Unisys Telephony magazine survey on customer service and buyer values points to the winners of the telephone wars.

ORLANDO, Fla.--(BUSINESS WIRE)--Nov. 6, 1995--Long distance companies have a very strong position in the minds of customers and will continue to hold that position in a competitive market.

This strength could serve AT&T, Sprint or MCI well in any moves into local telephone or cable television markets, perhaps even overcoming the dominance that current local telephone monopolies have on local markets.

A recent survey of 100 business and 250 residential telephone users sponsored by Unisys Corp. and Telephony and Global Telephony magazines asked respondents to rate their long distance, local telephone, cable and cellular companies on a variety of criteria -- both as they are performing now and on their credibility in providing a range of different services in the future.

"Respondents consistently picked long distance providers in almost every category," said Steven Titch, editorial director for Telephony and Global Telephony magazines. "Incumbents also do well in their respective categories, but long distance does best in the sort of cross-over between local telephone, cable, cellular and long distance service we expect to see in a competitive market."

"More than just a report card, this survey examines the 'buyer values' of today's business and residential customers, providing real insight into what things are most important to the customer," said Patricia Higgins, president, Unisys Communications Line of Business.

"The chief lesson of this survey is that the more you know about your customers, the easier it becomes to provide them with exactly what they want -- when, where and how they want it -- and the more difficult it becomes for a competitor to lure them away."

Despite the respondents general endorsement of the service provided by long distance carriers, the results of the survey make it very clear that many long distance, local telephone, cable and cellular service providers are not meeting even the most basic buyer values for service and reliability, and that no company has effectively established a close relationship with its customers.

Basic buyer values -- what customers really want

o Almost 75% of the residential customers would prefer a

single provider for all their telecommunications needs.

o Despite all the talk about the information superhighway and

video-on-demand, the Unisys/Telephony survey showed these are not

important to residential customers -- only 16% said that such

services are "very important".

o Residential customers are concerned about accurate bills,

service that does not break down and fast fixes -- with only a

single call -- when service fails. Customers are also concerned

about telephone fraud. The precise numbers: Accurate bills --

86% of the respondents listing this attribute as "very

important"; No breakdowns -- 82% list as very important; Fix

breakdowns fast -- 79%; Fix problems with only one call -- 79%;

Protect me from fraud -- 79%.

o Business customers look for reliability of the service and

the time to repair it when it breaks down. In fact, businesses

rank these attributes even higher than the residential customers,

with everything else falling far behind. The top criteria were

reliable service (93% rated "very important"), fast fix for

problems (89%), responsive service (84%) and quality products

(83%).

Long distance is tops, with local telephone a close second

o Long distance gets significantly higher ratings than all

other services, both in terms of overall ratings and on key buyer

values. Business users, for example, rate long distance as two

times better than local telephone service in the critical areas

of reliability (48% "very good" for long distance, versus 23% for

local) and fast response to breakdowns (45% to 23%), and almost

three times better than cellular (48% to 17%, and 45% to 19%,

respectively). Residential customers also give long distance by

far the highest rating in every category, except in providing

educational and entertainment television programming.

o Local telephone companies have more credibility among

residential customers than among business customers. Among

residential customers, local telephone service scored within 15%

of the rating of long distance service on most criteria.

Residential customers also saw the local telephone companies as

being a very credible source of video, long distance, data and

cellular services in the future.

Business is a tougher customer, and sees the local telephone monopoly as a problem

o In general, the business respondents were half as likely as

the residential customers to say that long distance and local

phone companies are doing a very good job at meeting their

telecommunications needs today -- or are able to meet their needs

in the future. Business users also think providers will do best

in the future what they do today -- e.g., that long distance

companies will perform best at providing long distance service.

Residential users were much more willing to accept cross-over.

o Business customers were tough on their local service,

rating it approximately half the quality of that provided by long

distance companies for reliability and responsiveness. The worst

showing by far for the local exchange carriers was reasonable

price -- where the ratio was a dismal .28 of the long distance

rating. Business customers clearly see the monopoly at the local

level as a barrier to reasonable price on telephone service.

o Almost half of all business respondents reported having

switched one or more of their telecommunications providers in the

past two years. This is a much higher rate than that reported by

the residents, and, given the number who say they would probably

switch, businesses will be twice as likely to switch in the

future: 29% of the business versus 18% of the residential

respondents said they would either definitely or probably switch

long distance carriers, with 41% and 28%, respectively, saying

they would switch local telephone service.

Cable is in big trouble

o Cable companies are at risk when deregulation occurs. The

survey shows that their reputation for service is worse than that

of all other communications media. This is reflected in the 79%

of the residential respondents who said that they would

definitely or probably switch cable providers after deregulation.

Cellular companies are at similar risk, with approximately 50% of

the respondents reporting they would switch.

o Cable companies and wireless providers have poor

reputations among customers. Respondents were asked to rate a

broad range of other consumer- and business-related services.

