Behavior Analysis on Mobile-Carrier Choice Considering Mobile Virtual Network Operators

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1 Behavior Analysis on Mobile-Carrier Choice Considering Mobile Virtual Network Operators Akiya Inoue Department of Management Information Science Chiba Institute of Technology Chiba, Japan Kenichi Kitahara Graduate School of Social Systems Science Chiba Institute of Technology Chiba, Japan Motoi Iwashita Department of Management Information Science Chiba Institute of Technology Chiba, Japan Abstract Due to severe competitive conditions in the mobile phone market, there are a few differences in relation to charges, phones and optional services provided by three major mobilecarriers: docomo, au and SoftBank. Three major mobile-carriers started selling SIM (Subscriber Identity Module Card)-free phones in May, 215. And new Mobile Virtual Network Operators (s) have entered the mobile phone market as new competitors. We analyzed the change of the preference for three major mobile-carriers vs. s. This paper presents the results based on the original market research survey data. We classify customers in two segments: three major-carrier customers and customers. We show the characteristics of two customer segments to understand the future demand of mobile carriers from the viewpoints of decision-making factors and satisfaction levels for mobile carriers. Keywords demand analysis; service-choice behavior modeling; mobile-carrier choice behavior; mobile-phone purchase behavior I. INTRODUCTION The number of mobile phone customers exceeded 154 million as of December, 215 in Japan [1]. The market in Japan is shared by three major mobile-carriers: docomo, au and SoftBank. Although the market still continues growing, it is difficult for mobile carriers to get new customers. The most important objective of a mobile-carrier is to prevent customers from changing to other mobile-carriers. Due to severe competitive conditions in the market, there are a few differences in relation to charges, phones and optional services provided by three mobile-carriers: docomo, au and SoftBank. Therefore, mobile carriers require useful ways to understand the mobilecarrier choice behavior in order to increase the number of customers. We proposed a Framework for Scenario Simulation (FSS) to analyze market structure and estimate service demand [2]-[6]. The objective of the FSS is not to obtain a demand-forecasting result but to simulate scenarios under assumed conditions according to service changes. We analyzed the decision-making processes and factors on mobile-carrier choice behavior and mobile-phone purchase behavior continuously for recent years [7]-[12]. We have proposed the mobile-carrier choice models [8]-[11] to predict the mobile-carrier choice probability under competitive conditions on the basis of Discrete Choice Models [13], [14]. We analyzed the mobile-carrier choice behavior and the mobile-phone purchase behavior considering the situation of the mobile phone market in Japan on the basis of an original survey conducted in February 215. We presented the results in CSI 215 [12]. Due to the entry of new s and the introduction of SIM-free phones, new types of changes occur in the mobile-phone market. We should consider these changes to understand the future market. Under above mentioned circumstances, the purpose of this study is to understand the preference for three major mobilecarriers vs. s considering the current mobile-phone market. In order to achieve the purpose, a new survey was conducted in January 216. We describe the current situation of the mobile phone market in Japan. We analyzed the change of the preference for the mobile carriers including s. This paper presents the results based on the original market research survey data. We classify customers in two segments: three major mobile-carrier customers and customers. We show the characteristics of two customer segments to understand the future demand of mobile carriers from the viewpoints of decision-making factors and satisfaction levels for mobile carriers. Finally, we conclude and discuss topics for future studies. II. MOBILE PHONE MARKET IN JAPAN This section describes the current situation of the mobile phone market in Japan. After the introduction of Mobile Number Portability (MNP) in Japan, the competitive condition around the mobile phone market became severe. Once better charge discounts and mobile /16/$31. copyright 216 IEEE ICIS 216, June 26-29, 216, Okayama, Japan

2 phone discounts for a mobile-carrier are introduced, other mobile-carriers soon follow. The mobile-phone market in Japan changed significantly after the introduction of iphone. This is the specific feature that the share of iphone in the smart phone market is higher than that of Android Phones in Japan. The effect of iphone was an incentive factor for SoftBank and au, until docomo started to provide iphone in 213. The bundle service of fixed-line Internet access service and smartphones was also an incentive factor for au and SoftBank, until docomo started to provide the service in March 215. As the result, there are few differences in relation to charges, phones and optional services provided by three mobile-carriers: docomo, au and SoftBank. The actual distribution in the mobile phone market shown in Table I [1]. The share of the market hardly changes for several years. behavior for mobile carriers and mobile phones considering the current mobile-phone market including the entry of new s and the