Consumer brand loyalty is taking a hit thanks to T-Mobile's un-carrier moves

Sue Marek

Wireless operators have long fought against any move that might make them appear a "dump pipe" in the eyes of the consumer. In fact that fear of becoming a commodity has been the underlying reason for so many of today's business models--the two-year contracts; the "exclusive" smartphone that is only offered by one operator; and even the special content deals like Verizon's NFL Mobile app.

But T-Mobile US' (NYSE:TMUS) "un-carrier" moves over the past year have pushed all the U.S. Tier 1 operators into a world of no contracts and no device subsidies. And the result is that carrier brand loyalty has taken a hit--at least that's what research firm Market Strategies found in its latest "Brand Love" report that queries consumers on their loyalties to their wireless carriers, their smartphones and their mobile operating systems.

According to Greg Mishkin, vice president of research and consulting at Market Strategies, although companies like AT&T (NYSE: T), Sprint (NYSE: S) and Verizon Wireless (NYSE: VZ) have very high brand recognition, that doesn't translate to brand loyalty. In fact, consumers are now indicating that they don't have much incentive to stay with their existing wireless operators. Instead, the recent moves toward no contracts and no handset subsidies have made the distinctions among wireless operators unclear. "I believe that the consumer fundamentally changed through this recent recession," Mishkin said. "And now people are proud to be value seekers. They want to find the best value with quality."

And while those of us who follow the industry closely may know the different nuances in operator networks, consumers are only hearing that their operator has 4G. And they aren't seeing any big differences between one 4G network and another. Plus, Mishkin added that the growth in Wi-Fi offloading is also making consumers aware of the fact that they aren't even on a cellular network a large percentage of the time.

So what should wireless operators do about this growing consumer perception that all wireless operators are the same?

Mishkin says carriers should continue to invest in other next-gen services like home security, home automation and the connected car. Interestingly, Mishkin said that in the Brand Love report, consumers said they trust their wireless operator (with the exception of Sprint) and would consider purchasing some of these additional offerings from their wireless provider.   

Of course, Mishkin's research validates AT&T's investment in its Digital Life home automation and security product and its inroads in the connected car space. Interestingly, AT&T reported that it had 500,000 connected car customers and 140,000 Digital Life subscribers as of the third quarter.

But wireless carriers should be aware: Consumers not only trust their wireless carriers, they also express great trust in brands like Apple and Google, which they perceive as providing valuable and easy-to-understand products. And with both Apple and Google exploring areas like home automation and connected autos, operators have even more to fear than just consumers' lagging loyalty to their wireless providers. --Sue

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