Nearly one-fifth of U.S. postpaid subscribers considering switching, Jefferies says

Nearly one-fifth of U.S. postpaid subscribers are considering switching carriers, according to fresh data from Jefferies Equity Research Americas. And their primary concerns are price and coverage.

Just like they’ve always been.

A Jefferies poll of 1,000 postpaid users found that Americans are “surprisingly loyal” when it comes to their service provider: More than 78% have been with their carrier for more than three years, and 75% haven’t switched carriers in the last five years.

But 18% of respondents said they’re considering switching service providers within the next year, and Sprint appears particularly vulnerable.

“Of the most loyal demographic (consumers who have not switched carriers in the last five years), propensity to churn in the next 12 months appears lowest for AT&T, followed by Verizon, T-Mobile and then Sprint,” Mike McCormack and other Jefferies analysts wrote. “The results indicate future levels of disconnects at Sprint are likely to continue to outpace competition—24.7% of this group indicated they were likely to switch carriers, materially higher than peers.”

Many Sprint customers were surely lured by the carrier’s aggressive 50% off promotion, of course. Now that the carrier has effectively killed that campaign, though, they may be looking for another carrier once their handsets are paid off or their contracts end.

But while the network gap between the major U.S. operators has narrowed significantly over the last two years, coverage is still a top priority for many consumers. That is a challenge for the nation’s two smaller Tier 1 carriers.

“While some might argue that network quality is converging, the survey suggests a gap remains in carrier coverage,” the analysts wrote. “T-Mobile has made great strides in network improvement in recent years (i.e., 700 MHz build), yet based on our survey, coverage remains the largest pain point for the Uncarrier, while Verizon and AT&T still lead from a network perspective.

“More predictably, Verizon and AT&T customers are most concerned with pricing, while Sprint complaints are more balanced between coverage and price. Slow data speeds rank highly for T-Mobile and Sprint, whereas the larger carriers’ second complaint is overages and fine print.”

And it’s worth noting that consumer price sensitivity places carriers in a difficult position in this era of unlimited data, Jefferies observed. Users clearly value the unlimited model—more than 86% of respondents indicated they would consider unlimited plans at another operator—so carriers will struggle with ways to fully monetize ever-increasing data consumption while maintaining their unlimited offerings.

“Despite the unsustainability of unlimited in its current form,” the analysts wrote, “the survey suggests consumers are highly price sensitive and would not welcome price increases; 75.4% of survey respondents indicated they would switch carriers or lower data tiers in lieu of a price increase. This emphasizes pricing as one of the largest drivers of churn, and the biggest opportunity for promotional share-taking—we watch keenly to see how carriers navigate the balance of promotions and top-line growth.”