introduction of SIM-free phones. Number of Customers (million) Rate of Customers Number of Customers Rate (%) TABLE I. ACUTUAL SHARE OF MOBILE CARRIER IN DECEMBER, The smart phone market in Japan is growing rapidly. The share of smart phones became more than 5% in 215. Almost all of smart-phone users contract an optional service to use packet data service with fixed charge. The average monthly charge of a smart phone is about 8, yen. Therefore, the total communications costs in the household increase in proportion to the number of smart-phone users. Prime Minister Shinzo Abe ordered Internal Affairs and Communications Minister to consider ways to reduce the mobile phone costs on households in September, 215. A government advisory panel by the communications ministry in Japan urged three major mobile-carriers to offer cheaper charge plans. The key points of panel s report released in December, 215 are in the following: Mobile Carrier Number of Customers Share docomo 69,61,6 45.1% au 45,24,9 29.3% SoftBank 39,576,9 25.6% Total 154,419,4.% To introduce cheaper charge plans for light data users who use 2 gigabytes or less of data each month. To rectify excessive mobile-phone discounts such as free mobile phones. To promote the competition by the entry of new s and the introduction of SIM-free phones. Three major mobile-carriers introduced new plans for light data users this year. And these carriers stopped selling mobile phones for free. These carriers are expected to reduce sales incentives and other discounts so that mobile phone prices will rise by around, yen to 2, yen. These change will prevent customers from not only changing to other mobilecarriers, but also renewing their mobile phones. On the other hand, it is expected to increase the number of customers who include s in the alternatives on mobile-carrier choice behavior. The number of customers exceeded million last year and was up 29% from the year before shown in Fig.1. We should understand the preference for the customer choice Fig. 1. Number of customers. III. SUMMARY OF SURVEY The original survey was conducted to analyze the preference for the customer choice behavior for mobile carriers and mobile phones in January 216. Sample data were collected by using the Web interview system provided by NTT Com Online Marketing Solutions Co. The sampling was carried out on the basis of the following requirements. 3/214 6/214 9/214 12/214 3/215 6/215 9/215 12/215 Business customers are excluded. The customers are limited to decision-makers to choose services and their carriers in their household. The mobile customers are not only three mobilecarriers: NTT docomo, au by KDDI, and SoftBank, but also customers including SIM-free phone users. A minimum number of individuals is specified for each mobile-carrier (more than 3 individuals for docomo, au, and SoftBank, respectively) and the others (more than individuals for s). There is no requirement for samples in relation to the other demographic factors such as age, gender, area, income and occupation. The number of individuals in the sample by gender category and age category are shown in Table II and Table III, respectively. Table IV indicates the number of individuals in each sample data by mobile-carrier. Distribution of individuals in the sample is different from the actual distribution in the mobile phone market shown in Table I. The definition of s in this paper means the other carriers except three major mobile-carriers. s include a Mobile Network Operator (MNO) such as Y!mobile. The mobile carrier in Table IV means the carrier of a mobile phone used mainly. The number of customers who use both three major mobile-carriers and s are shown in Table V. It is shown that about 2 % of customers using mainly s phones use simultaneously phones provided by three major mobile-carriers.

3 We define two customer segments: three major mobilecarrier customers and customers. Customers who contract with both major mobile-carriers and s shown in Table V are excluded in the following studies. Table VI shows the sample size of each segment. Three major mobile-carrier customers and customers are called and, respectively in this paper. that there is no great difference for male customers in age category. Over 5s of female customers prefer three major mobile-carriers to s. Figure 3 shows the customer's own monthly charge. It is shown that the monthly charge of more than 9 % of is less than 5, yen. TABLE II. SAMPLE SIZES BY GENDER CATEGORY Gender Number of Samples Share Male % Female % Total 1,197.% TABLE III. SAMPLE SIZES BY AGE CATEGORY Age Number of Samples Share s 6.5% 2s 5 4.2% 3s % 4s % 5s % Over 6s % Total 1,197.% Fig Age structure of all customers in each segment. TABLE IV. SAMPLE SIZES BY MOBILE CARRIER Mobile Carrier Number of Samples Share docomo % au % SoftBank % s % Total 1,197.% Fig Age structure of male customers in each segment. TABLE V. CUSTOMERS USING MULTIPLE CARRIER PHONES Mobile Carrier Main Use Three Major Mobile-Carriers & s docomo (5.5 %) au (6.1 %) SoftBank (5.8 %) s (2.4 %) Total 1,197 (8.4 %) Fig Age structure of female customers in each segment. TABLE VI. SAMPLE SIZES BY CUSTOMER SEGMENT Customer Segment Number of Samples Three Major Mobile-Carrier Customers ( ) 929 Customers ( ) 168 Total 1,97 IV. CHARACTERISTICS OF TWO CUSTOMER SEGMENTS We analyzed the difference in the attribute of two customersegments: and from the viewpoint of age and gender categories. The results are shown in Fig. 2. It is found Fig. 3. Customer s own monthly charge.

