The importance of loyalty in service industries is widely recognized, and previous studies
show consumer trust and perceived costs affect loyalty. The interplay of costs, trust and
loyalty has also been shown for the telecommunications industry, but the recent smartphone
revolution challenges existing theorizing. As consumers with smartphones collect
and share more data including location information, increasing privacy and security risks
make consumer trust even more important. Moreover, consumers with smartphones spend
less on voice calling and text messages since they switch to over-the-top services, which
changes the relationship that consumers have with their mobile operator. This paper studies
the impact of perceived costs and trust in operators on the loyalty that consumers
express towards their operator. We analyse a representative sample of 549 Dutch consumers,
of which 25% own a smartphone. The effect of trust on loyalty is significant and
consistent across smartphone owners and non-owners. Perceived costs have an indirect
effect on loyalty, mediated by trust, but this indirect effect is fully moderated by smartphone
ownership. Practical implication is that maintaining consumers’ trust continues to
be important to retain their loyalty, and especially smartphone owners should be offered
tariffs that consumers consider fair.