Boost Mobile scores highest among no-contract phone owners

Recourse from: http://edition.cnn.com/2011/TECH/mobile/04/05/no.contract.customer.gahran/index.html?iref=allsearch

To control costs and increase flexibility, more and more U.S. mobile users are choosing no-contract plans (month-to-month or prepaid) for cell phone service.
How happy are consumers with no-contract phones and service? J.D. Power and Associates recently released the results of its 2011 U.S. Wireless Non-Contract Customer Satisfaction Index Study. The no-contract carriers studied were: AT&T Gophone, Boost Mobile, Cricket, MetroPCS, Net10, T-Mobile, Tracfone, Verizon Wireless and Virgin Mobile.

This year, the overall winner was Boost Mobile, which scored top marks for its cost of service, account management practices, initial activation process and offers/promotions. However, Boost scored only a middling grade on performance and reliability, the characteristic that survey participants rated as most important.

Net10, Tracfone, and Verizon Wireless received consumers' highest ratings for performance and reliability; while AT&T Gophone, Cricket and MetroPCS fared worst on this front.

AT&T Gophone received the overall worst customer satisfaction rating this year, with poor to middling marks in all categories.

According to Valassis, a media and marketing services company, as of October of last year, 28% of all U.S. cell phone service plans did not have contracts (up from 21% in 2008). Meanwhile, J.D. Powers reports that this year, about half of of all no-contract customers have month-to-month plans, rather than prepaid ones. In 2008, only 30% of no-contract plans were monthly.

The increase in attractive monthly no-contract offers might start stealing customers away from contracts. J.D. Powers notes: "Among customers currently under [a regular carrier contract of a year or more] and who say they are likely to switch their carrier during the next year, nearly 40 percent are likely to choose non-contract service."

Monthly contracts are generally cheaper. According to J.D. Powers: "Monthly non-contract customers spend an average of $32 less per month than do customers with contracts. Monthly non-contract customers spend $60 per month, compared with an average monthly service cost of $92 for customers with service contracts."

Some smartphones are now available on no-contract plans. Most no-contract carriers offer some smartphone deals -- usually for BlackBerry phones, but increasingly for Android and some Windows Phone models, too.

These smartphones still cost substantially more to buy up front than the simpler, cheaper "feature phones" these carriers mostly offer, and they generally don't have the latest or most robust technology or operating system versions. Whether these offerings will entice many first-time smartphone buyers remains to be seen.

For example, MetroPCS currently offers a no-contract Huawei Ascend touchscreen phone running Android 2.1 for $129 after a $50 instant discount and $30 mail-in rebate; the month-to-month plan cost is $50. Similarly, Virgin Mobile is currently offering the LG Optimus (running Android 2.2) and Samsung Intercept (running Android 2.1) for $199.99, with month-to-month plans starting at $25.

Right now, the major U.S. wireless carriers are making considerable revenue off of smartphone customers under two-year contracts. And so far, it's pretty hard to get a higher-end smartphone without a two-year contract in the U.S.

But lower-end smartphones might suffice for many mobile users. That's why offers such as these could alter the U.S. wireless competitive landscape over the next few years.