"Asians are becoming more sophisticated and demanding from their mobile network providers," said Chi Wing Chan, regional director of telecoms & technology at TNS, a global market research company. "With the continuous deregulations and introduction of new networks in Asia such as 3G in Hong Kong and CDMA ix in China, Asia consumers are having more bargaining power over the operators."

Users in Japan and Korea appear most satisfied with their service as just 7-8% of those contacted said they were likely to make a change--half the average. The Korean network providers have the least to worry about with 87% of respondents saying they are not likely to change.

In Hong Kong, a market where it seems consumers switch service providers almost as often as they switch phones, 9% of those surveyed said they were very likely to change networks--three times higher than the average across all 12 regions. Hong Kong is also a market in which consumers apparently know what they want--just 1% said they weren't sure or didn't know if they would change networks. This compares to 24% in Japan who said they weren't sure--more than double the average of 11%. In last year's 11-country survey just 3% said they weren't sure. This more than threefold increase indicates that many are keeping their eye out for a better deal as operators race to rolling out new promotions and services.

While the likelihood of switching networks sometimes differs sharply by region, there were no significant differences by age group, sex or employment level. As one might expect, there was a slight upward trend toward not making a change with the older groups--moving gradually from 73% for the 20-29 age group up to 78% for those 60-69.

Pre-paid users were twice as likely to want to change than post-paid owners. Some 22% of pre-paid customers said they were very or quite likely to switch networks in the next six months. Post-paid users, however, were two times as likely to be unsure of whether would change than their pre-paid counterparts--14% vs 7%.

Churn factors

The top three reasons for wanting to switch were uncompetitive pricing (22%) poor coverage (17%) and bad reception (14%), although there were huge differences between markets. The results, which included only those saying they are likely to change networks, are almost identical to last year, except users seem to be experiencing more reception problems--just 9% in 2003. Surprisingly, poor coverage was cited by 33% of users in Korea as a reason to change networks. Other countries where respondents said coverage was the main reason for changing were Malaysia (37%), India (31%) and Thailand (30%).

In Singapore pricing was by far the most important factor, with 48% indicating price and just 6% citing poor coverage as key drivers for wanting to switch. Uncompetitive pricing was also a key reason in Korea (35%), Thailand (31%) and Australia (31%). Malaysia, Vietnam and India were markets where price wasn't an important factor, with just 11-14% of respondents listing pricing as a reason for switching.

Hanis Harun, TNS regional director of telecoms Asia Pacific and coordinator of the survey, says: "Similar to our study last year, we find that in the more developed telecoms markets, like Hong Kong, Singapore and Australia, churn drivers tend to relate to pricing. While in the less developed telecoms markets like Malaysia, Vietnam and China, the basics of reception and coverage are still the primary reasons for churning."

Interestingly, twice as many pre-paid users (6%) cited problems with billing as a factor for change than post-paid respondents. Considering pre-paid is suppose to be hassle free, this is perhaps an area for operators to explore.

Although bad customer service was cited as a reason for wanting to change networks by just 6% of those surveyed, the figure was more than double that in India (17%), Japan (14%) and Korea (13%). Just 2% of those interviewed in China, Singapore and Thailand said bad service was a factor. An interesting finding is that men were twice as likely as women to list bad service as a reason to change networks.

Only 5% of respondents listed billing problems as a reason to change. India was the only market with a double-digit figure--12% compared to just 1% in Korea.

Among all respondents surveyed the key criteria for selecting a network in the future are superior reception (18%), more competitive charges (15%) and superior coverage (10%). These results are consistent with last year. However, mobile users appear to be more satisfied with their coverage, with the number of respondents citing superior coverage as a key factor cut in half from 2003.

Japanese were the most satisfied with their network quality, with just 3% indicating superior coverage and 5% listing superior reception as factors to selecting a new network. At the opposite end of the spectrum were Thailand, Vietnam and India, where more than 50% of those polled listed coverage and reception as key selection criteria.

Just 1% listed high-speed data/next-generation network as a reason for selecting a network. The low rate was consistent across all 12 markets. Chan noted, "this is evidence that Asia consumers do not buy for technology but the actual benefits such as lower price and the mobility in everywhere."

While there were no differences between men and women or age groups, pre-paid users were more than twice as likely to list superior coverage than postpaid users--14% vs 6%--which is consistent with the 17% who cited poor coverage as a reason for changing networks. The results also showed post-paid mobile owners are interesting in finding a better deal, with 63% indicating more competitive charges as a key selection criteria compared to just 36% for pre-paid.

More dowloads

Among the specific applications used by mobile phone owners, SMS still rules with 78% of those polled using the service. SMS usage was consistently high in most markets, except in Hong Kong where it was almost half the average. China and Thailand both were well below the average at 55% and 52% respectively. At the top, not surprising, were the Philippines (99%), Singapore (92%) and Japan (92%).

Ringtone downloads were a far second with 50% of respondents using them. Usage of these downloads ranged between 62% and 34% in all markets, with the exception of Australia (26%) and New Zealand (27%).

