Telephone Competition:
A Study of Three Markets
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."
|   | 3 Market TotalChicago | Detroit/Grand Rapids | Milwaukee | |
| BASE | 1512 | 500511 | 501 | |
| % | % | % | % | |
| Yes | 30 | 36 | 25 | 23 |
| No | 6964 | 74 | 76 |
| 3 Market Total | $15K or less | $15,0001 to $25K | $25,001 to $35k | #35,001 to $50k | $50,001 or more | |
| BASE | 1512 | 150185 | 194 | 251 | 519 | |
| % | % | % | % | % | % | |
| Yes | 30 | 23 | 27 | 29 | 33 | 35 |
| No | 6977 | 72 | 71 | 66 | 64 |
| H.S. or less | Some College | College Grad or more | |
| BASE | 541 | 409 | 549 |
| % | % | % | |
| Yes | 26 | 32 | 36 |
| No | 7367 | 64 |
| Less than $50 | $50 - $99 | $100 or more | |
| Base | 642 | 468277 | |
| % | % | % | |
| Yes | 29 | 29 | 37 |
| No | 70 | 70 | 62 |
| White | Black | Hispanic | |
| Base | 1147 | 202 | 71 |
| % | % | % | |
| Yes | 28 | 39 | 42 |
| No | 7259 | 56 |
| 3 Market Total | Chicago | Detroit/Grand Rapids | Milwaukee | |
| Base | 446 | 180 | 144 | 122 |
| % | % | % | % | |
| Self | 42 | 44 | 38 | 41 |
| Someone else | 5147 | 59 | 49 | |
| Both | 68 | 3 | 9 |
| 3 Market Total | Chicago | Detroit/Grand Rapids | Milwaukee | |
| Base | 446 | 180 | 144 | 122 |
| ;NBSP | % | % | % | % |
| Long distance | 65 | 64 | 64 | 76 |
| Regional toll | 67 | 4 | 1 | |
| Both | 2221 | 26 | 17 |
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.
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.
| 3 Market Total | Chicago | Detroit/Grand Rapids | Milwaukee | |
| Base | 1512 | 500 | 511 | 501 |
| % | % | % | % | |
| Agree "competition among telephone companies makes prices lower" | 65 | 69 | 57 | 71 |
| Agree "having more than one telephone company makes billing confusing" | 64 | 64 | 66 | 60 |
| "Very" or "somewhat likely" to purchase all services from one company | 78 | 77 | 79 | 83 |
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:
Chicago, IL PMSA
Milwaukee, WI PMSA
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:
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.
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.