All,
Long winded but interesting.
How did the world's carriers serve their customers last year? Well
enough to get the business again next year? Telecoms users identify
the winners, the losers and the ones to watch.
Report by Camille Mendler
Results:
• Traditional Carriers
• New Carriers
• Alliances
Things were bound to be different this year - but how different will
serve as a salutary lesson for carriers worldwide.
The Winning Carriers questionnaire, sent exclusively to
telecommunications users around the globe last autumn, landed on desks at a crucial point for the industry: The dawn of liberalization. The World Trade Organization talks had concluded, and Europe was awaiting its telecoms "Big Bang" on 1 January, 1998.
Meanwhile, as the last days of 1997 ticked away, an upstart carrier
from Jackson, Mississippi named WorldCom Inc. appeared to have
snatched MCI from an alliance deemed by the industry as a fait accompli.
That set the stage for a drama now unfolding before an audience
increasingly jaded with the well-known cast, but growing indulgent
toward fresh-faced ingenues.
In its conception, the Winning Carriers survey had a simple goal: To
ask users about their experiences and perceptions of providers of
international telecoms services. The responses are tabulated into
rankings, not only for traditional carriers - mostly established
operators evolving from restricted national markets - but also for a
generation of new carriers whose origins, services and infrastructures were shaped from many different molds.
As the survey's partner, London-based consultancy COBA-Renaissance,
stresses, evidence among carriers of a customer-facing culture is a
better indication of future success than slavish attention to pure
financial data. Consequently, the survey's questions were designed to
find out, from the user's perspective, just how much telecoms
operators are doing for corporates around the world. As a result,
Winning Carriers not only gives us a clear snapshot of what
international telecoms users have on their minds, but helps the
carriers to identify trends among the respondents - their customers.
The response to the survey was truly global. Questionnaires were
returned by 731 telecoms users from 85 countries, giving details of
203 different carriers.
Compared to last year, some questions were worded differently in order to elicit a richer understanding of user experiences and perceptions, and a financial variable used last year was discontinued. (This significant variable, however, formed the basis of a full-scale study of productivity, technical and financial efficiency among the world's top 50 traditional carriers that appeared in the January 1998 edition of CWI's sister publication Communications International.)
In its place is an "internationality" variable, which takes into
account the number of responses carriers received from outside their
home markets. However, this received a lower weighting in final
scoring than network and customer-oriented variables.
In addition, the survey took into account the increasing number of
carriers on the market. Instead of choosing from a specified, and
therefore limited, list of carriers, respondents were asked to list
the carriers they used up to a maximum of four, and rank them in order of the amount they spent with the relevant carriers. As last year, the traditional, new carrier and alliance charts are geared to emphasize highs and lows of performance, compared to the industry average.
As predicted last year, the gulf between the services actually
provided and those marketed has bred unrest among users - and a
certain amount of change. Increasingly, telecoms users realize that if they do not like the service they receive, then they can look
elsewhere - if not now, then soon.
One German user, when asked if he would use a new carrier, summed up
the mood perfectly: "I can't wait for more competition!"
!!!!!!!!
Consequently, it seems fitting that this year's overall Winning
Carrier is MCI Corp. - the subject of a fight between the old guard
and the new. MCI, AT&T's traditional thorn in the side, proved so
again, beating its older opponent, which last year swept the board, by a hair's breadth - just 0.001. MCI's overall score of 3.651 reflected consistent high scores from users across four continents.
"MCI is best. Professionalism and range of services can't be beaten
here," commented one Mexican user. But kudos was also gained from
major telecoms users in Singapore, India and Belgium.
Where it clearly outpaced its big competitor AT&T was in tariffs,
scoring 3.51 versus 3.09, a score that lowered AT&T's overall tally to 3.650. And if MCI's planned merger with WorldCom comes to fruition, the potential strength of the pairing becomes an even greater threat. WorldCom, classified as a new carrier, gained one of the highest overall scores.
For its part, AT&T still has plenty to be pleased about: Its customers rate it highly, but so do other carriers' customers. AT&T's brand identity remains unmatched: It is perceived as the best carrier
overall (see Perception box). Indeed, 33% of MCI customers said they
thought AT&T was best - but perhaps the grass is always greener on the other side.
London-based Cable and Wireless plc moved up this year to a solid
third place with a strong score of 3.63, seen particularly in tariffs. Its continuing aim to move away from transport services to the provision of value-added solutions lays a path that should deservedly lead to further success.
