An-Najah National University Faculty of Graduate Studies The Role of Quality in Bit Stream Access Internet Service Providers on Customer’s Loyalty in Palestine By Ashraf Abed-Alrahman Abed-Aljaleel Demaidi Supervisor Dr. Ramiz Assaf This Thesis is Submitted in Partial Fulfillment of the Requirements for The Degree of Masters of Engineering Management, Faculty of Graduate Studies, An-Najah National University, Nablus-Palestine. 2017 II The Role of Quality in Bit Stream Access Internet Service Providers on Customer’s Loyalty in Palestine By Ashraf Abed-Alrahman Abed-Aljaleel Demaidi This thesis was defended successfully on 15 / 8 /2017 and approved by: Defense committee Members Signature  Dr. Ramiz Assaf /Supervisor …..……………..  Dr. Wasel Ganem /External Examiner …………………  Dr. Yahya Saleh /Internal Examiner ………………… III Dedication I dedicate this work to my wife and parents for their consistent support and prayers. IV Acknowledgement First and foremost, I express my gratitude to Allah for affording me the opportunity to continue my education and complete my thesis on a topic which is of importance to my country and people. I would like to express my deepest gratitude and appreciation to all who participated in putting this thesis together. Special thanks and appreciation go to Dr. Ramiz Assaf for his guidance, time and his valued input, He supported me throughout this undertaking, and helped me make this thesis a rewarding experience and contributed greatly in preparing me for the professional and academic work ahead. I would also like to thank Dr. Masud Abdellatif for his experience, advice, feedback, and contribution to this study. I also extend my thanks to the dissertation committee members for taking the time in reviewing and constructively criticizing this work. Special thanks and appreciation to all individuals who provided me with their support, encouragement, and thoughts. I cannot end without thanking my family, whose constant encouragement and love I have relied on throughout the execution of this work. V اإلقرار العنوان تحمل التي الرسالة مقدم أدناه الموقع أنا The Role of Quality in Bit Stream Access Internet Service Providers on Customer’s Loyalty in Palestine ,ورد حيثما إليه اإلشارة تمت ما باستثناء الخاص, جهدي نتاج هو الرسالة عليه شملت ما بأن أقر لدى بحثي أو علمي لقب أو درجة أي لنيل قبل من يقدم لم منها جزء أي أو ككل الرسالة هذه وأن بحثية أو ميةعل مؤسسة أي Declaration This work, which is provided in this thesis, is the work of the researcher, unless where referenced, and has not been submitted elsewhere for other degrees or qualification. الطالب: اسم Student's Name: :Signature التوقيع: لتاريخ:ا Date: VI Abbreviations Abbreviation Definition 3G Third Generation ADSL Asymmetric Digital Subscriber Line ANOVA Analysis Of Variance BSA Bit Stream Access CRM Customer Relationship Management Software DSL Digital Subscriber Line EDGE Enhanced Data Rates for GSM Evolution GSM Global System for Mobile Communications ICT Information And Communications Technology IP Internet Protocol IPTV Internet Protocol Television ISP Internet Service Provider IT Information Technology IVR Interactive Voice Response MB Mega Byte MPLS Multiprotocol Label Switching MTIT Ministry Of Telecommunication And Information Technology N Number Paltel Palestinian Telecommunications Company R2 Coefficient Of Determination SQ Service Quality SPSS Statistical Package For The Social Sciences SD Standard Deviation VDSL Very high bitrate Digital Subscriber Line VIF Variance Inflation Factor WiMAX Worldwide Interoperability For Microwave Access WWW World Wide Web VII Table of Contents Dedication --------------------------------------------------------------- III Acknowledgment ------------------------------------------------------- IV Declaration -------------------------------------------------------------- V Abbreviations ----------------------------------------------------------- VI Table of Contents ------------------------------------------------------- VII List of Tables ----------------------------------------------------------- XI List of Figures --------------------------------------------------------- XIII List of Equations ------------------------------------------------------- XIV List of Appendices ---------------------------------------------------- XV Abstract ------------------------------------------------------------------ XVI Chapter one: Introduction ------------------------------------------- 1 1.1 Chapter Overview ---------------------------------------------- 2 1.2 Services Background ------------------------------------------- 2 1.3 SERVQUAL Modle ------------------------------------------ 4 1.4 Telecom Industry ------------------------------------------------ 5 1.5 Broadband Internet ---------------------------------------------- 7 1.5.1 Digital Subscriber Line (DSL) ------------------------- 8 1.5.2 Cable Modem --------------------------------------------- 9 1.5.3 Fiber Optic ------------------------------------------------ 9 1.5.4 Wireless