Do Reductions in Switching Barriers in The US Mobile Service Industry Affect Contract and No-Contract Customers Differently

Abstract

In the past four years, the US mobile phone service industry has implemented changes related to product offerings and competition strategies. Mobile phone service providers have shifted from contract to no-contract plans, separated devices from service costs and begun challenging switching barriers by offering to refund the financial costs of potential switchers. This study examines customers' perceptions of contract and no-contract mobile phone service plans regarding the impact of switching barriers on their decisions to change providers. Consistent with previous research, the study finds that contract and no-contract mobile phone service customers differ significantly in their perceptions of relational benefits, switching costs and availability and attractiveness of alternatives. However, in contrast with previous research, the study observes no significant differences in the length of time they intend to wait before switching and their perceptions of providers' effort to recover a service. Implications of the findings for theory and practice conclude.