Emerging Dominance in Cellular, TV and ISP Markets

Includes: CMCSA, CVC, DISH, T, VZ
by: ChangeWave Research

By Paul Carton

ChangeWave recently conducted three separate surveys to determine which of the major telecom service providers are best positioned to dominate the marketplace going forward.

The key areas of focus were the cellular, internet, and home TV service provider markets -- all three highly competitive and in the midst of heated battles featuring bundling, discounts and new technologies in the struggle to grab market share.

A total of 9,195 respondents participated over the course of these three surveys, with the most recent completed on December 14, 2009.

Cellular Service Providers

The cellular service provider results show Verizon (NYSE:VZ) with by far the most satisfied and loyal customers, the least amount of dropped calls and the greatest momentum in terms of future market share.

Of course, AT&T (NYSE:T) has the Apple iPhone, which continues to be a giant game changer for the company. But despite the iPhone's formidable momentum, future demand trends are clearly turning in Verizon's favor.

The following chart shows Verizon and AT&T continuing their fierce battle for market share -- but with Verizon currently heading higher while AT&T is trending lower.

We note that the uptick for Sprint/Nextel (NYSE:S) in our September survey was short-lived, as going forward they drop from 6% to 3%.

One major reason for Verizon's improving cellular share lies in customer satisfaction, where it remains the industry leader.

Home TV Service Providers

The home TV service provider results show a market in the midst of transformation, but with large numbers of consumers wanting to migrate towards those providers offering high speed fiber-optic services -- of which Verizon is currently the biggest player.

Such longer term trends are particularly worrisome for both cable and satellite companies.

For example, among the 10% of subscribers who plan on switching providers over the next 6 months, almost half (46%) say they'll sign up with a fiber-optic service.

At the company level, Verizon FiOS (22%) and AT&T U-Verse (22%) are the leading providers that switchers plan to move to, followed by Satellite providers DIRECTV (DTV; 20%) and DISH Network (DISH; 14%). Cable companies bring up the rear.

To better understand these trends we once again look towards customer satisfaction, where Fiber customers as a group (38% Very Satisfied) are the most satisfied by a wide margin, followed by Satellite subscribers (28% Very Satisfied). Note that only 15% of Cable subscribers say they are Very Satisfied.

Broken down by company, Verizon FiOS (46% Very Satisfied) once again holds the customer satisfaction lead among all providers.

Bright House (44%), a smaller cable company serving 5 states, ranks second, followed by the AT&T U-Verse service (38%).

Internet Service Providers

The internet service provider results also show a tumultuous battle between Verizon and AT&T -- with cable providers such as Comcast (NASDAQ:CMCSA), Cablevision (NYSE:CVC) and Charter fighting to remain competitive.

A key difference here is that Verizon and AT&T offer high-speed fiber services while cable companies do not -- perhaps making cable more vulnerable to customer switching.

As in the cellular market, Verizon appears better positioned than AT&T, leading them in customer satisfaction, loyalty and future demand. For example, only 7% of Verizon's customers say they're likely to switch providers over the next 90 days, compared to 10% for AT&T.

Note that most of the cable companies -- including Cablevision (16%), Charter (16%) and Comcast (15%) -- are far more vulnerable to customers switching. (The exception is Cox, where only 6% of subscribers say they're likely to switch).

But the future comes into sharpest focus when we ask respondents which Internet Service Provider (ISP) they're most likely to switch to. Again Verizon (21%) wins by a wide margin, followed by AT&T (14%) and Comcast (12%).

Andy Golub co-wrote this article.

Disclosure: No Positions