Internet ----------------------------------------- 10 1.5.5 Satellite ---------------------------------------------------- 11 1.5.6 Broadband Over Power Line (BPL) ------------------ 13 1.6 A Brief Overview of the Internet Service Sector in Palestine 13 1.7 Problem Statement ---------------------------------------------- 17 1.8 Research Questions --------------------------------------------- 18 1.8 Significant of the Research ------------------------------------ 19 1.9 Expected Outcome ---------------------------------------------- 19 VIII 1.10 Structure of the Thesis ------------------------------------------ 20 Chapter Two: Literature Review ------------------------------------ 21 2.1 Chapter Overview ----------------------------------------------- 22 2.2 Concepts Related to Service Management ------------------ 22 2.2.1 Service Concept ------------------------------------------ 22 2.2.2 Service Versus Product ---------------------------------- 22 2.2.3 Service Quality -------------------------------------------- 23 2.3 Measuring Service Quality (SERVQUAL Scale) ------------ 25 2.4 Dimension of SERVQUAL ------------------------------------ 27 2.5 Levels of Service Quality---------------------------------------- 29 2.6 Customer Loyalty------------------------------------------------- 29 2.6.1.Framework for Measuring Customer Loyalty in Telecommunication Market ----------------------------- 31 2.7 Customer Satisfaction ------------------------------------------- 33 2.8 Interaction between Satisfaction and Quality ----------------- 34 2.9 Linking Service Quality, Customer Satisfaction and Loyalty 34 2.10 Research Theoretical Model ------------------------------------- 40 Chapter Three :Research Methodology ---------------------------- 41 3.1 Chapter Overview ------------------------------------------------ 42 3.2 Types of Research ------------------------------------------------ 42 3.3 Approach of Research ------------------------------------------- 44 3.3.1 Qualitative Approach ------------------------------------- 44 3.3.2 Quantitative Approach ------------------------------------ 45 3.3.3 Mixed Approach ------------------------------------------ 45 3.4 Strategy of Research --------------------------------------------- 46 3.4.1 Research Method ------------------------------------------ 46 3.5 Research Population and Sample ----------------------------- 47 3.5.1 Research population -------------------------------------- 47 IX 3.5.2 Research Sample ----------------------------------------- 48 3.5.3 Data Collection ------------------------------------------ 49 3.6 Questionnaire Developments ---------------------------------- 51 3.7 Data Analysis Framework ------------------------------------- 57 3.8 Validity ---------------------------------------------------------- 58 3.9 Reliability ------------------------------------------------------- 59 Chapter Four: Results and Discussion-------------------------------- 61 4.1 Overview----------------------------------------------------------- 62 4.2 Descriptive Analysis of Sample -------------------------------- 62 4.3 Descriptive Analysis of Study Variables ---------------------- 67 4.3.1 Empathy ---------------------------------------------------- 67 4.3.2 Reliability ------------------------------------------------- 68 4.3.3 Responsiveness ------------------------------------------- 69 4.3.4 Tangibility ------------------------------------------------- 70 4.3.5 Assurance -------------------------------------------------- 71 4.4.6 Customer Satisfaction ----------------------------------- 72 4.3.7 Loyalty ----------------------------------------------------- 73 4.3.8. Summary of the Descriptive Analysis of the Study Variables -------------------------------------------------------- 73 4.4 Ranking Quality Service Dimension ------------------------- 75 4.5 Summary of the Respondents’ Comments ------------------- 75 4.6 Research Hypotheses Tests ------------------------------------- 77 4.6.1 Hypotheses (1) --------------------------------------------- 77 4.6.2 Hypothesis (2) -------------------------------------------- 83 4.6.3 Hypothesis (3) -------------------------------------------- 87 4.7 Chapter Summary 96 Chapter Five: Conclusions and Recommendations --------------- 98 5.1 Overview --------------------------------------------------------- 99 X 5.2 Conclusions ------------------------------------------------------ 99 5.3 Implications ------------------------------------------------------ 103 5.3.1 Managerial Implications ----------------------------------- 103 5.3.2 Technical Implications ------------------------------------ 104 6.3 Recommendations ---------------------------------------------- 106 6.4 Limitation -------------------------------------------------------- 106 6.5 Future Research ------------------------------------------------- 107 References --------------------------------------------------------------- 109 Appendices -------------------------------------------------------------- 122 Appendix A: Study Questionnaire ---------------------------- 122 Appendix B: SPSS Results ------------------------------------ 128 ب ----------------------------------------------------------------------- الملخص XI List of Tables N Subject Page 2.1 Summary of the major findings of the consulted literature 38 3-1 Internet service providers in West Bank 48 3-2 The questioner references 52 3-3 Degree level 58 3-4 Cronbach’s Alpha Test 60 4-1 Demographic Information of the respondents 63 4-2 Mean, SD, rank, and level of Empathy. 