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ISPs Barely Passing Customer Service Tests

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Posted December 6, 2001 By Michael Pastore     Feedback

A survey by the National Regulatory Research Institute and BIGresearch of more than 14,000 Internet users found that almost half have complained to their ISP about the quality of service.

A survey of more than 14,000 Internet users by the National Regulatory Research Institute and BIGresearch found that almost half (47 percent) of the respondents have complained to their ISP about the quality of service.

"The survey results suggest a surprising number of customers are not fully satisfied with the service they are receiving from their Internet service providers," said Vivian Witkind-Davis, NRRI's associate director. "Interrupted connections are a frequently cited concern -- 75 percent of the respondents told us that their connection is occasionally or frequently interrupted."

The survey asked respondents to grade the quality of the customer service they receive from their ISP on a scale from A (the best grade) to F (as in failure, the worst grade). Using this academic-like GPA system, an A is a 4.0, a B is 3.0. a C is a 2.0 and so on. ISDN connections received the best grade point average with a 2.76. Cable ISPs scored a 2.73, followed by wireless (2.71), DSL (2.69), and dial-up providers (2.58). The average score among all respondents was 2.62.

"With these grades, the ISP industry doesn't make the dean's list. It's an industry of C students when it comes to satisfying the customer," said Joe Pilotta, vice president of BIGresearch. "It's no wonder the survey showed almost 70 percent of the customers interested in switching to a different service if they could get it for their home today."

Nearly half of those surveyed (48 percent) cited fewer service interruptions as a reason for switching providers. For those customers who would consider switching or will definitely switch providers, the quality of Internet connections is the most frequently cited reason for a move. Other top motivators are faster data rates and lower prices. Less than 25 percent said the speed of their Internet connection meets their expectations.

Consumers looking for the appropriate connection speed and quality customer service could spur further consolidation in the ISP industry. It's interesting to note that the bankrupt Excite@Home cable ISP was among the lowest scorers in the NRRI/BIGresearch survey.

In the business ISP market, the report "2001 Business ISPs -- Service, Size, and Share" by Cahners In-Stat Group predicts that continued economic challenges and decreased market capitalization will lead business service providers to either merge or go out of business. There are more than 6,000 ISPs offering business access services in the United States, but the top 10 competitors generated more than 65 percent of all access revenues in 2000.

While there is little reason to believe that the largest ISPs will relinquish much of their market share, In-Stat believes this will not result in the total demise of the smaller regional ISPs. Many of these smaller ISPs will survive by continuing to branch out into other services and by working with businesses that are often overlooked by national service providers.

"While new services will continue to emerge and grow, access services will still account for over half of all business service revenues followed by Web hosting, non-hosting value added services, and hardware resell/leasing," said Daryl Schoolar, a senior analyst at In-Stat. "Access service revenue dominance will continue because ISPs use this service as a platform upon which to build other services. However, all ISPs need to beef up access service by offering a SLA (Service Level Agreement). The SLA must not only offer customer retribution for service shortfalls, but also needs to be pro-actively monitored by the ISP."

According to In-Stat's report, the largest ISP, in terms of access revenues for 2000, was WorldCom/UUNet. The second largest ISP, in terms of revenue, was AT&T. Other ISPs with significant market share were -- PSINet, Cable & Wireless, Sprint, Genuity, InterNap, XO Communications, Verio and Qwest.

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