Across almost all 20 application categories there was a slight increase in usage of 1 to 2 percentage points compared to last year. The one area to experience a major shift was downloading/listening to music, with usage jumping to 12% from 3% in 2003. Other significant gains were in online banking/stock trading (7% from 4%), sending emails with attachments (8% from 3%) and sending music and video clips (5% from 1%). The only application to experience a decline was downloading logos/characters, which dropped to 29% from 35% last year.

Consistent gains were seen in usage of many advanced applications, such as MMS (photos, audio and video) and location-based services, across most countries, not just Japan and Korea.

With more multimedia-enabled handsets penetrating the Asian market, the popularity of MMS and MP3 music for mobile phones is finally showing some signs of life. However, Chan points out, "there is still a lack of the next killer apps after SMS."

As expected, the usage patterns varied greatly by market, age as well as payment method. One of the most striking findings was that post-paid respondents used many valued-added applications more than twice as much as pre-paid users (see table above).

While SMS and downloads of ringtones and games were similar among the two groups, post-paid mobile owners were more than two times as likely to send/receive emails with attachments, subscribe to a news service or shop online. The biggest gap between the two groups was with Internet usage--26% of post-paid users said they browsed while just 8% of pre-paid customers did. The only application used more by the pre-paid respondents was instant text messaging or chat mail (10% vs 5%).

A closer look

The survey supported the predictable patterns of usage by age group. SMS usage across all age groups was fairly consistent (70-88%) as was subscribing to news services (14-17%) and online shopping (4-5%), with the young group edging out the other groups in all categories. But those were the few areas of similarity. Twice as many users under 25 years old downloaded ringtones and music, sent photos and browsed the Internet as those 40 and over. Just 8% of the 40+ group downloaded games compared to 33% of those under 25.

The one area where both the 25-39 and 40+ age groups topped the under 25-year-olds was in online banking/stock trading, but by just one percentage point. There was little difference in the applications used by men and women, with the reported use of downloads of ringtones, games and music virtually identical.

Some of the aggregate figures across all 12 markets need to be taken with a grain of salt since there were huge disparities between certain countries, particularly in the value-added and Internet applications. Usage of Internet services in Japan was off the chart in a number of categories in Japan, thus raising the overall average and skewing the results. Most notable was Japanese users' 43% use of Internet browsing--more than double the next closest (Korea with 16%) and four times all the rest.

The situation was the reverse with 44% of Koreans surveyed searching online yellow pages and directories--twice the number in Japan and four times the other 12 markets. Other applications that Japanese respondents used more than two times the average were sending/receiving emails with attachments 16%), online banking (16%) and Internet shopping (10%). The only area where Japan and Korea trailed the pack was instant text messaging--1% and 3% respectively, compared to the 7% average.

"Our findings indicate that mobile data applications are gradually becoming more significant for Asian mobile users," Chan said. "The , and 3G networks and multimedia enabled-mobile handsets are the key drivers for this. To realize the opportunities, it is crucial for operators to market the benefits instead of the technology to the mobile users."

Based on consumer interest, the mobile applications with the potential to grow the fastest are location-based services, video calling, directory services, MMS (photos, audio, video), downloading music and watching real-time TV. Harun notes that, "These are the applications that mobile consumers aspire to use, and it is up to mobile networks to harness this interest with suitable products and pricing."

Satisfied--but still room for churn
Likelihood of changing network in next 6 months

Very likely %
Quite likely %
Not likely 73%
Don't know 11%

Source: TNS Asia Telecoms Index

Note: Table made from pie chart.

Focused on price and quality
Main reasons for wanting to change network

Uncompetitive pricing 22%
Poor coverage 17%
Bad reception 14%
Bad customer service 6%
Billing problems 5%
Poor roaming 2%

Source: TNS Asia Telecoms Index

Note: Table made from bar graph.

Key factor for changing network

Australia Uncompetitive pricing (31%)
China Bad reception (20%)
India Bad customer service (17%)
Korea Uncompetitive pricing (35%)
Malaysia Poor coverage (37%)
Singapore Uncompetitive pricing (48%)
Vietnam Poor coverage (31%)

Source: TNS Asia Telecoms Index

Searching for clarity and low cost
Key criteria for selecting a new mobile network

Superior reception 18%
More competitive charges 15%
Superior coverage 10%
Good customer service 5%
Good promotion 4%
More services/apps 3%
Friends family on network 3%
Subsidized handsets 1%

Source: TNS Asia Telecoms Index

Note: Table made from bar graph.

Paying for added value
Applications usage by payment method

 pre-paid post-paid

SMS 70% 84%
Download ringtones 44% 55%
Browse Internet 8% 26%
Download games 15% 20%
Search yellow pages/directories 13% 24%
Subscribe to news or notices 9% 17%
Send/receive photos 11% 16%
Download/listen to music 13% 11%
Send/receive emails w/ attachments 4% 11%
Use text instant messaging 10% 5%
Conduct online banking/stock trading 2% 10%
Shop at Internet store 2% 5%

Source: TNS Asia Telecoms Index