But whatever sums C&W may have spent in rebranding U.K. fixed services arm Mercury Communications, local customers are not yet won over: Subsidiary Cable & Wireless Communications, into which Mercury was subsumed, scored a poor 3.17 total, with one of the lowest scores for customer service at 2.64.
Meanwhile, in a world apparently dominated by U.S.-based carriers,
another bright star across the Atlantic is undoubtedly Telecom
Finland, which learned early that investing jointly in network and
service development could pay dividends. The Helsinki-based carrier, a close fourth behind C&W with an overall score of 3.62, displayed
particular excellence in services offered and network quality.
"[They're] small, innovative, flexible, professional, experienced and
lean," said one German user, echoing views from users around the
world. Other carriers should take heed of these strategies.
Meanwhile BT, which trailed the likes of Singapore Telecom, Tele
Danmark, France Telecom and Entel, has a particular problem that kept
it down the ranks. With an overall total of 3.34, and only 2.72 for
tariffs, BT must ask itself why it cannot combine international with
local recognition. If U.K. users are tough to please after a decade of competition, how soon will it be before customers elsewhere start
asking difficult questions?
The worst performers overall were incumbent carriers. Bottom of the
pile is Brazil's Embratel, with a total score of 2.47. Embratel also
features in the 5 worst carriers for tariffs and customer service.
Telekomunikacja Polska comes next with 2.62, and is joint worst in
tariffs and customer service. Portugal Telecom is third worst overall
with 2.67, and a placing in the 5 worst for tariffs. Last year's worst performers, which included Belgacom (2.72), Telecom Italia (3) and Telefonica (2.75), showed minimal improvement.
A word here too for the alliances, which each suffered a bruising in
1997, either in terms of constituent members, personnel, or finances.
Alliances consistently turned in significantly higher scores,
testifying to some improvement in services.
However, the surprise top scorer among these organizations was Global
One, with a strong overall score of 3.67. Although it may have lost a
chief executive because disappointing financial results, Global One
does have a core of customers who value it. But who exactly are these
customers?
The Winning Carriers survey indicates that among this alliance's
claimed 30,000 customers, there is a broad range of financial power.
Our Global One sample showed that: 23% of respondents had annual
telecoms budgets of more than $10 million; 10% had $5 million to $9.9
million to spend; 26% fell in the $1 million to $4.9 million category; and the remaining 40% had less than $1 million to spend, including 18% with annual telecoms budgets of less than $100,000.
Things are different for Global One's closest alliance competitor,
Concert, which returned an overall score of 3.5 - notably higher than
last year's 3.4. Its breakdown in telecoms spend is narrower, true to
its statement that it serves the world's largest multinationals. Our
Concert sample showed that 35% spent more than $10 million a year on
telecoms services; 4% spent $5 million to $9.9 million; and 30.5% had
a telecoms budget of $1 million to $4.9 million. Just fewer than 4%
had less than $100,000 a year budgeted.
Unisource, meanwhile, was again a laggard, scoring a much improved
3.28, having attained only 3.0 last year. But despite high scores in
global reach, network quality and services offered, Unisource was sunk by mediocre scores in tariffs and customer service. Telecoms spend for our Unisource sample was 35% with more than $10 million; 6% with $5 million to $9.9 million; 23.5% with $1 million to $4.9 million; and nearly 12% had less than $100,000 annually to spend, supporting recent assertions (CWI, 16 February) that it views the small and medium-sized enterprise as an emerging revenue stream.
With impending liberalization in mind, respondents were asked if they
planned to use a new carrier during the next 12 months. A majority,
57.5%, said "Yes," while 3% said "Maybe" and 39.5% said "No." However, many of those who said "No" qualified their answer by saying that competition was simply not allowed in their country for the
foreseeable future.
But without asking the question directly, it was quite clear that new
carriers were already making their mark among the respondents. Maybe
new carriers are only gaining a small chunk of some vast budgets, but
they have their feet in the door.
The best New Carrier this year - although it would undoubtedly not
describe itself as such - is IBM Corp. It scored well in terms of the
reach and quality of its global network, and, importantly, for the
range of services offered, for which it achieved the highest score of
3.9.
A stunning overall score of 3.88 cannot, however, hide a rather
average score of 3.38 in customer service, surprising in an
organization that prides itself on developing specific solutions for
particular customer needs. Good, but can do better, says this report
card.
