Latest Business Customer Benchmarking Study Points to Increased Competition and Continued Migration

Our research team just released the latest edition of the 2010 Business Connectivity and Wireless Business Report Card, which was based on more than 5,000 individual ratings of carriers by their SMB and enterprise customers. Looking specifically at wireline carrier performance, this year's study identified a number of key trends. Here's a snapshot of several of these areas:

Network and Brand: Customer brand ratings increased over the 2008-‘09 timeframe and again from ‘09-‘10.  Network Performance, on the other hand, had risen nearly 3 percent from ‘08 to ‘09 but became the only major customer touch point to trend downward in 2010. While the decline was marginal, it is a more significant development than it might appear to be at first glance for two reasons: first, because Network Performance is the top purchasing driver in the retail sector, and second, because every other customer touch point with the exception of billing increased by at least 1.1 percent over the same time period. Interestingly, the declines in Network Performance were limited to the CLEC/Cable/Fiber carriers, while the average for ILEC/IXC providers remained unchanged from 2009.  Network Performance and Brand are two of the only customer touch point categories for which the smaller carriers don’t beat the larger ILEC/IXC carriers by a substantial margin, and from 2009 to 2010, the CLEC/Cable/Fiber carriers' Network Performance score fell from 1.4 percent higher than the ILEC/IXCs to only 0.4 percent higher.

Customer Touch Points: Most carriers remained stable this year, but we did log an overall tightening of performance gaps as carriers that had stalled or lost ground from 2008 to 2009 regained their footing over the past year, racking up score improvements for the ‘09-‘10 timeframe. Standouts on the large carrier side included Level 3, which improved considerably in almost every customer touch point category, and CenturyLink, which scored much better in 2010 than its legacy brand Embarq did in 2009.  Among the smaller competitive carriers, XO distinguished itself by making sizable score improvements in almost every operations category. 

Product Quality: Product quality remained stable, for the most part, though we did log overall improvements in this space as there were more products with higher scores than products that had lost ground. This "stayed roughly the same" description belies significant carrier accomplishment, however, as carriers had driven product satisfaction scores very high in recent years, turning the challenge away from getting to high performance to one of maintaining it. So far, so good. Carriers continue to deliver across the spectrum, and despite this challenge, there were considerable gains in overall product ratings achieved by key growth products, like Ethernet, as well old standbys, like local private line.

Technology Migration: VoIP, Ethernet and IP VPN racked up plenty of new installs over the past year, which was in line with our projections from previous years' studies as well as our industry sizing and share forecasts.  However, not everyone is on the bandwagon, and we expect further gains in these product segments. Only 33 percent of business respondents reported that they currently buy Ethernet, but 15 percent of respondents reported it was a product they plan to buy in the coming year, and while only 25 percent of respondents said they currently buy VoIP services, a full 27 percent intend to move to VoIP in the next twelve months. 

The competitive landscape in this early part of the new decade represents the coming together of several significant forces that have been underway for the past two decades but have reached the point wherein they now dominate industry activity — migration toward data at the macro level and within data technologies at the micro level; the steady march toward greater commoditization of connectivity; the merging of wireless and wireline usage and networks; massive stress on networks and product teams to deliver faster and more reliably amid data environments now dominated by multimedia content; and vertical market specialization and applications overlaying the entire industry framework.

Fedor Smith is president of ATLANTIC-ACM, a provider of strategy research, consulting and benchmarking services to telecommunications and information industry companies. An expert in niche- and channel-based marketing and operations management, Smith specializes in customer satisfaction and benchmarking projects for ATLANTIC-ACM, where he oversees proprietary projects as well as the firm's Carrier Report Card series, which serves as the telecommunications industry's principle source of benchmarking tools.