As new smartphone customers become harder to find in the U.S. mobile market, carriers are shifting their operational focus from growth in average revenue per user growth to churn management, according to recent research from Parks Associates.
In this mode the carrier must adjust its proposition to dissuade its own customers from leaving and compel its competitors’ customers to switch sides; a journey of discovery into precisely what it is about mobile service that consumers value most.
As part of its research, Parks Associates asked consumers what would sway them, and this is what they learned: Two-thirds of consumers who are likely to switch carriers in the next year felt access to Wi-Fi as part of their mobile service would be “very important” to their decision.
The survey ranks Wi-Fi connectivity as a more compelling piece of the proposition than a loyalty rewards program, the chance of an early handset upgrade, or a long contract to offset upfront device costs – and equally attractive as the ability to roll over unused data. Wi-Fi and data rollover were second only to the holy grail of good customer service in perceived importance.
It is worth placing Parks’ findings into the wider context of the U.S. mobile market, because the prospect of increasing churn is hardly the carriers’ only concern. An LTE capacity crunch is looming as “4G” falls victim to its own success like 3G before it. Meanwhile the competitive pitch is being raised yet further by challengers, including Google’s Project Fi and the debut wireless offering from Comcast, expected later this year.
Google’s positioning of Fi as a “project” is ambiguous; projects can be side lines or grand undertakings. Pitching Fi as a project allows Google to show a little deference to the carrier partners it is effectively commoditizing, while also hinting at a far wider plan to force fundamental evolution in smartphone connectivity provision.
Whatever your interpretation, Project Fi is already changing the game. It cannot be coincidence that the service elements consumers identified as decision makers — data rollover and a connectivity model, which blends Wi-Fi and cellular into a single continuous service — are mainstays of the Fi proposition. Google commands the highest profile for its activities, even in their earliest incarnations, and the progressive clarity of the Fi offering has clearly struck a chord.
While U.S. carriers have introduced varying degrees of data rollover with varying degrees of reluctance, no doubt influenced in some cases by Project Fi, their plans for Wi-Fi are less clear.
The relationship between cellular carriers and Wi-Fi is complicated. In one sense carriers are more than happy for consumers to use Wi-Fi, particularly when it has enabled them to charge (as part of the monthly bucket price) for cellular capacity which doesn’t get used. And when that capacity is constrained, as was the case with 3G and soon will be with 4G, the option to offload is an appealing one.
And yet they have largely resisted integration of Wi-Fi at scale into the service, in a strategic sense, naturally prioritizing a return on investment on their multibillion-dollar networks and spectrum investments. Even where carriers have their own Wi-Fi deployments, they are not prominently positioned. In short, customers using Wi-Fi isn’t a problem — but it’s the customer’s business, not the carriers’.
The Parks Associates survey contradicts the notion that consumers are perfectly happy to manage their own Wi-Fi connectivity. They don’t want to have to find hot spots, join different providers’ programs, or submit reams of personal data during captive portal rituals just to get a simple connection to the internet.
Google knows this, which is why it’s doing it for them.
So we have a situation where mobile carriers are fighting to retain customers who clearly want Wi-Fi as part of their mobile service. That fight is playing out against a backdrop of intensifying competition, thanks in part to one of the world’s most powerful consumer-facing companies, which is offering Wi-Fi as part of its mobile service. To top it off, LTE networks are hitting worrying levels of congestion and the mobile industry’s official response — “5G” — is years away.
The carriers have never needed Wi-Fi more.
Editor’s Note: The RCR Wireless News Reality Check section is where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
