Wireless carriers must manage customer expectations more effectively while putting money into upgrading networks after the latest report from the American Customer Satisfaction Index showed consumers are unhappy with their service.

The level of satisfaction with information services ? including subscription television, Internet, wireless and fixed line telephone and computer software ? dropped 3.4 percent to a score of 68.8 out of 100, the lowest level in seven years, according to the ACSI, a private company which measures the satisfaction of consumers across the United States economy. The results point to how carriers set up the growing mass of smartphone users for disappointment when infrastructure lags demand.

?As long as there is meaningful choice among companies with a range of plans to suit individual needs and tastes, lower satisfaction almost always leads to customer defection to more attractive alternatives,? said David VanAmburg, managing director of ACSI, Ann Arbor, MI.

Customer satisfaction with wireless telephone service was down 2.8 percent to 70. The aggregate of smaller wireless companies had the highest customer satisfaction and even showed slight improvement, up one percent to 79. Smaller companies tended to be no-contract carriers with lower fees, which many customers saw as better value.

 

In its first year as an ACSI-covered company, the prepaid phone provider TracFone Wireless took the lead at 77. Verizon Wireless dropped 5 percent to 71. Both T-Mobile and AT&T improved to tie at 70, while Sprint fell four percent to 65.

 

Customer satisfaction with fixed-line telephone service fell 5.5 percent to 69 as landline usage continued to shrink; more than 44 percent of homes now forgo fixed-line service in favor of wireless.

 

Despite slipping 3 percent to 76, the average ACSI score of smaller local and long distance providers was much better than that of large providers. Vonage and Bright House Networks were near the top of the category ? both 73. CenturyLink dipped one percent to 70, while Verizon declined seven percent to 68. Cox Communications dropped three percent to tie Verizon and, just a notch below, Cablevision Systems entered the Index at 67.

 

AT&T's landline service suffered the most, down 10 percent to 65. Nevertheless, AT&T stayed ahead of both Comcast, down four percent to 64, and Time Warner Cable, down three percent to 63.

Sixty-one percent of U.S. households have just one or no high-speed Internet provider servicing their region and the lack of customer choice contributed to weak customer satisfaction, according to the report. 

Even as Internet usage grew, customer satisfaction with ISPs remained unchanged at an ACSI score of 63 and tied with subscription TV for last place among 43 industries. 

Customers are frustrated with unreliable service, slow broadband Internet speeds and rising subscription prices ? and they resent being locked into service contracts.

 

Two large ISPs did improve and their gains were sizeable. AT&T?s U-verse service picked up 6 percent to an ACSI score of 69, taking the lead from Verizon, which fell four percent to 68. Time Warner Cable gained seven percent to 58. Bright House Networks matched the industry average at 63, while Cablevision Systems and Frontier Communications debuted at 61.

Several ISPs suffered large drops in customer satisfaction, including CenturyLink, down eight percent to 60, Cox Communications, minus nine percent to 58, and Charter Communications, declining seven percent to 57. Comcast stayed at the bottom of the category, slipping two percent to 56.

 

Customer satisfaction with cell phones remained unchanged at 78, the highest score yet for the industry. The majority of new cell phones sold today are smartphones, which generally have higher satisfaction than feature phones. 

With some of the strongest scores in the entire ACSI, the two largest smartphone manufacturers led the way: Apple and Samsung Electronics. Apple advanced one percent to 80, going head-to-head with Samsung, which fell one percent.

The report is the latest evidence suggesting that a shakeup is needed to make carriers properly address customers? needs on mobile.

In January, Google and Cablevision delivered a hard kick in the pants to the wireless carrier industry?s moribund business model with a plan to prepare new cell phone services.

Google?s service seeks to hunt through cellular connections provided by Sprint and T-Mobile US and Wi-Fi hot spots, picking whichever offers the best signal to route calls, texts and data, while Cablevision is offering a Wi-Fi-only mobile-phone service. 

Until network operators develop consumer-centric businesses driven by differentiated marketing strategies their financial performance is likely to continue to decline. 

Specifically, wireless carriers must rethink their fundamental business models, focus on actionable market segmentation, adopt differentiated competitive strategies, and dramatically enhance their marketing communications, experts said.

?Prepaid providers know that it is relatively easier for customers to abandon them for a competitor if the providers are not offering a satisfying, respectful experience,? Mr. VanAmburg said. ?By contrast, the major contract providers create barriers to switching through early cancellation penalties.  

?This results in some inertia on the part of customers to leave their current provider and as a consequence less incentive on the part of providers to offer the best customer service experience, knowing that some degree of inertia to defect exists.?