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Subscribers Up, Customer Satisfaction Down

Monday, November 18, 2002

This New York Times article (please note: a free registration is required to read most New York Times articles) discusses the staggering increase in new cell phone subscribers, more than twice that of 1995. It contrasts that with the limited capacity of overburdened networks. This problem is compounded by the fact that the cell phone companies are adding new services but only have a limited range of frequencies in which to operate.

The article makes the silent assertion that, with the stock prices of these companies already on the rocks, it is unlikely that cell phone subscribers will receive a reprieve. The networks were incredibly expensive to roll out, debt that in many cases, hasn't been paid back. As a result, the cell phone companies will no doubt milk the existing infrastructure as long as they can.

Additionally, cell phone providers don't have to worry about customer churn to the extent that many companies must. Specifically, the industry standard is to lock customers into long term contracts. Currently, there is no provision allowing customers to take their number with them when they switch providers. Because there is no single network standard, customers can't use the same phone with different providers.

So, in effect, switching providers requires a new phone and accessories as well as a new phone number and all the hassle that entails. Wall Street seems to think a few mergers in the industry will fix the economic problems. However, if mergers between cell phone companies go at all like mergers between ISPs, this is the last thing customers want to hear.

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