Importance of Price in Telecommunications Managers' Choice of Local Access Provider

Abstract

The decision making strategies of telecommunications managers and Chief Information Officers in the USA are changing as new companies are providing local access (residential/office) telephone services in addition to the Regional Bell Operating Companies. The choice of local access providers is critical to a company since they furnish the physical connection between the company's location and the public telephone network. Using experimental research, this paper investigates whether price is an important factor to the telecommunications managers in deciding whether to stay with the current provider or switch to an alternate provider.

Fifty-two telecommunications managers participated in an experiment that provided them with a local access decision situation. The managers were given the opportunity to consider information associated with different decision factors and asked to determine the percent of service they would acquire from each of two competing local access providers. A software recorded actions taken by the managers during the experiment. The managers also ranked the decision factors in a post-experiment questionnaire. The experimental results show the most important decision factors for the managers to be price, technical quality, responsiveness, and maintenance ability. Price emerged as the most important factor in the experiment, although, it was ranked only fourth in the post-experiment questionnaire.