Meanwhile, closely following IBM were two strong contenders: WorldCom
with 3.79 and Sita-Equant with 3.78. And while there doesn't seem to
be much to divide these two, closer scrutiny shows otherwise.
Unsurprisingly, WorldCom, the telecoms world's enfant terrible,
exhibits clear strengths in network quality and tariffs, but customer
service was also highest, rated at 3.69 from its growing pool of big
telecoms users. Clearly the worry expressed by some respondents last
year over the acquisition of business-focused MFS by the streetwise
upstart is being addressed, although some MCI customers may still have their doubts (CWI, 6 October).
For its part, Sita-Equant continues to excel in network reach, with
the highest score in that category of 4.48. It also scored well in
services offered, although not the highest. Will this continue to be
enough? Indifferent scores for tariffs of 3.2 and customer service of
3.28 suggest that Sita-Equant should not get complacent, although its
rebranding exercise last year for commercial division Scitor, now
known as Equant, is clearly paying off.
Other new carriers that distinguished themselves were Sweden's Tele2,
which scored 3.58, Infonet Services Corp. with 3.44 and Australia's
AAPT with 3.43. Both Tele2 and AAPT outpaced their local incumbents
Telia (3.27) and Telstra (3.25) respectively.
Indeed, the breakdown of Telstra's score tells a valuable story about
the leverage to be gained in being a consistent customer-led
organization. While the Australian carrier generated consistently
excellent scores in global reach, services offered and network
quality, the pool of largely Australia-based respondents were severe
elsewhere. Telstra scored only 2.35 for tariffs and 2.71 for customer
service - very poor scores that undid the good work elsewhere.
European customers, meanwhile, reported far higher satisfaction levels in these categories.
A service-oriented question, introduced this year, reflected a range
of user desires about the types of service they wanted to see offered
by their carrier during the next 12 months. Top of the list were
IP-related areas: Internet telephony was mentioned by 59% of
respondents, followed by Internet service guarantees, noted by 50.6%.
Demand was also high for fixed-mobile integration, yielding 43.2% of
votes.
Surprisingly, despite much media attention, only 38.4% wanted
electronic commerce services, and only 26.2% intranet consultancy -
but perhaps that is because users do not expect a carrier to be
equipped to provide such services. ATM fared better, with 33.7% of
users requesting it, while Web-based billing interested 33.6% of
respondents.
David Larsson and Chris Green of COBA-Renaissance also conducted a
focused study to gauge which carriers had built innovative,
customer-led organizations. Their analysis, which drew on a wider pool of carriers, yielded a clear winner: U.S. carrier Sprint, which
generated an outstanding service score of 3.97. Although its sample
size would not warrant an individual ranking under the survey's
established rules, the consistency of Sprint's customer responses
suggested high levels of success - an overall score would have
generated 3.952.
Green states that to get the most out of their networks, carriers need to focus on their biggest asset - the customer base. The ability to develop the right solutions for target customers will determine which carriers are successful: In this area Sprint is clearly one step ahead of the pack, and seemingly the main source of Global One's talent.
We predicted last year that a new class of carrier would be seen in
the rankings: The Baby Bells. And indeed their influence has been felt among international telecoms users - but not yet to such a degree to warrant individual rankings within the overall Winning Carriers tables.
BellSouth, for example, made a notable appearance among Latin American respondents, while indications are that Ameritech is swiftly picking up fans much further afield than its home ground of the U.S. mid-west, with several Scandinavian users nominating the carrier as most innovative.
To place this crop of Winning Carriers rankings in a broader context,
it should be noted that 1998 is a transitional year for carriers and
users alike. Carriers, traditional and new, face difficult strategic
decisions as transport prices tumble in a newly competitive
international market. Should they move up the value chain to provide
value-added services? Or should they play the arbitrage game of
telecoms minutes? Upon which customers should carriers focus their
energies?
International telecoms users, meanwhile, may find competition imposes
unexpected demands upon them. Not least of these is the patience to
wade through a growing list of carriers eager for their custom. If
nothing else, events in 1997 also proved that stability is not a
feature of global carrier alliances - yet. The one-stop shop concept
they marketed so strenuously remains largely unproven and ill-defined.
This is particularly true as the commoditization of basic transport
services frees up resources that can be channeled towards the one
challenge everyone talks about, but yet few carriers or users
understand: How to integrate business goals with communications services.
Produced in association with David Larsson and Chris Green of
COBA-Renaissance, London. Tel:+44 171 577 8000. |
