Subscriber churn in the Australian ISP market

Rapid growth in Internet use, combined with easy market entry by Internet service providers (ISPs), has resulted in a highly competitive supply of Internet services. Australian ISPs range in size from a few large national operators to niche ISPs focused on specialised service. With many ISPs currently not profitable, subscriber retention is an important aspect of survival. This study develops a model which relates the probability of subscriber churn to various service attributes and subscriber characteristics. Estimation results show that churn probability is positively associated with monthly ISP expenditure, but inversely related to household income. Pricing also matters with subscribers preferring ISPs which offer flat-rate pricing arrangements.