4 V. MOBILE-CARRIER CHOICE BEHAVIOR ANALYSIS A. Decision-Making Factors for Mobile-Carrier Choice Table VII shows the decision-making factors for mobilecarrier choice. Those decision-making factors are the reasons why a customer decided to create a contract with the current mobile-carrier. We asked the value of the important level for each factor by 5 levels: very important, important considered, considered a little, and unimportant. Figure 4 shows the percentage of the important levels. The percentage of the important levels means the rate of customers who answer very important and important for each decision-making factor. We analyzed the differences in the important levels by two customer segments: and. The results are sorted in the order of decreasing the percentage value of. It is found that it is quite different in the important levels of decision-making factors between and. The difference in the important levels of each decision-making factor between and is shown in Table VIII. The characteristics of decision-making factors are summarized as below: TABLE VII. tend to choose the same mobilecarrier for the entire family. would like to continue chargediscount-service depends on contract duration and loyalty program. is the most important factor for almost all of customers. customers do not think that charge-discountservice depends on contract duration and loyalty program are important. Decision-making Factors Same carrier as family Mobile phone service area Time and effort for carrier change Contract duration dependent service Loyalty program Satisfaction Support for maintenance and failure Customer service in carrier shop Bundle service Carrier-specific services and contents DECISION-MAKING FACTORS FOR MOBILE-CARREIR CHOICE Meaning Entire family is using the same carrier. is low. Mobile phone service area is wide. I get tired of changing mobile carrier for various reasons. I would like to carry over contract duration for charge discount service. I would like to carry over Loyalty program. I am satisfied with current mobile phone. is good. Support service for maintenance and failure is good. Attitude of salespersons and shop assistants I can use bundle service with smart phones and fixed-line Internet service. Carrier-specific services and contents are attractive. Decision-making Factors Same carrier as family Fig. 4. Important levels of decision-making factors of each customer segment. TABLE VIII. Mobile phone service area Time and effort for carrier change Contract duration dependent service Loyalty program Satisfaction Support for maintenance and failure Customer service in carrier shop Bundle service Carrier-specific services and contents Percentage of important levels (%) IMPORTANT-LEVEL DIFFERENCE BETWEEN AND Decision-making Factors Difference (- ) Same carrier as family 29.2 Loyalty program 28.2 Contract duration dependent service 25.4 Time and effort for carrier change 18.5 Customer service in carrier shop 12.7 Support for maintenance and failure 11.9 Bundle service 11.7 Mobile phone service area Carrier-specific services and contents 5.5 Satisfaction 2-42 B. Satisfaction Levels for Mobile-Carrier We asked the value of the satisfaction level for the current mobile-carrier from eight factors. The satisfaction levels are defined by five levels: very satisfied, satisfied, nothing to complain, dissatisfied, very dissatisfied. We analyzed the satisfaction levels and the dissatisfaction levels. The satisfaction level of each factor indicates the percentage of customers who are very satisfied and satisfied with the factor of the current mobile carrier. The dissatisfaction level of each factor indicates the percentage of customers who are dissatisfied and very dissatisfied with the factor of the current mobile carrier. The results of the satisfaction levels for and are shown in Fig. 5. The results of the dissatisfaction levels for and are shown in Fig. 6. The satisfaction levels of are higher than those of in relation to all factors except two factors: support for maintenance and failure and customer service in carrier shop. It is shown that the satisfaction level of monthly charge for is outstandingly high. As the satisfaction level of monthly charge for is low, the dissatisfaction level of monthly charge for is high. This is the reasonable result. On the other hand, the dissatisfaction levels of all factors for including two factors: support for maintenance and failure and customer service in carrier shop are low.

