Rising price sensitivity is re-shaping the way consumers approach their communication services. Recent research by BNP Paribas Exane sheds light on changing habits of US consumers via the annual Survey of Media and Telecom Preferences (STAMP) – a proprietary consumer survey designed to gain insight into consumer behaviour as it relates to communication services.
The 2024 edition of STAMP marks the 9th year of running the survey and the first since launching wider coverage of US telecoms and cable. It surveyed about 10,000 US consumers in Q1 2024 and a further 10,000 in Europe, Canada and Brazil providing well over 100 million data points historically.
The survey identifies market level trends, wireless and broadband trends, as well as unique insights into regional differences through the use of respondents’ zip code data as well as the Federal Communications Commission’s map and census bureau data.
Industry insights
Wireless
The wireless environment remains rational. The survey shows that the price consideration is modestly increasing for consumers when choosing their wireless provider, with 43% citing it as the number one factor when deciding on a network provider, up from 42% last year. Intentions on switching providers, however, are decreasing suggesting more loyalty to existing providers. 13% of respondents claim they are likely to switch in the next twelve months, slightly lower than the 14% from the year prior.
Of those looking to switch, the survey shows 50% stating price as the reason for wanting to change providers, hinting at some underlying macro weakness. Customer satisfaction levels with the price and quality of their wireless service remain broadly stable year-over-year, and are generally higher than levels of satisfaction with home broadband.
Broadband
Price considerations remain the most important factor behind provider choice. In broadband 54% of consumers looking to switch say that price is the reason for wanting to move to a new provider, representing the second year in a row that price has risen in importance when switching. Consumers are also less willing to spend more for faster broadband, with only 26% of respondents considering it a spend priority, down from over 36% a few years ago.
Higher price sensitivity is manifesting in a clear industry shift – consumers continue to favor cheaper FWA (Fixed Wireless Access) alternatives over cable incumbents that are losing market share at an accelerated rate.
In terms of where switchers are looking to move to, the survey finds that:
- Fibre is improving, with 29% of switchers looking to move to fibre vs 22% in 2023;
- FWA looks set to lead the market again, with at 52% of switchers looking to move to an FWA provider (vs market share of <10% today);
- Cable’s share of potential broadband switchers is at an all-time low close to 20%, well below their current 60% share.
BNP Paribas Exane analysts suggest that the post pandemic shift towards quality consciousness amongst US consumers has now fully reversed, with price sensitivity back to pre-pandemic levels. This is playing into the hands of the wireless carriers who are disrupting the cable hegemony in broadband.
New paradigm for the communication services industry
Overall, the survey finds that we are seeing an industry with suppressed market activity (low churn) and increasing price sensitivity. Customers are generally happier than last year, as they have been beneficiaries of growing competition (lower prices) between telecoms and cable.
❝ As incremental consumer demand for faster speeds decreases, and new options for home internet emerge, we are clearly entering a new paradigm for the communication services industry. ❞
BNP Paribas does not consider this content to be “Research” as defined under the MiFID II unbundling rules. If you are subject to inducement and unbundling rules, you should consider making your own assessment as to the characterisation of this content. Legal notice for marketing documents, referencing to whom this communication is directed.