Residential customers rate cable and wireless providers as having

poorer service than the US Postal Service (mean ratings of 3.82

for the USPS, 3.57 for cellular, and 3.42 for cable). The only

service rated worse is that provided by automobile dealerships

(3.05 mean rating).

o Cable television is not even seen as providing good content

by the survey's residential respondents. Cable got poor ratings

in programming, and long distance and local telephone companies

were rated by the respondents as being just as credible in

providing cable service as cable companies. Cable was rated

"very credible" at providing educational and entertainment

programming in the future by only 30% of the respondents,

compared to 26% each for both long distance and local telephone

companies.

AT&T is very strong

o AT&T has earned a great deal of customer loyalty,

especially among business users. Only 15% of the respondents on

the business survey said they would probably switch away from

AT&T. That compares with the 38% who said they would either

definitely or probably switch from MCI and the 41% who thinking

of switching from all other long distance carriers.

o AT&T was the fourth most frequently mentioned provider of

local telephone service, even though AT&T has not offered local

service since the break up of the Bell telephone system in 1984.

AT&T clearly dominates customer mindshare, a dominance made all

the stronger by its continuing advertising and its nationwide

brand identity.

Customer relations -- beyond good service

One area where all telecommunications companies are falling down is in customer relations. Residential customers in particular feel this lack of a strong relationship with providers -- either positive or negative. Respondents were asked to list one thing that a telecommunications company has done to impress them, and similarly, the one thing the company has done to annoy them.

Surprisingly, the number one response from residential customers in both areas, by a wide margin, was "nothing" (35% for impress, 30% for annoy). In comparison, business customers, again by a wide margin, listed "service" as both the number one thing that has impressed them and annoyed them (53% for impress, 45% for annoy).

Given that almost 75% of the residential customers would prefer a single provider of all telecommunications services, there is a real potential opportunity for a company that can make a strong and lasting positive impression on customers, and educate and reassure them about telecommunications products, services and prices.

Respondents say they know what is best for their needs and know whether or not they are getting a good value. Yet, at the same time, respondents say they don't understand telecommunications technology or have a good grasp of the services that are available.

This potential opportunity holds especially true for the long distance companies, which dominate the categories for reliable and responsive service but score weakest of all in relationship building.

The Unisys Customerize process

Unisys undertook the research with Telephony and Global Telephony magazines as part of its ongoing Customerize(SM) research on the best practices of outstanding customer-focused organizations. Customerize, as Unisys defines it, is to make a company more responsive to its customers and better able to attract new ones.

Unisys has incorporated the knowledge and insight gained from in-depth interviews, focus groups and quantitative surveys into a unique process model that allows clients to focus quickly on applying these best practices in the most appropriate areas of their own organizations.

The resulting Customerize Assessment is a targeted evaluation that will accelerate the adoption of world-class customer service practices in any organization.

Survey Process

For the residential study, 250 interviews were conducted nationally between Aug. 7 and Aug. 11, 1995, among equal numbers of male and female heads of household. The interviews were about 30 minutes long and were conducted in the evening. Respondents and their family members could not be current or past employees of a telecommunication or telephone company.

For the business study, 100 interviews were conducted nationally between Aug. 11 and Aug. 22, 1995, with the majority of the interviews in 11 competitive metropolitan markets. The companies interviewed had to have between 100 and 999 total U.S. access lines and not be in the telecommunications business.

The person interviewed was the one responsible for the telecommunication decisions within the company. The average interview was about 35 minutes long.

Both studies were executed by C/J Research of Arlington Heights, Ill.

Telephony -- for today's competitive public network market

Telephony magazine, published weekly by Intertec Publishing Corp., focuses on news and technology issues in telecommunications for more than 50,000 telephone companies, cellular companies and long distance carriers in North America.

Its sister publication, Global Telephony, focuses on telecommunications in the global marketplace. Intertec Publishing Corp., founded in 1886, is a wholly-owned subsidiary of K-III Communications Corp., New York.

One of the largest trade magazine publishers in the United States, Intertec has its headquarters in Overland Park, Kan., and divisional offices in Chicago; Denver; Irvine, Calif.; Minneapolis; and New York City and White Plains, N.Y. Intertec employs more than 750 people and publishes 39 magazines in the United States.

Unisys -- the information management company

As an information management company, Unisys acts as a solutions and systems integrator for business and government, complementing those integration skills with a full range of consulting and implementation services, information technology and vertical industry expertise. The company's perspective extends beyond supplying technology to delivering comprehensive information management solutions.

Unisys Communications Line of Business serves more than 50 leading communications services companies around the world with information management solutions that are transforming customer care, infrastructure and network management, and the delivery of advanced intelligent network services.

Unisys works closely with its clients in the communications services industry to support their efforts to grow market share, exploit new revenue opportunities and efficiently manage their networks.

Further information is available through the Unisys home page on the World Wide Web: http://www.unisys.com -0- Unisys is a registered trademark of Unisys Corp. -0- All other brands and products reference herein are acknowledged to be trademarks or registered trademarks of their respective holders.

CONTACT: Unisys Corp., Blue Bell

Oliver L. Picher, 215/986-5367

Internet: [e-mail]