes that consumers still value the capabilities and reliability of a traditional landline phone. However, traditional wireline providers must not lie on their laurels. As consumers are faced with real dollar decisions, the economics of paying for what is perceived as two similar services may cause some to convert to wireless.

A recent In-Stat/MDR survey has also found that:

There are clear distinctions of behavior depending on the age of respondents, the younger the respondent, the more likely to "cut the cord." However, customers that "cut the cord" today, may reconnect to the landline services later in life as their priorities change.

Convenience was the number one stated reason, on average, for considering canceling wireline services, suggesting the cutting the cord is really about mobility -- not necessarily just price.

While both wireline and wireless calls tended to be more local than long distance, the proportion of long distance calls was higher among wireless calls.

Verizon/Verizon Wireless was the only provider to consistently be ranked among the top three providers, in terms of respondents subscribing to their service for local, long distance, and wireless phone service. Verizon was the most frequently selected provider for local and wireless phone service, and the third most frequently selected provider for long distance.