WSJ -- How Cellular Services Rank On Complaints ..................................
March 29, 2005
How Cellular Services Rank On Complaints
Cingular Tops FCC List With Most Gripes Per Customer; Dropped Calls, Billing Errors
By LI YUAN and JESSE DRUCKER
Staff Reporters of THE WALL STREET JOURNAL
When Cingular Wireless completed its acquisition of AT&T Wireless Services Inc. in October, it created the nation's largest cellular-service provider.
It also created the wireless carrier with the country's highest customer-complaint rate.
The new Cingular Wireless, boasting of expanded coverage from two networks, has been adding new subscribers at fast clip. It now serves more than 50 million customers.
But Cingular's rate of complaints -- on everything from billing, marketing to service quality -- was consistently higher than competitors in the fourth quarter, the first quarter as a combined company, according to complaints received by the Federal Communications Commission and obtained by The Wall Street Journal through a Freedom of Information Act request.
Cingular Wireless had a rate of 4.6 complaints per 100,000 customers. The rate of complaints for T-Mobile USA Inc., a unit of Deutsche Telekom AG, was next highest at 4.3 per 100,000 customers. Sprint Corp. and Nextel Communications Inc. -- which announced plans to merge in December -- posted complaint rates of 3.6 and 2.3 per 100,000 customers, respectively. By comparison, Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC of the U.K., and the nation's second-largest cellphone operator, had the lowest rate of complaints, with 1.4 per 100,000 customers. Verizon declined to comment.
Both T-Mobile and Sprint declined to comment on the FCC complaint figure, but both said they will focus on customer satisfaction. A Nextel spokesman said, "We're always looking to improve service of our customers."
By the end of 2004, Cingular had 49.1 million customers. Verizon Wireless had 43.8 million. Sprint, including its affiliates, had 21 million. Nextel had 15 million. T-Mobile had 17.3 million.
The FCC provided the total complaint figures, but the rate was calculated by the Journal. (The rate for Sprint was calculated including its affiliates.) The FCC cautioned that the existence of a complaint doesn't necessarily indicate wrongdoing by a carrier.
At the time the Cingular/AT&T Wireless merger was announced last year, Cingular Chief Executive Stan Sigman said the deal "will mean better coverage, improved reliability, enhanced call quality and a wide array" of new services.
But with the two large companies just starting to merge operations, networks and customer databases, some Cingular customers had to undergo the pain and the costs of the merger. Cingular officials maintain that the problems are few and far between given how many customers receive their service.
"While we take each complaint very seriously and are always striving for improvement, the number of complaints represents an infinitesimally small portion of our customer base," Cingular spokesman Ritch Blasi said. He acknowledged that there could be some engineering problems during the process of combining the two systems that may cause worse coverage for some customers, but emphasized that the issue isn't widespread.
Despite a multibillion-dollar investment by the wireless industry on network upgrades and advertisements trumpeting the latest features, many consumers remain frustrated with their cellphone service. Spotty service coverage and incomprehensible bills are still the bane of many subscribers.
Dropped calls and dead zones can result from a variety of factors: insufficient investment in the network; heavy calling traffic at busy times of the day; and complicated zoning laws that make it difficult to place cellphone towers in areas that would lead to better coverage.
For the industry as a whole, complaints in all of 2004 were up nearly 38% from 2003, according to the Consumers Union, a consumer-advocacy group that released a study on cellphone complaints yesterday. That increase outpaced the rate of U.S. subscriber growth, which increased roughly 14% to 180.5 million users in 2004, according to the Cellular Telecommunications and Internet Association.
Cellular service has lower levels of overall customer satisfaction than for most other services the Consumers Union measures, such as hotels, retail outlets and insurance. In its annual cellular-subscriber survey conducted last fall in 17 major cities, the group found that nearly 60% of those who use a cellphone frequently said they had a bad connection.
Some industry analysts say that the high complaint rate at Cingular could be related to the complexity of merging two carriers' networks. However, the most complaints arose from billing problems as things like roaming charges and complex fees make cellular bills incomprehensible to many customers.
The complaint rate at both Cingular and AT&T Wireless was higher than competitors even before the merger, the FCC data show.
Given the size of the wireless market, the number of FCC complaints is relatively small, as few consumers take the trouble of actually filing a complaint to a federal government agency. Many consumers instead register their displeasure with Web sites such as planetfeedback.com or escapecellhell.org by the Consumers Union.
For Gary Myers and his wife, Nancy, of McMinniville, Ore., their AT&T Wireless service worked fine until last winter, about the time of the merger.
By mid-March, Mr. Myers couldn't get a signal in some parts of his 28,000-population town. When he called AT&T Wireless customer service, a representative told him that the Myerses need to get new Cingular GSM phones to get better coverage. Though the phones are free after a rebate, the Myerses will be charged for $18 activation fees for each line and their contract will be extended for another term. "I'm done with both of them," Mr. Myers said.
Mr. Blasi of Cingular confirmed that the company charges a fee to move AT&T Wireless customers over to the Cingular network. Current AT&T Wireless customers will get better coverage by upgrading their phones, he said, and many people are making the move to get slicker handsets.
In areas where Cingular has redundant coverage capacity, the carrier is planning to remove 8,000 cell sites, or 18% of the total, by June 2006 and install them in areas where AT&T Wireless and Cingular didn't have any coverage before, Mr. Blasi said.
Mr. Blasi adds that in very few cases customers may experience worse coverage than before because their phones are connected to a cell site that may be farther away than where their original cell site was. He said the problems will be solved once Cingular finished the integration of two networks by June 2006.
Before the merger, both Cingular and AT&T Wireless were in the process of upgrading their networks from an older technology, called TDMA, to a new technology called GSM. Plus, most major carriers have started or announced plans to upgrade their networks yet again to accommodate higher speed, so-called third generation, or 3G, wireless services, such as wireless Web browsing.
Cingular is investing $6 billion to enhance its networks in 2005, and the overwhelming majority of that will be spent on the GSM network, said Mr. Blasi of Cingular. About 80% of minutes of use for all Cingular customers go to GSM network while the rest go to TDMA network. Mr. Blasi insists that Cingular will continue maintaining the TDMA network. But industry analysts believe that Cingular is investing close to nothing on it because it is more cost effective to maintain one network rather than two.
With two networks AT&T Wireless and Cingular customers may not experience as many dead spots, but removing cell sites can be tricky, said Jonathan Atkin of RBC Capital Markets.
Write to Li Yuan at li.yuan@wsj.com and Jesse Drucker at jesse.drucker@wsj.com
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