ISPs get a "C" in customer service - Market Intelligence - National Regulatory Research Institute and BlGresearch survey - Brief Article

ISP Business, Dec, 2001

According to a recent survey by the National Regulatory Research Institute and BlGresearch, almost half of Internet users have complaints about the quality of service that they receive from their service provider. Out of 14,000 Internet users surveyed, 47 percent were dissatisfied.

Respondents were asked to grade the quality of the customer service they receive from their ISP on a scale from "A" to "F", with "A" as the best grade and "F" as failure. Using this academic-like GPA system, an "A" is a 4.0, a "B" is a 3.0, a "C" is a 2.0 and so on. ISDN connections received the best grade point average with a 2.76. Cable ISPs scored a 2.73, followed by wireless (2.71), DSL (2.69), and dial-up providers (2.58). The average score among all respondents was 2.62.

"With these grades, the ISP industry doesn't make the dean's list. It's an industry of C-students when it comes to satisfying the customer," said Joe Pilotta, vice president of BlGresearch. "It's no wonder the survey showed almost 70 percent of the customers would be interested in switching to a different service if they could get it for their home today."

One of the concerns was interrupted connections. Seventy-five percent of the respondents said that their connection is occasionally or frequently interrupted. Nearly half of those surveyed (48 percent) cited fewer service interruptions as a reason for switching providers. For those customers who would consider switching or will definitely switch providers, the quality of Internet connections is the most frequently cited reason for a move. Other top motivators are faster data rates and lower prices. Less than 25 percent said the speed of their Internet connection meets their expectations.

Consumers looking for the appropriate connection speed and quality customer service could spur further consolidation in the ISP industry. In the business ISP market, the report 2001 Business ISPs - Service, Size, and Share by Cahners' In-Stat Group predicts that business service providers will either merge or go out of business due to continued economic challenges and decreased market capitalization will lead. It's interesting to note that the bankrupt cable ISP Excite@Home was among the lowest scorers in the NRRI/BIGresearch survey.

Although there are more than 6,000 ISPs offering business access services in the US, the top 10 competitors generated more than 65 percent of all access revenues in 2000. However, In-Stat does not believe that this will result in the total demise of the regional ISPs, even though it is doubtful that the largest ISPs will give up much of their market share. Smaller ISPs will be able to survive by continuing to branch out into other services and working with businesses that are often overlooked by national service providers.

"While new services will continue to emerge and grow, access services will still account for over half of all business service revenues, followed by Web hosting, non-hosting value added services, and hardware resell/leasing," said Daryl Schoolar, a senior analyst at In-Stat. "Access service revenue dominance will continue because ISPs use this service as a platform upon which to build other services. However, all ISPs need to beef up access service by offering a SLA (service level agreement). The SLA must not only offer customer retribution for service shortfalls, but also needs to be pro-actively monitored by the ISP."

According to In-Stat's report, WorldCom/UUNet was the largest ISP, in terms of access revenues for 2000. The second largest ISP, in terms of revenue, was AT&T. Other ISPs with significant market share were PSINet, Cable & Wireless, Sprint, Genuity, InterNap, XO Communications, Verio and Qwest.