67 4-3 Mean, SD, rank, and level of Reliability 68 4-4 Mean, SD, rank, and level of Responsiveness. 69 4-5 Mean, SD, rank, and level of Tangibility. 70 4-6 Mean, SD, rank, and level of assurance. 71 4-7 Mean, SD, rank, and level of customer satisfaction. 72 4-8 Mean, SD, rank, and level of loyalty. 73 4-9 Summarize of descriptive analysis of study variables. 74 4-10 Ranking the quality dimension 75 4-11 Residual statistics for H1 78 4-12a Collinearity test of the impact of quality on satisfaction 80 4-12b Summary result of the impact of quality on satisfaction 80 4-12c ANOVAa result of the impact of quality on satisfaction 81 4-12d Regression test of the impact of quality on satisfaction 81 4-13 Residual statistics for H2 84 4-14a Summaryb of regression test applied on hypothesis H2 85 4-14b Result of ANOVA test applied on hypothesis H2 86 4-14c Regression test between satisfaction and loyalty 86 4-15 Residual statistics for H3 88 4-16a Model Summary applied on hypothesis H3a 89 4-16b ANOVA test applied on hypothesis H3a 90 4-16c Regression test of the impact of quality on loyalty 90 4-16d Modified regression test of the impact of Quality on loyalty. 91 XII 4-17a Model Summary of multiple regression test of independent variables (empathy, responsiveness, tangibility, assurance, and satisfaction) on customer loyalty 92 4-17b ANOVA test for the effect of empathy, responsiveness, tangibility, assurance, and satisfaction on loyalty 93 4-17c Regression test for the effect of empathy, responsiveness, tangibility, assurance, and satisfaction on loyalty 94 XIII List of Figures NO Subject Page 2.1 SERVQUAL Model Gap 26 2.2 Measuring Quality Gaps using SERVQUAL scale 28 2.3 Research Theoretical Model 40 3.1 Research Methodology 47 4.1 Scatter plot for H1 78 4.2 Normal probability plot for H1 79 4.3 Conceptual model for the result of quality service dimensions effect on customer satisfaction. 81 4.4 Scatter plot for H2 84 4.5 Normal probability plot for H2 85 4.6 Conceptual model for the result of customer satisfaction effect on customer loyalty 87 4.7 Scatter plot for H3 88 4.8 Normal probability plot for H3 89 4.9 Conceptual model for the result of quality effect on customer loyalty 92 4.10 Proposed conceptual model 95 XIV List of Equations Equation 3.1 Survey Sample Size ............................................................... 49 Equation 3.2 Internal Class of Degree Level .............................................. 57 Equation 4.1 Multiple Linear Regression .................................................. 77 Equation 4.2 Simple Linear Regression .................................................... 86 XV List of Appendices Appendix A: Study Questionnaire -------------------------------------- 122 Appendix B: SPSS Results ----------------------------------------------- 128 XVI The Role of Quality in Bit Stream Access Internet Service Providers on Customer’s Loyalty in Palestine By Ashraf Abed-Alrahman Abed-Aljaleel Demaidi Supervisor Dr. Ramiz Assaf Abstract The Internet Service Provider (ISP) sector in Palestine operates in a highly competitive market, including many challenges related to the Israeli rules and regulations concerning internet service. Such challenges emphasize the need for the various ISPs to have a detailed and clear understanding of the critical service quality dimensions that affect customer loyalty, and to constantly evaluate and strengthen the service they provide. Therefore, this work aims to study the influence of service quality on customer satisfaction and loyalty in the Palestinian internet sector. The study used a quantitative approach based on SERVQUAL dimensions to collect the data from internet subscribers through a questionnaire and the data was analyzed using statistical methods. The survey data was gathered from 403 valid responses covering more than eight ISP companies in West Bank. Examination of the study variables based on the conceptual framework is achieved by using SPSS, where means of quantitative methods such as comparison of means, simple and multiple regression were calculated. The findings of the research indicate that, in general, the level of service quality does not meet customer expectations. In addition, descriptive XVII analysis of the study variables give indication that means of three service quality dimensions (reliability, responsiveness, and tangibility) have a medium degree level, while empathy and assurance have a high degree level. The findings of the research showed that service quality positively affects customer satisfaction. A positive relationship exists between customer satisfaction and customer loyalty. The study suggests that the effect of the responsiveness dimension on consumer satisfaction and loyalty is stronger than the effects of the other dimensions, where tangibility has the lower effect. Finally, the study recommends the ISPs to improve the level of service quality in order to meet customer needs and wants and to gain long-term customer loyalty. 