Multiple mobile phones in individual households is driving growth, not the number of homes with phones.
Posted Apr 14, 2005
As the number of U.S. mobile consumers continues to rise, the market is not approaching saturation anywhere near as quickly as some predictions had indicated, a report from Forrester Research contends. According to "US Mobile Growth Defies Conventional Wisdom," two thirds of all households had a mobile phone by the end of 2004, which is 2 percentage points higher than the research firm's forecast for the end of 2004, and just half a percentage point behind Forrester's end-of-year forecast of 67.5 percent for 2005.
Charles Golvin, principal analyst at Forrester Research and author of the report, maintains that the growth is driven not by new households adopting mobile phones, but by an uptick in the amount of wireless phones within households. The research reports that households with mobile service at the end of 2004 had an average of 1.8 phones. In December 2004, 39 percent of households had only one mobile phone, an 8 percentage point decrease from January's reported figure. By comparison, 7 percent of households had four or more phones in December 2004, up 3 percentage points from January 2004. Nextel had the highest average of phones, primarily because of its Direct Connect walkie-talkie service, which requires that the person someone is trying to reach also has the service. "Whereas before," Golvin says, "maybe the head of household had a mobile phone, now both that person and their partner has one, and maybe one of their kids has one."
While the number of mobile phones within households is increasing, customer satisfaction has continued to slide since 2002. If there is a silver lining for the carriers, Golvin says, "it's that fewer consumers are also saying they are highly dissatisfied." For instance, the percent change of wireless users satisfied with customer service decreased 7 percent since 2002, but the percent change of wireless users dissatisfied with customer service has dropped 30 percent since 2002. Coverage is the only category to experience a percent change increase, although only 1 percent, in the amount of wireless users satisfied. Still, the remaining categories that reported change--voicemail, call sound quality, phone selection, call dependability, range of options and offerings, and service plan value, all experienced similar movement in customer service, dropping in satisfaction and dissatisfaction.
Prepaid wireless service, although a small portion of today's U.S. market, grew from 5.2 percent, a number reported in a September 2002 Forrester brief, to almost 11 percent in 2004. One of the reasons behind prepaid wireless' increase, Golvin says, are that companies like Virgin Mobile and Boost, a subsidiary of Nextel, "have turned the marketing around and made it more of a value proposition." Ten percent of Alltel's carrier base comes from prepaid users, the highest among major carriers, while Sprint had the lowest prepaid customer base of about 3 percent. According to the report, however, Sprint suffered a rise in bad debt partly because of its prepaid offer, but if the exclusively prepaid users of Virgin Mobile (which uses Sprint's network) were included, then Sprint's prepaid base would surpass that of Alltel's.
Prepaid wireless aside, the report also touches on what consumers deem important when selecting a new phone. Price, battery life, and ease of use are the main characteristics customers consider, although they do buy phones with features including cameras and video recorders. Golvin, however, says it's not demand-side driven. "We expect that those features will be adopted, but today it's not the subscribers who are asking for them. It's the carriers and the device makers who are pushing them."
Mobile CRM Seals the Deal for Cingular
Going Beyond the Phone Call
U.S. mobile subscribers increasingly are using their devices for downloading games, and retrieving news and information.
Waiting for Wireless
Sponsored By: Jacada, Avaya, Confirmit, inMoment and BoldChat
Sponsored By: Genesys, Avaya, Verint, and Aspect
Sponsored By: Informatica
Sponsored By: Verint®, Confirmit and inContact