Telephone Competition: A Study of Three Markets

Table of Contents
Introduction1
A Note on Reading The Tables1
Summary of Key Findings2
Telephone "Slamming"2
Telecommunications Products and Services7
One-stop Shopping8
Billing9
Perception of 1996 Telecommunications Act9
Sample Design11
Weighting12
Sampling Error12

Introduction

Louis Harris and Associates was commissioned by The National Consumers League to examine the opinions of adults on switching their company for long distance and regional toll call service. The survey was conducted in three markets, Chicago, Detroit/Grand Rapids and Milwaukee. Interviews were conducted by telephone and lasted approximately 15 minutes. The methodology is described in detail in Appendix A.

The objectives of the survey were to measure the level of awareness in these markets of service options, knowledge of current legislative initiatives relative to telecommunications and to learn about awareness and experience in these markets with unauthorized switching of telecommunications carriers.

This report presents a summary of the key findings of the survey. The complete results, with the percentages broken out by area, are available in the annotated questionnaire in Appendix B.

A Note on Reading The Tables Percentages may not always add to 100% due to computer rounding, acceptance of multiple responses or deletion of non-relevant responses. Any results drawn from less than the full base should be viewed as directional only.

SUMMARY OF KEY FINDINGS

Consumers today are faced with more decisions about telecommunications products and services than ever before. In addition to being able to choose a variety of services and products, consumers can also choose from a wide variety of suppliers. Competition between telecommunication providers has caused consumers to be inundated with advertisements and offers through every possible means. Additionally, many people are concerned that this competition caused an increase in unauthorized switching of carriers of telephone service, "slamming." 

Telephone "Slamming"

Thirty-nine percent of adults in the three markets are aware of the term "slamming". Awareness of slamming is somewhat higher among those in Chicago (42%) and Milwaukee (43%) than it is among those in the Detroit and Grand Rapids areas (35%). Among all adults in the three markets, awareness of the term slamming increases with age and household income. Specifically, while only 20% of those age 18-29 know the term, 56% of those age 65 and over have heard the term slamming. Furthermore, just 29% of those with a household income of $15,000 or less know the term slamming compared to 41% of those with a household income greater then $50,000.

Three in ten adults in the three markets (30%) say they or someone they know has been slammed-that is had their telecommunications company switched without their consent. Self-reported experience with this unauthorized switch is somewhat higher in Chicago (36%) than in Detroit/Grand Rapids (25%) or Milwaukee (23%).


Q815. Have you or has anyone you know ever been "slammed"-that is, had companies switched without their consent-or not?

3 Market Total500
 ChicagoDetroit/Grand RapidsMilwaukee
BASE1512511501
 %%%%
Yes30362523
No69647476

Overall in the three markets, the likelihood of having been slammed or knowing someone who has been, increases with household income, level of education, the amount spent on an average phone bill and is higher among Blacks and Hispanics than Whites. Twenty-three percent of those with a household income of $15,000 or less know someone who has been slammed compared to 35% of those with a household income of $50,000 or more. Twenty-six percent of those who have at the most a high school education and 32% of those with some college compared to 36% of those who have completed a college education have been or know someone who has been slammed. Twenty-nine percent of those who spend less than $100 on an average phone bill compared to 37% of those who spend $100 or more on an average phone have experience with slamming.

Q815. Have you or has anyone you know ever been "slammed"-that is, had companies switched without their consent-or not?

INCOME
150
  3 Market Total$15K or less$15,0001 to $25K$25,001 to $35k#35,001 to $50k$50,001 or more
BASE1512185194251519
 %%%%%%
Yes302327293335
No697772716664
EDUCATION
73
 H.S. or lessSome College College Grad or more
BASE541409549
 %%%
Yes263236
No6764
AVERAGE MONTHLY BILL

468
  Less than $50 $50 - $99 $100 or more
Base642277
 %%%
Yes292937
No707062
RACE/ETHNICITY
72
 WhiteBlackHispanic
Base114720271
 %%%
Yes283942
No5956
Those who have experience with slamming are nearly equally divided into those whose experience with unauthorized switching of carriers is personal or happened to someone they know. Forty-two percent say their knowledge of slamming comes from personal experience and 51% say the slamming happened to someone they know. Additionally, 6% of those who have knowledge of slamming have experienced this themselves and also know someone who has been slammed.

Q820. Was that you or someone else?
Base: know someone who has been slammed


516
 3 Market TotalChicagoDetroit/Grand RapidsMilwaukee
Base446180144122
 %%%%
Self42443841
Someone else475949
Both839

The majority of those who have experience with slamming (65%) say the unauthorized switch occurred with long distance service. Six percent say the switch was for regional toll service and 22% say the switch occurred for both types of service.

Q815. Was this slamming done for long distance service, regional toll service or both?
Base: Know someone who has been slammed

622
 3 Market TotalChicagoDetroit/Grand RapidsMilwaukee
Base446180144122
;NBSP%%%%
Long distance65646476
Regional toll741
Both212617

The most common means that one finds out that they have been slammed is by receiving a bill from the new carrier. Eighty percent of those in the three markets with knowledge of slamming say the switch was discovered by receiving a bill for the service from the new carrier. Six percent say a verification call was how the switch was discovered. Three percent report a welcome letter was sent from the new company and 2% a farewell letter was sent from the original company. The majority of those who have experience with slamming in the three markets (59%) say a complaint was filed in response to the unauthorized switch. Eighty percent of those who report a complaint being filed say the issue was resolved satisfactorily.
Telecommunications Products and Services

Adults in the three markets receive information about new telecommunications products and services from a wide variety of sources. Eighty-nine percent obtain information from advertising and 80% receive materials about telecommunications products and services in the mail. A substantial majority (69%) say they get information from telemarketing calls. Twenty-four percent get information about new products and services through the Internet.

