Plans, contracts and costs
For the fourth year in a row, family plans are more popular than any other type: 54% of respondents have family plans, 27% are on individual phone plans, 12% have data-sharing plans that include other devices such as tablets, and 6% are on business plans.
In 2016, providers moved increasingly away from long-term contracts, and our survey shows that users are following suit. In the contract model, carriers subsidized the cost of premium smartphones up front and made that money back by locking customers into a pricey two-year contract. With no-contract plans, you pay the full price of the phone but are free to leave your carrier without facing a stiff penalty. All providers offer no-contract models, although some also have options for long-term contracts.
For the first time since we’ve been conducting this survey, an equal number of people have no contracts and long-term contracts – a 50-50 split. Last year, 61% of respondents were on long-term contracts and 39% on month-to-month plans. In 2014, 65% were on long-term contracts, and in 2013, 84% had long-term contracts. We expect that next year, no-contract plans will be the norm.
Each year we’ve been offering this survey, fewer people have used unlimited data plans compared to the year before. This year, 36% of respondents are on unlimited plans, 55% are on tiered plans, and 9% aren’t sure. Last year, 39% of respondents said they were on unlimited plans. In our 2014 survey, 42% said were on unlimited plans and in the 2013 survey, 56% of respondents were.
However, the trend away from unlimited data plans may be reversing itself: In January 2016 AT&T rolled out an unlimited data plan, albeit one that’s available only to its DirecTV and U-Verse TV customers. And both T-Mobile and Sprint launched new unlimited data plans over the summer. In fact, for new customers T-Mobile is offering only its unlimited plans, although current customers can keep their existing plans. It will be interesting to see if there’s an uptick in respondents who have unlimited data plans in our 2017 survey.
Of course, “unlimited” data plans often do have limits: Many, including some of Sprint’s and T-Mobile’s new plans, throttle connection speeds for certain types or quantities of data consumption. Of the 176 respondents who have unlimited data plans, more than a quarter (26%) report that their carrier slows down data connections after a certain data limit is reached, while 39% say their carrier doesn’t do so, and 35% aren’t sure.
In terms of pricing plans for mobile data services, nearly all respondents have voice-and-data bundles rather than data-only plans, with 86% having a bundle and 14% having data service only. That compares to 81% having a bundled plan and 19% having data service only in 2015.
In the data-only group, 33% of respondents pay $40 or less for service each month, 27% pay between $41 and $80, and 21% pay more than $80. The rest are not sure how much they pay. (Keep in mind that some survey takers’ employers pay for their mobile data service.) There are some well-heeled data guzzlers out there: Six percent of respondents pay more than $200 a month for data alone.
No surprise: People with bundled voice and data have higher monthly bills. Twenty-two percent pay $60 or less per month, 25% pay between $61 and $100, 20% pay between $101 and $150, and 28% pay more than $150. Four percent aren't sure how much they pay. The numbers are almost identical to those of a year ago.
Still early days for free video streaming
Providers have begun to offer unlimited data for certain services such as streaming video. T-Mobile’s Binge On service, for example, allows certain subscribers to stream video for free from services including Netflix, Hulu, Amazon and HBO Now, while AT&T offers free video streaming to customers who also use its DirecTV or U-Verse TV services — all without tapping into customers’ monthly data cap. And both Verizon and AT&T offer services that let customers accumulate free data in exchange for viewing or downloading sponsored content or apps. We wanted to find out if people are taking advantage of such programs.
So far, the answer is largely no. Forty-two percent of respondents don’t know whether their carrier offers free video streaming, 27% say their carrier has the service, and 31% say their carrier doesn’t have the service. Of those few who say their carrier has the service, 49% are satisfied with it, 4% are not satisfied with it, and 47% don’t use it.