1 Chapter One Introduction 2 Chapter One Introduction 1.1 Chapter Overview This chapter is a brief description of the subject of the study. The study focuses on the relationship between service quality and customer loyalty. The chapter includes subsections related to services background, short summary Bit-Stream Access (BSA) and Internet Service Sector in Palestine (ISPs), telecom industry, problem statement, expected outcome and the structure of the thesis. 1.2 Services Background In most developed countries, the economy has been moving from product- based to service driven markets. Services have become the biggest part of most industrialized countries' economies over the past three decades (Spohrer et al, 2007). According to the central intelligence agency (CIA) (The world factbook, 2017), service sector represented more than seventy nine percent of the USA Gross Domestic Product (GDP) in the year 2016,and according to (Palestinian Economic Performance, 2015) service sector represented more than sixty two percent of the Palestinian GDP in the year 2015. In economics and business science, Amina et al (2012) defined service based economy as value creation of the non-material equivalent of goods, creating value by servicing the consumer. Services are not economic activities which produce physical products for 3 consumption in general, they produce and provide added value in forms, such as convenience, amusement, timeliness, comfort or health that are essentially intangible concerns to the purchaser (Zeithaml and Bitner, 2003). However, it is important to distinguish between services and goods and their quality. Parasuraman et al (1985) determined the characteristics of services which explain crucial differences between them and products. More precisely, the differences are intangibility, simultaneity or inseparability, heterogeneity and perishability. Furthermore, the difference between services and physical products also bring particular features to their quality. Service is gauged to be of high quality if the provided service conforms to the customer's expectations. Service providers often evaluate the quality of service offered to their customers in order to improve their service, to quickly recognize problems, and to better assess client satisfaction (Business Dictionary, 2017). The starting point in developing quality in services is measurement and analysis. There has been no general agreement on the measurement of the concept of service quality (SQ). Most of the researchers attempted to use SERVQUAL model, which is a conceptual model developed by Parasuraman et al, (1985) and improved in 1988 to measure SQ. The published work undermines the role of service quality as a determinant of customer loyalty and customer satisfaction. This study will be an extension of the previous work, and it will focus on the field of Internet Service Providers (ISPs) in Palestine, where there does not appear to have http://www.businessdictionary.com/definition/delivery.html http://www.businessdictionary.com/definition/final-good-service.html http://www.businessdictionary.com/definition/client.html http://www.businessdictionary.com/definition/expectation.html http://www.businessdictionary.com/definition/service-business.html http://www.businessdictionary.com/definition/customer.html http://www.businessdictionary.com/definition/order.html http://www.businessdictionary.com/definition/improve.html http://www.businessdictionary.com/definition/problem.html http://www.businessdictionary.com/definition/satisfaction.html 4 been addressed in the past. 1.3 SERVQUAL Model The SERVQUAL scale has been the major instrument used to measure consumer’s perceptions of SQ by measuring the difference between customer expectations and their perceptions of the delivered service in five dimensions: tangibility, reliability, responsiveness, assurance and empathy (Malang and Siswanto, 2011). The five quality dimensions have varying influence on customer satisfaction and customer loyalty, (Hossain, 2015; Al-Zoubi, 2013; Agus et al 2007; Caruana, 2002). The SERVQUAL scale possesses higher diagnostic powers, compared to other scales such as SERVPERF and SIMALTO, which can pinpoint areas for managerial interventions in the event of shortfalls in the service quality. It is generally the preferred scale employed to assess customer satisfaction and loyalty (Jain & Gupta, 2004), and (Hill & Alexander, 2006). The SERVQUAL scale constitutes an important