Verizon Gaining Momentum as iPhone Hits Their Menu

There has been much speculation about the Verizon iPhone for many months leading up to its announcement earlier this week. The ChangeWave Alliance surveys its members periodically to measure their satisfaction with their current cellphone carrier, and for those likely to change carriers, why they would change and who they would change too. Looking at this first chart, you can see that Verizon is the huge winner in this measurement, climbing rapidly in new subscriber interest level, primarily at the expense of AT&T. Its also evident that this trend started around the time that the iPhone rumors started gaining stronger credibility and volume.



But we can't blame all of this trend purely on the availability of one new PDAPhone handset from Verizon. The survey looked at the details behind this alarming jump in interest with Verizon to look at user satisfaction as well as their stated reasons for wanting to switch carriers. From a satisfaction standpoint, 55% of Verizon Wireless subscribers in December 2010 were very satisfied with their carrier, while only 19% of AT&T subscribers were very satisfied. That is a significant spread, but at 55%, Verizon still isn't setting phenomenal satisfaction levels and so the other carriers have opportunity to pass them if they get their acts together. Verizon has, however, improved from 49% two years ago, while AT&T has dropped from 30% two years ago. Sprint was second at 39%, and T-Mobile beat out AT&T by a wide margin at 29%.



So why are subscribers so dissatisfied with AT&T? Dropped calls appears to be a big reason. Looking at a comparison of dropped call percentages across the four carriers, we see that Verizon has the best percentage at 1.7%, followed closely by T-Mobile and Sprint at 2.2% and 2.7%. AT&T's reported percentage of dropped calls was 4.7%, nearly double the rate of the next closest competitor, and nearly triple that of Verizon. This is an improvement for AT&T which peaked at 6% last quarter. It should be noted that these percentages are based on survey participant estimates, and not on any system generated metrics, but perception by customers is at the end of the day a significant factor.



The iPhone impact was specifically tested in the survey with current AT&T subscribers being asked if they would switch to Verizon when they begin offering the iPhone. While only 16% of overall AT&T subscribers plan to do so, the number is as high as 26% for current Apple iPhone owners who are currently with AT&T and plan to switch to Verizon. Among those planning to switch, 41% say they'll switch within the first three months of the Verizon iPhone's release, and another 31% within the first year. Some quick math shows that if this trend holds, AT&T could lose nearly 19% of their iPhone customers to Verizon within the first year.

So is this good news or bad news for AT&T? It may not be all that bad in the long run. The reality is that their network has suffered due to the rapid growth of the iPhone and its intense data demands. This has certainly impacted their overall user satisfaction with their network and been a constant source of criticism in recent years. If they lost some of their iPhone subscribers, it may allow their network to have some relief resulting in overall better satisfaction and better loyalty from its customers overall. The other thing to consider is where all those AT&T iPhones will go when they switch. Resale value for used iPhones remains very high, and since these phones are locked to AT&T, it stands to reason that a large percentage of these phones will be sold on the used market and reactivated on AT&T without contract commitments. AT&T may not end up with as big of a drop in subscribers as the numbers would imply when factoring in the used market. They will, however, not have the golden goose any longer for new subscribers.

For more information on this survey, contact ChangeWave Research. The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals - as well as early adopter consumers - who work in leading companies of selected industries.