Even fewer people seem to know about or be interested in accumulating free data in exchange for viewing sponsored content. Only 1% of respondents say their carrier offers such a program, 43% say it doesn’t, and 56% don’t know. Among those who say their carrier does not offer a program like this, just 28% say they would use it if it were offered, and 72% say they wouldn’t.
Why you chose your mobile provider
How do people choose their mobile providers — based on price, coverage, plan options, the availability of a specific phone? Did they want a no-contract plan, or did their employer choose the carrier? We asked survey respondents to rank the importance of 12 factors, with 1 being the most important.
For the third consecutive year, network coverage in the U.S. was the most important factor, with 61% of respondents ranking it either No. 1 or No. 2. Next was price, with 52% ranking it 1 or 2. Those were the two most popular factors by far, with no other reason cited as a 1 or 2 by more than 50% of respondents. Being a longtime customer was important for 26% of respondents, who gave that reason a 1 or 2. And moving to an unlimited data plan was given a 1 or 2 by 23% of respondents. The rest of the factors came in more or less equal, including getting a discount with the provider through an employer, moving to a no-contract plan, and sticking with the same provider because they’re happy with their current service, among others.
Switch providers? No thank you
Very few respondents have switched carriers in the past year – only 10%. Of those who switched, 70% switched once, 15% switched twice, and 15% jumped ship more than twice. Why switch? Price (77%), coverage and reliability (53%), and plan options (49%) are the most frequently cited reasons.
Only 27% of respondents are considering switching to another provider, nearly identical to last year’s 28%. They cite the same three reasons for potentially switching: 77% say cost may cause them to switch, followed by plan options at 43% and coverage and reliability at 40%.
The rankings: Best and worst mobile data providers
Which data providers are ranked best by their customers? We used weighted averages on a scale of 1 to 5, did some number-crunching, and came up with the results. (See "How the survey was conducted and graded" for details.)
T-Mobile barely squeaked out a win over Verizon this year, scoring the top rating for the third year in a row. It had the top rankings for five of eight categories, and beat all comers with a weighted rating of 3.95 out of 5. Verizon was just behind it, with a 3.89 ranking. Next came Sprint with a 3.78 and AT&T with 3.67.
T-Mobile won five categories, often by slim margins over Verizon. But in one category it dominated: performance relative to cost — in other words, bang for the buck, or value — where it had a 3.98 rating, well ahead of second-place Sprint, which had a 3.62 rating. Next came Verizon with 3.39, and then AT&T with 3.24. It’s the fourth year in a row that T-Mobile had a big win in this category.
T-Mobile has been the leader the past several years in introducing no-contract, no-phone-subsidy plans, which is likely why it keeps winning the value category. But now all other providers are following suit, so we’ll have to see whether T-Mobile will still be the value leader in next year’s survey.
In the 2016 survey, T-Mobile also led the ratings for average download speed (with a rating of 4.02 to Verizon’s 3.96), average upload speed (3.87 to Verizon’s 3.81), technical support (3.97 to Verizon’s 3.78) and customer service/billing (3.89 to Verizon’s 3.72). Factor in its strong showing in the network performance categories, the value category and the softer categories of dealing with customers, and it’s no surprise that T-Mobile was the overall winner.
Verizon, as in years past, did well in the network performance categories, coming in first for availability of connection (4.29) and reliability of connection (4.17). It also came in second to T-Mobile in average upload and download speeds, technical support and customer service/billing.
Sprint was the only other provider to win a category, phone selection, with a 4.23 rating. But the real story with Sprint is its significantly improved customer satisfaction ratings in network availability, reliability and performance. That in turn has brought its overall weighted rating up from 3.54 in 2015 to 3.78 this year – a very positive trend for a carrier that has been struggling to attract subscribers for years.
AT&T, meanwhile, found no love from its customers, finishing dead last in six of eight categories.
You can download our survey results PDF below.