5 Customer service in carrier shop Surpport for mantenance and failure Available mobile phones Mobile service area Available contents Data communication speed Fig. 5. Satisfaction levels of each customer segment. Fig. 7. Contract intention with s. Customer service in carrier shop Surpport for mantenance and failure Available mobile phones Mobile service area TABLE IX. SAMPLE SIZES BY CUSTOMER SEGMENT OF Customer Segment Number of Samples All of 929 with contract intention for s 395 without contract intention for s 534 Available contents Data communication speed Fig. 6. Dissatisfaction levels of each customer segment. C. Preference for s We asked whether or not you will plan to contract with s in the future. Figure 7 shows the results for. It is found that the rate of users who would like to or may contract with s in the future is more than 4%. We classify the customer segment, into two customer segments: with contract intention for s and without contract intention for s based on the result. Table IX shows the sample size of each segment. It seems that decision-making factors for choosing a mobile carrier vary from customer to customer, even if the customers contract with the same carrier. We analyzed the difference in the important levels by two customer segments of : customers with contract intention for s and customers without contract intention for s. We show the result in Fig. 8. It is found that the characteristics of the decisionmaking factors of with contract intention for s is similar to that of customers. Decision-making Factors Same carrier as family Mobile phone service area Time and effort for carrier change Contract duration dependent service Loyalty program Satisfaction Support for maintenance and failure Customer service in carrier shop Bundle service Carrier-specific services and contents Percentage of important levels (%) All of Fig. 8. Important levels of decision-making factors of. with contract intention for s without contract intention for s We asked the reasons why you do not contract with s to understand the preference of for s. In other word, the reasons why you use only three major mobile-carriers are expressed in Table X. The results are sorted in the order of decreasing the percentage value of. We analyzed the difference between two customer segments: without contract intention for s and with contract intention for s. Table XI shows the result of the difference of each reason. The positive value of the difference expresses the characteristic of the customer segment, without contract intention for s. The negative value of the difference expresses the characteristic of the customer segment, with contract intention for s. It implies that are more likely to contract with s, if the reasons of which the negative value is big are resolved.

6 TABLE X. REASONS OF USING ONLY THREE MAJOR MOBILE-CARRIERS Reasons All of without contract intention for s with contract intention for s There are no particular reasons I feel insecure for the other carriers except three major carriers: docomo, au and SoftBank I do not know that the service area of s is the same level as that of three major carriers I do not know that the communications quality of s is the same level as that of three major carriers cheaper price plans. The panel issued the report at the first step in December, 215. As the results, three major mobile-carriers are trying to rectify excessive discounts such as free mobile phones for those who switch carriers and to introduce lower fees plan for light users of data communication services. We should consider these changes to understand the future market. We will continue to study new types of customer segments and to analyze the preference for mobile services and the mobilecustomer choice behavior according to the new conditions. Cancelation charge is necessary to change current carrier I fell difficult to create a contract with s except three major carriers I do not know that the Data transmission speed of s is the same level as that of three major carriers Mail address cannot be carried over There are few or no carrier shops There are a few kinds of mobile phones TABLE XI. DIFFERENCE BETWEEN TWO CUSTOMER SEGMENTS OF Reasons Difference (%) I feel insecure for the other carriers except three major carriers: docomo, au and SoftBank..2 There are no particular reasons. 8.7 I do not know that the service area of s is the same level as that of three major carriers..2 Cancelation charge is necessary to change current carrier. -.7 I do not know that the communications quality of s is the same level as that of three major carriers Mail address cannot be carried over I do not know that the Data transmission speed of s is the same level as that of three major carriers There are few or no carrier shops There are a few kinds of mobile phones I fell difficult to create a contract with s except three major carriers -5.1 VI. CONCLUSION The purpose of this study is to understand the mobile-carrier choice behavior considering s. We classified mobile customers into two customer segments: three major mobilecarrier customers () and customers (). We analyzed the differences between 3 and from the viewpoints of the decision-making factors for mobile-carrier choice and the satisfaction levels for mobile services. Moreover, in order to understand the potential demand for s, we classified the customer segment, into two customer segments: with contract intention for s and without contract intention for s. It is found that the satisfaction levels of are higher than expected, and the dissatisfaction levels of are low. This implies that customers would like to continue the contract with s. The results in relation to customers show that the number of customers is expected to increase in the future. A government advisory panel by the communications ministry in Japan urged three major mobile-carriers to offer REFERENCES [1] Telecommunication Carriers Association in Japan, Number of subscribers by Carriers (as of Decmber, 215): [2] A. Inoue, S. Takahashi, K. Nishimatsu, H. 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