The average cell phone customer now switches carriers as soon as his or her second two-year contract is up. That startling decline in loyalty is causing wireless companies to rethink the way they do business, according to a new study released Monday.
The average length of relationships between carriers and their under-contract customers fell to an all-time low of 48 months last year, PricewaterhouseCoopers' found in the latest edition of its North American wireless industry survey. The comprehensive annual study includes data from all of the region's major carriers.
The trend has building for a few years. What's shocking is how quickly it accelerated. In 2010, the average customer-carrier relationship was 59 months -- nearly a full year longer.
The most precipitous decline came among smaller cell phone companies, but large carriers like Verizon, AT&T and Sprint didn't fare much better. Their average relationships with customers under contract lasted just 51 months.
"Competition is fierce, and pricing is a key element," said Pierre-Alain Sur, global communications industry leader at PwC. "That accelerates the jump from one carrier to another at the end of a contract period."
If customers are going to cut and run frequently, carriers will need to rethink their pricing models -- particularly when it comes to expensive smartphones.
They've been encouraging customers to upgrade to smartphones because the devices bring in a new revenue stream. Most providers charge smartphone customers a premium for data usage, with plans averaging about $25 per month.