Bottom line and what's next
Top rankings are one thing, but having lots of customers is another entirely. And even though T-Mobile won the customer satisfaction crown yet again from us, it still lags well behind Verizon and AT&T in subscribers. That said, it is gaining ground. Research firm Strategy Analytics reports that in the third quarter of 2016 Verizon had 143.9 million customers, AT&T 133.3 million, T-Mobile 69.4 million and Sprint 59.2 million. A year earlier, in the third quarter of 2015, Verizon had 137.6 million customers, AT&T had 126.4 million, T-Mobile 61.2 million and Sprint 58.1 million. So in that time T-Mobile gained the most customers, about 8 million, while Verizon gained about 6 million, AT&T gained about 7 million, and Sprint only about 2 million. So, T-Mobile added roughly 1 million more customers than AT&T over that year, 2 million more than Verizon, and 6 million more than Sprint.
Those gains may be hard to sustain next year, because all the other providers have followed T-Mobile's lead in doing away with long-term contracts and subsidized phones, a strategy that has been spurring T-Mobile's growth.
One takeaway from our survey is that Sprint's upgrade and buildout of its data network is paying off when it comes to customer satisfaction. In line with our own survey findings, Gartner analyst Bill Menezes says he has seen research saying customers are more satisfied with the Sprint network. "The perception used to be that if you used Sprint you'd have problems getting a data connection, but that's no longer the case," he adds.
As for what to expect in wireless in 2017, expect a lot. Consumers are hungry for the old "all-you-can-eat" unlimited data plans, and carriers may promote plans that seem to be unlimited, but in fact, aren't quite that. Such unlimited plans may include throttling after a certain amount of data is used or for certain types of data, Menezes says. And carriers will likely roll out more video streaming options, again with throttled bandwidth. "Clearly, video is getting more important," he says. "People won't really mind having to stream at a lower resolution, because you don't need all that resolution to watch video on a small smartphone screen."
If you're hoping for superfast 5G networks in 2017, you'll be disappointed. Those networks are probably years away. In fact, the 5G standard hasn't even been finalized yet. But in the meantime, carriers will continue to upgrade their existing 4G networks. Sprint, in particular, has aggressive plans to boost its network capacity and speed.
As for new entries into the market, Comcast has said it's going to jump into the wireless market in the middle of 2017. Rather than build its own data network, it's going to follow in the footsteps of Google's Project Fi, which uses Wi-Fi voice calling, and only switches to a data network if no Wi-Fi is available. Comcast has 15 million hotspots, and if customers are out of reach of one, they'll automatically be switched to the Verizon service.
The biggest changes in the wireless landscape in the coming years probably won't be due to actions taken by the carriers such as introducing free streaming or changing the plans they offer. Instead, they're likely to come from Washington, D.C. Under President Obama, the Federal Communications Commission has taken what it believes are consumer-friendly actions, such as establishing net neutrality as the law of the land. Under President Trump, that kind of action is likely to change. He has announced he will cut as many regulations as possible, and said he is against net neutrality.
Also worth considering: The Trump administration is likely to be more friendly to a merger of big carriers than was the Obama administration. In 2011, AT&T announced it was going to buy T-Mobile, but the U.S. Justice Department filed a lawsuit against it and AT&T abandoned the plan. Sprint and T-Mobile considered a merger in 2014, but when regulators signaled they were likely to oppose it, the plans were dropped. But a merger announcement in 2017 or soon thereafter wouldn't be out of the question.
An even bigger bombshell could be a merger between a wireless carrier and a cable company. UBS analyst John Hodulik wrote in a research note that such a merger would not be a surprise under new leadership at the FCC and DOJ. Given the partnership between Comcast and Verizon over Comcast's entry into wireless, a Comcast/Verizon merger could be on the horizon.
Will any of this happen, and how will it affect mobile data services? At this point, no one knows. But we do know one thing: 2017 should be a wild ride for wireless. Check back often for Computerworld's wireless coverage. And, of course, we'll do our annual mobile data customer satisfaction survey next year as well.