UCC's Quality of Service survey shines a spotlight on MTN's challenges in a crowded market

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This week the Ugandan regulator UCC presented research findings on the quality of service levels for mobile, fixed and Internet services as part of its wider work on developing its responsiveness to consumers. There were worrying signs for the market’s top dog, MTN. The research was carried out by local company Knowledge Consulting and Russell Southwood listened to its presentation by Dr Tusu Tusubira.

The research results presented an interesting paradox for although the market leader MTN does well amongst consumers (witness its leading position), it does so on the basis of not actually delivering the very things customers say they want. How so?

At the back end of Tusubira’s presentation was a slide showing UCC’s own measures of performance standards: in each case, a lower number represents higher performance. On TCH congestion, the measure was set at 0.5, MTN achieved well outside the standard at 3.71. Others were closer but only utl was close to meeting it: Zain (0.97); Warid (0.79) and utl (0.53). On call drop rates, the standard was set at 2 and all operators were comfortably within the standard. On call block rates, the standard was set at 2 and all operators were comfortably within the standard except MTN at 3.33. As Tusubira argued, maybe if a standard is easily being met, it could improved upon.

One of the key factors of consumer dissatisfaction identified below is network congestion and access to the network and on the basis of this factor alone, MTN should be losing customers. Operators know that if you are getting high levels of congestion on the network, it is clear that it is because you are not investing enough resources in the network.

Therefore cynics might accuse MTN of simply taking the money and running. However it was clear from discussions after the workshop that MTN’s staff are very aware that although they have the winning position that they cannot expect to retain it unless they start making changes. Nevertheless the suspicion lingers that MTN is “sweating” its assets before re-investing.

In terms of operators used by respondents, the breakdown was as follows: MTN (65%); utl (17%); Zain (10%); Warid (7%) and Orange (1%). Although this overstates MTN’s market position, it broadly mirrors the market positions of the players. On fixed lines, it was as follows: utl (61%) and MTN (31%). Fixed wireless phones were as follows: Zain (6%) and Warid and Orange (1% respectively).

The majority of respondents said they chose their mobile provider on the basis of reputation (38.1%). Other factors included: flexibility and better customer support (26%); overall image (19.2%) and lastly, technical capability (14.6%).

The puzzle here is that anyone will tell you whilst MTN has many virtues, its network quality of service (particularly in Kampala) is terrible. So the paradox is that you have customers who know that service quality is low but continue to rate highly the reputation of MTN. On the basis of a recent visit to Ghana, the same is true there. It says something about MTN’s success at creating positive “mindspace” through its media and sponsorship.

Internet users among the respondents were significantly more concerned with reputation (48.7%). Other factors included: flexibility and customer support (34.5%); overall image (16.6%); and technical capability (16.6%).

In both cases (mobile and Internet) consumers either don’t understand or don’t want to have to understand the technical capabilities upon which some of the key issues of reputation are settled.

Indeed, the extent of network coverage rather than voice quality was the most important factor for respondents: network coverage (69.4%); voice quality (18%) and ease of access (9.7%). Here again, market leader MTN came last amongst those named as best for voice quality: Zain (26.5%), utl’s Mango (21.7%), Warid (17.2%) and MTN (16.5%).

In terms of what made respondents dissatisfied, it was overwhelmingly network congestion and access to the network problems (53%). Other factors included: coverage levels (27%), call drops (11%) and voice quality (8%).

Interestingly, more recent entrants have both lower on and off network prices. Ranked by off network call levels prices were as follows (all in Ugandan shillings): utl Vibe: On 8 vs Off 11; MTN On 7 vs Off 11; Zain 35s: On 8 vs Off 10; Warid: On 9 vs Off 9; and Orange On 8 vs Off 8. So there is clear price differentiation of the kind not found in less competitive markets and new entrants have to offer lower prices to enter. Although despite blanket poster coverage in Kampala, progress has been slow for Orange.

Around 70% were happy with the information they were provided with: easy to find (75.6%); answers my questions (70.6%) and easy to understand 68.9%). But the number dropped to 61.1% when asked about the level of customer service when contacted. Also it’s clear that these numbers – particularly on information – would be lower if the education levels of the sample had reflected the national average.

Just over a quarter of the survey’s respondents had more than one SIM card: 22% had 2 SIM cards; 3% had three SIM cards; 1% had more than 3 SIM cards. This reduces the actual level of individual subscribers (currently at around 9 million) by a factor of 0.75.

These figures should be a wake up call to all mobile operators because it means that over a quarter of customers have no fundamental loyalty to a provider. They are simply playing the field in terms of using tactical marketing offers. And as we shall see below, this could be the Achilles heel for MTN. It also tells you that that the blizzard of tactical marketing promotions (“make me an offer I can’t understand”) are far from achieving customer loyalty and market share.

Indeed there are no operators that currently have a pricing strategy that is worth the paper it is printed on. Furthermore new entrants like Orange might mouth the usual rhetoric about quality of service and value but actually they are competing on price to get a foothold.

Levels of satisfaction with service are based upon expectations. If there are rising expectations, then consumers will be more demanding about what they want. When the mobile operators first rolled out, users were so grateful to have some service at last that its quality and their expectations of it were less important. However, as they negotiate the best deals in a crowded market, they continue to look for better value and will become more demanding.

So why don’t very unhappy MTN customers desert in droves? Well, when you’ve got lots of friends, do you want to have to change your number and let everybody know you’ve done so? Probably not. Nevertheless, Warid is offering potential waverers the opportunity to tell all those they call regularly about their new number.

UCC is considering number portability and if introduced, it will probably allow unhappy MTN users to churn to other providers. But the top dog is unlikely to lie down while this is happening so watch this space.

The survey was based on 507 respondents from 11 districts and the socio-demographics of the respondents matched national statistics except the sample was both more educated and men were disproportionately represented: 63.9% men to 36.1% women.