Wireless Industry Complaints Closely Related to Competition, Say Panelists

WASHINGTON, December 14, 2009 – What’s the greatest source of dissatisfaction in the mobile wireless industry? Ironically, according to industry experts and government representatives attending a conference on customer complaints, it is competition itself.

The size and pervasiveness of the mobile device market has exploded. In the space of just 17 years, the number of active mobile subscribers in the United States has exploded from 11 million to 276 million. An increased number of complaints have accompanied this market growth.

Why does market growth and competition lead to complaints? Several factors may be at work, panelists said. As mobile hardware becomes more and more varied and creation of applications continues, consumers’ expectations increase, leading to complaints.

Speaking about the success of Apple’s iPhone, Lois C. Greisman of the Bureau of Consumer Protection at the Federal Trade Commission commented that, “if [the iPhone] hadn’t become so successful we wouldn’t have this many complaints. We sort of get a leapfrogging effect with the competition of companies like Verizon.”

The release of new devices and technology forces companies to rapidly innovate and expand to keep up with competition. “This move speaks to the success of the marketplace,” added Greisman.

“Innovations of technology can actually stimulate complaints,” agreed Robert Roche, Vice President of Research at CTIA – The Wireless Association.

John W. Mayo of Georgetown’s McDonough School of Business – who co-organized the conference – disagreed, however, that this competition increases complaints.

He coauthored a recently released study,  “Can You Hear Me Now?’ Exit, Voice and Loyalty under Increasing Competition,” which suggested that competition actually decreases the number of complaints. He contended that as competition increases, more consumers are able to exit the market and switch, leaving the product for a more attractive alternative.

Besides competition, the accessibility of regulatory commissions and underlying American mentality contribute to the number of complaints.

“The FTC [Federal Trade Commission] does make it a lot easier, but Americans also seem prone to it,” said Greisman.

“There weren’t a lot of people complaining to the politburo in the Soviet Union.”

The FTC handles much of the nation’s consumer complaints, between 35,000 and 45,000 each week. The information is received in a variety of ways, not only by conventional mail and telephone hotline services, but through an online reporting system. This online system was groundbreaking when it was created in 1997, and allows consumers to make their voices more easily heard.

Why does the FTC deal with these complaints when many of them have nothing to do with the commission’s responsibilities?

“First of all, it’s good government,” said Greisman. “And second, it provides us with good information”

This information can prove invaluable both in the ongoing fight against fraud and for policy makers trying to improve conditions. The online system has already made this easier and expansion of broadband to help link other agencies and systems together quickly and efficiently is the next step. In a world where wasted time can mean more lost money by consumers, the stakes are high.

“Consumers want intervention, and they wanted it yesterday,” said Greisman.

Telecommunication was one of many industries studied for the forum, “Unpacking Customer Satisfaction: The Role of Customer Complaints Across Industries and Agencies,” hosted by Georgetown University’s Center for Business & Public Policy.

Among the questions considered at the forum included:

• What are the types of complaints that industries and government agencies face?
• How active are government agencies in the complaint process?
• Are government agencies effective in addressing/rectifying customer complaints?
• Do firms and agencies have customer complaint processes in place?