A great many adults in the three markets (71%) find the offers they receive for new telecommunications products and services to be confusing. Twenty-eight percent find these offers "very confusing" and 43% say they are "somewhat confusing." As a result it is not surprising that 82% believe that consumers have a need for a source of unbiased, clear information about telecommunications products and services. When asked who could best provide consumers with this information, the majority believe that consumer advocacy groups would handle this best, and while some (28%) say that telephone companies would be the best source of this information, very few believe the government should be entrusted with this task.


Q530. Who do you think could best provide consumers with unbiased, clear information about telecommunications products and services? Base:1512


One-stop Shopping

Despite a belief that competition makes prices lower, many adults in the three markets find the idea of being able to purchase all telecommunications products and services from a single vendor to be an attractive proposition. This is not surprising as the majority find that having more than one telephone company makes billing confusing.


In the three markets, adults in Detroit/Grand Rapids are less convinced that competition does result in lower prices and those in the Milwaukee area are most likely to be interested in purchasing all telecommunications services from one provider.

Q205b.Competition among telephone companies makes prices lower-do you agree or disagree with that statement?
Q205c. Having more than one telephone company makes billing confusing-do you agree or disagree with that statement?
Q401.If you were able to purchase all you telecommunications services-including local and long distance telephone service, Internet connection and cable service-- from one company, how likely would you be to make that decision- very likely, somewhat likely, not very likely or not likely at all?


 3 Market TotalChicagoDetroit/Grand RapidsMilwaukee
Base1512500511501
 %%%%
Agree "competition among telephone companies makes prices lower" 65695771
Agree "having more than one telephone company makes billing confusing" 64646660
"Very" or "somewhat likely" to purchase all services from one company 78777983

Billing

The average amount spent on monthly telephone service in the three markets is $69. Fully one-half of adults in the three markets (50%) have found charges they disputed on their telephone bills. The disputed charges most often involve long distance service (56%), and 11% relate to regional toll calls. Happily for the majority of these customers (79%) the disputed charges were resolved satisfactorily.

Perceptions of the 1996 Telecommunications Act

Very few adults in the three markets say they are at least somewhat familiar (18%) with The 1996 Telecommunications Act. Respondents were given the following explanation of the Act: "In 1996 the Congress passed and the President signed into law a new telecommunications act. The act was designed to remove barriers to competition among local and long-distance telephone companies, cable operators, and others. Some people have said that this new law would increase competition, lower prices and give consumers new service choices. Others have said that the new law will lead to higher prices, advertising that is confusing to consumers and intrusive telemarketing calls." This explanation leads adults in the three markets to no consensus on whether the results of this new law will in fact benefit them. Forty-eight percent believe the new law will as intended result in "increased competition, lower prices and new service choices", and 45% think the result will be "higher prices, confusing advertising and intrusive telemarketing."

Appendix A: Methodology

Sample Design

The Telephone Competition Survey was conducted for National Consumers League by Louis Harris and Associates. The study was conducted by telephone within the United States in September, 1997 among three representative geographic regions. Interviews were completed with a minimum of 500 adults age 18 and over in the following Census areas:

The interviews conducted in Michigan (359 in the Detroit PMSA and the 152 in the Grand Rapids-Muskegon-Holland MSA) were weighted to represent the correct proportion of these two geographic regions.

The Louis Harris and Associates, Inc. Telephone Sample is based on a methodology that is designed to produce representative samples of persons in telephone households in the selected geographic region. The Harris Telephone Sample makes use of random-digit selection procedures that assure sample representation of persons in both households that are "listed" in telephone directories, as well as persons in households that are "unlisted" in telephone directories.

Weighting

The preliminary stage of weighting created a combined proportionate sample of the Detroit PMSA and the Grand Rapids-Muskegon-Holland MSA. The subsequent stages of weighting are as follows:


Sampling Error

The results achieved from all sample surveys are subject to sampling error. Sampling error defined as the difference between the results obtained from the sample and those that would have been obtained had the entire relevant population been surveyed.

In theory, with a sample of 500 one can say with ninety-five percent certainty that the results have a statistical precision of plus or minus four percentage points of what they would have been if the entire adult population had been polled with complete accuracy. Unfortunately, there are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include refusals to be interviewed (non-response), question wording and question order, interviewer bias, weighting by demographic control data and screening (i.e., for an illness). It is difficult or impossible to quantify the errors that may result from these factors.

This statement conforms to the principles of disclosure of the National Council on Public Polls.


Telephone Competition:
A Study of Three Markets

Conducted for: The National Consumers League
Fieldwork: September, 1997

Project Directors:
David Krane, Executive Vice President
Robert Spanski, Vice President
Lisa Wickham, Research Associate

Louis Harris and Associates
111 5th Avenue
New York, NY 10003
© Louis Harris and Associates, Inc.

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