PrePay Subscribers Prefer Flat-Rate Tariff Plans

Overall satisfaction among US prepaid wireless customers who subscribe to flat-rate plans with unlimited minutes is considerably higher than that of customers who subscribe to per-minute price plans, primarily due to cost advantages associated with flat-rate plans, according to a J.D. Power and Associates report.

Now in its third year, the study measures customer satisfaction with current prepaid wireless service across seven key factors. In order of importance, they are: call quality (24%); company image (19%); cost of service (17%); account management (15%); initial activation (11%); service plan options (8%); and customer service (6%).

The study finds that overall satisfaction among prepaid wireless customers that subscribe to flat-rate pricing plans with unlimited minutes is 764 on a 1,000-point scale, which is considerably higher than that of subscribers of traditional per-minute pricing plans (717, on average). This gap in satisfaction is primarily driven by differences in the cost of service, as well as by the benefit of unlimited minutes available in flat-rate plans. In particular, unlimited-plan customers report higher satisfaction levels with the amount of airtime minutes offered for the price paid, the overall cost-per-minute charges and the cost per transaction to refill minutes in their account.

"Prepaid customers are clearly responding favorably to these unique service plan options, as they provide a cost-effective alternative to traditional price-per-minute plans that are typically offered and allow customers freedom from worrying about being charged extra fees for making too many calls within a given time period," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "Although plans with unlimited minutes typically have geographic restrictions for placing and receiving wireless calls, they still fulfill customer expectations and tend to meet a specific service need better than other wireless plans. In fact, 46 percent of unlimited plan customers have completely replaced their traditional landline phone with wireless service, compared with only 13 percent of traditional pay-as-you-go customers."

The study also finds that satisfaction ratings for the initial activation process also vary greatly between customers that subscribe to, flat-rate prepaid plans with unlimited minutes and subscribers of traditional, per-minute plans. Specifically, customer satisfaction scores with plans that have unlimited minutes average 862, compared with only 756 among traditional prepaid calling plans. The ease of initially subscribing to the plan and activating the phone are the two areas driving the gap in satisfaction.

MetroPCS ranks highest in prepaid wireless satisfaction for the first time since the inception of the study and performs particularly well in five out of seven factors that drive overall satisfaction: cost of service, account management, initial activation, brand image, and service plan options. Also ranking above the industry average are TracFone, Cricket, Virgin Mobile and T-Mobile To Go, respectively.

"In particular, MetroPCS differentiates itself from the competition in areas related to the cost of service, account management and service functions," said Parsons. "From initial account setup and activation to account management tools and variety of pricing plans available, MetroPCS provides its customers with important elements that positively impact their daily service experiences."

The study also finds the following key prepaid wireless usage patterns:

• Prepaid users spend $40 on average when purchasing additional airtime -- an increase of $2 from 2007. In comparison, the average monthly service cost for postpaid customers in 2008 is $76.
• Prepaid customers report using 233 minutes per month. Conversely, postpaid customers average 543 minutes per month.
• Approximately 63 percent of prepaid phones that are prepackaged with minutes are purchased from retail stores, while an additional 20 percent of customers report purchasing a prepackaged phone via the Internet. Approximately 17 percent of customers purchase activated minute cards separately from their cell phones.
• Twenty-six percent of prepaid customers refill minutes approximately once per month, marking a decrease from 29 percent in 2007. An additional 14 percent refill their plan minutes at least twice a month.

The 2008 Wireless Prepaid Customer Satisfaction Study is based on responses from 3,316 wireless customers who currently subscribe to prepaid service plans.

Posted to the site on 25th July 2008