landmark in the literature of service quality and has been extensively applied in different service markets (Jain & Gupta, 2004). The SERVQUAL model has been described by its original founders as a simple and comprehensive multi-dimensional measuring scale that has good reliability and validity in its results. It can be applied to a large and diverse number of services and commercial enterprises (Handrinos, et al, 2015; Ajam, et al, 2014; Khamis & Njau, 2014; Papanikolaou & Zygiaris , 2014; Kushwah & Bhargav, 2014; Amiri Aghdaie & Faghani, 2012; Al- 5 Zoubi, 2013 and Hossain, 2015) 1.4 Telecom Industry The worldwide revenue from telecommunication services was estimated at $2.1 trillion in 2012 and is expected to grow to $2.7 trillion in 2017 at a combined average growth rate of 5.3 percent (Mountain Lakes, 2012). Despite the global economic crisis (2007-2009), the telecommunications sector continues to achieve high growth in revenues and it is anticipated that local investment and development in the telecommunications industry to continue to grow. The motive and the engine for these industries is consumer internet usage and business mobility solutions, which create new applications (Gaulfield, 2012). The fact remains that the growth of the global economy in modern times, in part to progress in communications technology and telecommunications, play an important role in social and economic progress. Also, it’s one of the main tools in the economic development, such as water, energy and other, (Gaulfield, 2012). The information and communications technology (ICT) revolution has driven global development in an unprecedented way. Through technological advancements and the deployment of infrastructure, high growth rates are expected in access to information and communication technology to the billions of people all over the world. On the other hand, ICT has an important role to play in the development agenda beyond 2015, 6 and in achieving the goals of sustainable development in the future as the world moves faster and faster towards digital society (Sanou, 2015). Palestinian Central Bureau of Statistics (PCBS, 2017) reported that telecom industry represented more than 5.5 percent of Palestinian GDP in the year of 2016. However, telecom industry is unlike other service sectors such as education and health. The telecom industry has definite characteristics that discriminate telecom services from other services. In particular, telecom services have developed very quickly and are adapted according to customer need and it is offered in extremely competitive markets. Thus, telecom firms do their best to enhance customer loyalty to sustain current subscribers and to improve quality of service to attract new ones (Sanou, 2015). Success of a service provider is determined in part the high quality of its service and its relationship with the clients (Panda, 2003), which governs customer satisfaction and loyalty (Lymperopoulos et al, 2006). Research has shown that service quality affects organizational outcome such as performance superiority (Portela & Thanassoulis, 2005), growing sales profit (Levesque & McDougall, 1996; Kish, 2000; Duncan & Elliott, 2004), and market share (Fisher, 2001), improving customer relations, corporate image and customer loyalty (Newman, 2001; Szmigin & Carrigan , 2001; Ehigie, 2006). In addition, service quality and customer satisfaction were found to be related to customer loyalty (Levesque & McDougall, 1996; Newman, 2001). Preserving high levels of loyalty is very important for service provider for numerous reasons including greater 7 market share, through positive transfers of existing customers to new prospects, lower marketing and operational costs and higher profitability attainments (Ladhari et all, 2011). Perceived service quality is the result of subscriber evaluation of a service provider’s overall excellence or superiority (Parasuramanet et al, 1988). It could be considered as an attitude, based on the so-called disconfirmation paradigm ( Asubonteng et al, 1996), where perceived service is made by the comparison of customer expectations with their perceptions of performance (Grönroos, 1984, Parasuraman et al, 1985). The earlier literature on services marketing agrees that customers base their judgments about service quality level mainly on two broad aspects (Arshad, 2014) (Olgun et al, 2013), known as: 1) technical quality which represents what a customer actually receives from the service encounter or the outcome of the service and are assessed after the service delivery, and 2)functional quality which represents the way a service is delivered to a customer or a customer’s perception of the interaction that takes place during service delivery. 