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Virgin Mobile Tops Wireless Prepaid Satisfaction Study

August 24, 2006
Virgin Mobile ranks highest in overall customer satisfaction among current wireless prepaid customers, according to the J.D. Power and Associates 2006 Wireless Prepaid Customer Satisfaction Study.

The inaugural study measures customers' satisfaction with their current prepaid wireless service across seven key dimensions (in order of importance): call quality (24%); company image (19%); cost of service (17%); account management (15%); initial activation (11%); service plan options (8%); and customer service (6%).

Virgin Mobile ranks highest in prepaid wireless satisfaction and performs well across all factors, particularly in account management issues such as initial account activation and customer service.

Verizon Wireless follows, and performs particularly well in the call quality and company image factors. Other prepaid carriers that score at or above the industry average are T-Mobile, Boost Mobile and TracFone.

"Virgin Mobile has differentiated itself from the competition in areas related to the support functions by providing its customers with a positive service experience," said Kirk Parsons, senior director of wireless services for J.D. Power and Associates.

"From initial account set up and activation, to account management that tracks and updates available minutes, Virgin Mobile appears to be providing its customers with important elements that impact the daily service experience," he added.

The study finds that wireless satisfaction varies depending on the type of customer who subscribes to service from either a mobile virtual network operator (MVNO) or to carriers that own and operate their own network.

Customers of MVNOs -- which consists of providers that lease airtime and resell wireless services, for example Virgin Mobile, Boost Mobile and TracFone -- report higher satisfaction levels in account management and cost of service dimensions.

On the other hand, carriers who own and operate their own network (ALLTEL, Cingular, T-Mobile and Verizon Wireless) generate higher satisfaction ratings in components comprising the company image factor, such as reputation, image as a technical innovator and efficiently solving call quality issues.

Customers also report higher satisfaction levels with traditional network operators for having a larger local calling area and for providing timely voice and text mail notifications.

"As a group, MVNOs attract a slightly different customer base due to their targeted products and services, such as unlimited text messaging options and cellular e-mailing capabilities, which commonly attract teens and young adults," said Parsons.

"With this in mind, MVNOs have a competitive advantage in specific cost of service components, such as the price to refill minutes and to make local calls. They also have an advantage in management activity components, including the ease of recharging minutes and providing efficient methods of displaying used minutes. These are all critical areas that customers look for in a wireless provider," according to Parsons

From a network operator perspective, the majority of prepaid service plans are mainly product extensions from their post-paid offerings. Subsequently, areas such as brand image and network quality are traditionally perceived as competitive advantages among more established network wireless carriers. This has a positive impact on prepaid service offerings.

The study also finds the following key prepaid wireless usage patterns:

• Prepaid users typically spend on average $37 when purchasing airtime. Comparatively, the average monthly service cost for a typical post-paid customer is $65.

• Prepaid customers report using 208 minutes per month -- less than one-half as much as post-paid users, who average 501 minutes per month.

• Two-thirds (66%) of prepaid phones are purchased prepackaged with minutes off store shelves, while 19 percent of customers report purchasing a prepackaged phone from the Internet. The remaining 15 percent purchased an activation minutes card separately from their cell phone purchase (applies to selected cell phones).

• The majority (46%)of prepaid customers use a card provided by their local retailer to purchase additional airtime minutes, while more than one-third (34%) use the provider's Web site to do so. Ten percent of prepaid customers use their handsets to purchase additional minutes.

The 2006 Wireless Prepaid Customer Satisfaction Study is based on responses from 4,012 wireless customers who currently subscribe to prepaid service plans. Findings are based on the past two reporting waves, which were conducted in January 2006 and March 2006.

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