The Single Worst Practice of Wireless Providers

By Markets Fool.com

Wireless carriers aren't all that popular these days. Sure, we need them to tap into the mobile web, download apps on the fly, and make phone calls, but when it comes to providing subscribers with great customer service, the major carriers fall flat.

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Recent data from Statista shows that telecoms have the second-worst customer service, narrowly escaping the top spot held by government offices (hooray for the private sector!).


Source: Statista.

The telecommunications industry involves more that just wireless carriers, and if we single out the wireless providers on their own, things don't get much better.

In a 24/7 Wall Street and Zobgy Analyticssurveyconducted last year, respondents namedSprintthe third-worst company for customer service, andAT&Ttook the No. 8 spot.

AT&T faired even worse onRanker.com, where online users voted the company to the top spot for worst customer service. Meanwhile,Verizon Communicationscame in at No. 15 on the same list.

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Of course, not all surveys are created equal.J.D. Powerreleased wireless carrier customer service satisfaction survey results last month, and AT&T actually came out on top, followed by T-Mobile , Verizon, and Sprint.

Source:J.D. Power.

But while some surveys vary on who comes out on top, it's clear that wireless providers are having a hard time keeping their customers happy.

Maybe this is why
Recently, each wireless carrier -- except Verizon -- has been sued by the Federal Communications Commission for what's called bill "cramming." That's when carriers add unauthorized charges on a customer's bill.

The FCC fined AT&T a record-setting $105million back in October for bill cramming, and then slapped T-Mobile with a $90 million finefor the same thing the next month.

Sprint likely won't escape unscathed -- the FCC is currently suing the carrier for $105million as well. Verizon hasn't been named in any cramming lawsuits yet, but that doesn't mean it's innocent, either.

To be fair, all of the major carriers have agreed to stop allowing cramming charges on subscribers' bills. But the customer service damage has already been done.

So, what's the real impact on the carriers for delivering poor customer service and bill cramming? Not as much as you think.

There's not much incentive to change
A 2013 Consumer Reportssurveyfound that most wireless customers stayed with their current carrier more than two years even though only half of respondents were "highly satisfied" with their carrier.

And remember the J.D. Power survey results? Verizon came in third place in customer service satisfaction among its competition, yet the carrier has the most wireless customers in the U.S., has thebest-performing networkaccording to RootMetrics,andhas some of the lowest churn rates (the percentage of customers that leave each quarter) in the industry.

Verizon beats all other carriers in overall performance. Source: RootMetrics.

Apparently customer satisfaction isn't a prerequisite to beat out rivals. And it many not have much of an impact on company stock performance, either.

Researchpublished in MIT's Sloan Review last year said that "if you look across industries at the correlation between companies' customer-satisfaction levels for a given year and the corresponding stock performance of these companies for that same year, on average, satisfaction explains only 1% of the variation in a company's market return."

In short, some companies don't need high customer satisfaction levels to run a successful company. But while wireless providers may have ridden this idea for a while, the tide may be turning against them soon.

Google-- which typically ranks high for customer service-- isslowly enteringthe wireless provider market. If the company eventually brings more competition, and higher customer satisfaction, it could be a very good thing for disgruntled subscribers -- but not so much for wireless carriers.

The article The Single Worst Practice of Wireless Providers originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Verizon Communications. The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.