1.5 Broadband Internet The term broadband commonly refers to high-speed Internet access that is always on and faster than the traditional dial-up access. Broadband includes several high-speed transmission technologies such as Digital Subscriber Line (DSL), Cable Modem, Fiber Wireless , Satellite and Broadband over Power lines (BPL), (Types of Broadband Connections, 2014). https://www.fcc.gov/general/types-broadband-connections#dsl https://www.fcc.gov/general/types-broadband-connections#dsl https://www.fcc.gov/general/types-broadband-connections#cable https://www.fcc.gov/general/types-broadband-connections#fiber https://www.fcc.gov/general/types-broadband-connections#wireless https://www.fcc.gov/general/types-broadband-connections#satellite https://www.fcc.gov/general/types-broadband-connections#bpl https://www.fcc.gov/general/types-broadband-connections#bpl 8 Availability, price, location (urban or rural area) and value added service is the main factors that affect the customer’s choice for broadband technology (Types of Broadband Connections, 2014). 1.5.1 Digital Subscriber Line (DSL) DSL service is a broadband digital transmission service offered through traditional copper telephone lines. DSL is typically used to offer data, video, and voice services. DSL does not displace or disrupt the operation and quality of the existing analog telephone service, so that both analog phone and broadband services can be simultaneously offered, (Cioffi et al, 2008). There are several types of DSL transmission technologies, the leading DSL technologies being deployed today include: Asymmetrical Digital Subscriber Line (ADSL, Symmetrical Digital Subscriber Line (SDSL), High data rate Digital Subscriber Line (HDSL) and Very High data rate Digital Subscriber Line (VDSL). The following are definition of each type: 1. Asymmetrical Digital Subscriber Line (ADSL): Used mainly by residential customers, such as Internet surfers, who downloads frequently rather than uploads data (Dsl-variety, 2014). The downstream direction is typically faster than the upstream direction in ADSL (Types of Broadband Connections, 2014 ). “ADSL allows faster downstream data transmission over the same line used to provide voice service, without disrupting regular telephone calls on that line” (Types of Broadband Connections, 2014 ). 9 2. Symmetrical Digital Subscriber Line (SDSL): Supports symmetric downstream and upstream data transmissions and is used typically by businesses for services such as video conferencing (Types of Broadband Connections, 2014), 3. High data rate Digital Subscriber Line (HDSL): is a higher transmission rate form of SDSL 4. Very High data rate Digital Subscriber Line (VDSL). Is faster than the others forms (Dsl-variety, 2014). 1.5.2 Cable Modem Subscribers can access the service by just turning on their computers, without dialing-up an ISP. You can still watch cable TV while using it. Transmission speeds vary depending on the type of cable modem, cable network, and traffic load. Speeds are equivalent to DSL (Christopher and Hannah, 2015) Cable modem is broad band digital transmission service offered on the same coaxial cables that deliver picture and sound to your TV set. Most cable modems are external devices that have two connections: one to a computer, the other to the cable wall outlet. They provide transmission speeds of 1.5 Mbps and higher (Argaez, 2016). 1.5.3 Fiber Optic Wires are tiny strands made of plastic or glass which are thinner than a single human hair. It was designed to carry data at very high speeds. Fiber transmits data at speeds far exceeding current DSL or cable modem speeds, 10 typically by tens or even hundreds of Mbps. Fiber optic broadband service is usually available in limited areas. 1.5.4 Wireless Internet Wireless broadband connects a home or business to the internet using a radio link between the customer’s location and the facility of the service provider. Wireless broadband can be mobile or fixed. Wireless broadband internet access services offered over fixed networks allow consumers to access the internet from a fixed point while stationary, as such it requires a direct line-of-sight between the wireless transmitter and the receiver. These services have been offered using both licensed spectrum and unlicensed devices. For example, thousands of small Wireless Internet Services Providers (WISPs) provide such wireless broadband at speeds of around one Mbps using unlicensed devices, often in rural areas not served by cable or wire line broadband networks. Wireless Local Area Networks (WLANs) provide wireless broadband access over shorter distances and are often used to extend the reach of a "last-mile" wire line or fixed wireless broadband connection within a home, building, or a campus environment. Wi-Fi networks use unlicensed devices and can be designed for private access within a home or business, or be used for public Internet access at "hot spots" such as restaurants, coffee shops, hotels, airports, convention centers, and city parks. Mobile wireless broadband services are also becoming available from mobile telephone service providers and others. These services are generally 11 appropriate for highly-mobile customers and require a special PC card with a built in antenna