High-Speed Internet Subscribers are Less Loyal to Their Providers Than are Dial-Up Subscribers, Despite Steady Growth in High-Speed

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Although high-speed Internet service continues to attract new subscribers, satisfaction measures for high-speed customers suggest that service providers are not making significant headway in producing loyal customers, according to the J.D. Power and Associates 2007 Internet Service Provider (ISP) Residential Customer Satisfaction Study^SM released today.

The study finds that 42 percent of high-speed customers are loyal to their ISP, compared to a 51 percent loyalty rate among dial-up subscribers. Overall satisfaction is also higher among dial-up subscribers than high-speed subscribers, increasing 13 points from 2006 to 709 on a 1,000-point scale in 2007. Conversely, customer satisfaction among high-speed subscribers has declined by 13 points since 2006 to 680 in 2007.

“Although high-speed subscriptions continue to increase annually—to 65 percent of the market in 2007—more than one-third (35%) of Internet service subscribers still use a dial-up service,” said Frank Perazzini, director of telecommunications at J.D. Power and Associates. “The cost of high-speed Internet is up nearly $2 per month since 2006, averaging $44.09 in 2007, yet dial-up service costs have dipped $0.12, averaging $17.81. As long as high-speed Internet prices continue to rise and dial-up providers offer a viable level of service at a low price point, significant market opportunity will continue to exist for dial-up service.”

The study also finds the following loyalty and usage patterns:

In 2007, 70 percent of households with high-speed service report they experienced outages, while only 51 percent of households with dial-up service reported the same.
Within the past 12 months, only 9 percent of dial-up users switched Internet providers. Among dial-up users who did switch providers, 74 percent switched to another dial-up service.
Dial-up customers use the Web just as much as high-speed customers, with 17 percent of both user sets averaging more than 30 hours online per week.

According to the study, Internet service subscribers are more likely to use alternative Web-based e-mail from a third-party provider, such as Google Gmail, MSN Hotmail, Yahoo! Mail or AOL Mail, as their primary e-mail service rather than the e-mail from their ISP. Web-based e-mail usage is much more common among high-speed subscribers (63%) than dial-up (38%).

“Web-based e-mail users can now switch ISPs without the fear of losing a long-standing e-mail address,” said Perazzini.

Now in its 10th year, the study measures customer satisfaction with high-speed and dial-up Internet service providers based on seven factors: performance and reliability; image; cost of service; offerings and promotions; billing; customer service/technical support; and e-mail services.

Dial-Up Internet Service Rankings
EarthLink ranks highest in the dial-up segment with an index score of 736, performing particularly well in performance and reliability; image; billing; customer service/technical support; and e-mail services. MSN and NetZero follow EarthLink, with index scores of 718 and 716, respectively.

High-Speed Internet Service Rankings
In the 2007 study, high-speed Internet providers are examined in four regions:
East Region: EarthLink ranks highest with a score of 715, performing particularly well in the image, cost of service, billing and e-mail services factors. Following EarthLink are Cablevision (710) and Verizon (701).

SouthRegion: With a score of 742, EarthLink ranks highest, performing well in performance and reliability, cost of service, image, e-mail services, and offerings and promotions. Road Runner (BHN) follows with 732, and Verizon ranks third in the region with 730.
West Region: Qwest ranks highest with a score of 697, performing well in performance and reliability, and cost of service. Verizon (696) and EarthLink (693) follow in the region.
North Central Region: Performing particularly well in performance and reliability, image, billing, and offerings and promotions, Verizon ranks highest with a score of 746. WOW! (WideOpenWest!) and EarthLink follow, earning scores of 730 and 720, respectively.