that plugs into a user’s laptop computer. Generally, they provide lower speeds, in the range of several hundred Kbps. (Types of Broadband Connections, 2014 ). In remote areas where it is not possible to provide ADSL or cable broadband service, wireless internet access is the best option. The development of a dedicated telephone line in this type of service is not required. Wireless Local Area Networks (WLANs) provides local coverage using wireless technology (Larsson et al, 2014). The wireless broadband works by the wireless router, so any ADSL (phone line) or cable broadband service scale can be transformed into a wireless connection simply by steering - change and there is no need for a new broadband package. ( Baccelli & Blaszczyszyn,, 2008). 1.5.5 Satellite Just as satellites orbiting the earth provide necessary links for telephone and television services, they can also provide links for broadband. Satellite broadband is another form of wireless broadband. It is also useful for serving remote or sparsely populated areas. Downstream and upstream speeds for satellite broadband depend on several factors, including the provider and service package purchased, the consumer’s line of sight to the orbiting satellite, and the weather (Types of Broadband Connections, 2014 ). Satellite Broadband service is the most reliable since it can be used almost 12 anywhere. It should be noted that satellite communications come in two different types in any one way, and communications dual track. They help in having connection at a lower cost and higher speed, and have reliable connections to the Internet directly to your computer. It connects enterprises to broadband service in most remote areas, keepings its customers always smiling (Marzetta, 2010). Satellite broadband is a network connectivity provided through low-earth- orbit (LEO) or geostationary satellites, with the latter providing much faster data rates. Satellite broadband enables internet access via satellite in two steps (Larsson et al, 2014): 1. A personal computer broadcasts requests via satellite modem to a satellite dish placed on top of a home or business. 2. The dish sends and receives signals from the orbiting satellite. If the dish is able to get a clear view of the southern sky (over the United States), a user can receive satellite internet access. Satellite Internet systems are independent alternatives to provide fast Internet broadband (domain) bi-directional through a small shower from any region except most of the Arctic and Antarctic zones. There are more than 302 communication satellites which are deposited in a fixed orbit around the Earth, specifically directly over the equator. The distance among them is typically two or three degrees. The satellite around the Earth at the same speed and direction of rotation of that of the earth so they appear stationary in the sky for any spot on earth, so you can use fixed and well directed small aperture to connect to a satellite. This is called VSAT: 13 very small aperture terminal, (Argaez, 2016). 1.5.6 Broadband over Power line (BPL) It is a system for transferring data connectors that are also used for power transmission. It is also known as power line carrier and power digital subscriber line (PDSL), and communication pipes, power line telecommunications (PLT), power line networking (PLN), and broadband over power lines (BPL), ( Marzetta, 2010). Transfer internet data through broadband over power lines, BPL, has become interesting experts in its potentials to the investment in the late nineties as a way of communication and rapid information delivery to homes and businesses, a reality now that there have been extensive research, testing and initial experiments in this regard. Various companies, including Google, believe that BPL is a rich source of revenue, convincing it to spend heavily in order to develop this new technology. (Argaez, 2016). BPL modem is connected to any electrical socket in the building to gain access to radio signals by the BPL where your modem technology converts radio waves into data. In the end, the user connects the BPL modem to the computer or "Server" or to the distributor "Switch", or to wireless access point, (Cioffi et all, 2008). 1.6 A Brief Overview of the Internet Service Sector in Palestine Before the Oslo agreement in 1993 between the Israelis and the Palestinians, the Israel occupation was responsible for providing telephone service to Palestinians. Thereupon, the service was restricted in a specific area, mostly 14 in the cities with limited capacity. Therefore, few customers were able to obtain the service. Then, the responsibility of providing telephone services moved into Palestinian control through 1994-1996 period, which saw the installation of networks all over the West Bank and Gaza strip and provided services to subscribers. But because of shortage of funding and limited resources the development was slow. A private company “Paltel” bought the Palestinian telephone network in 1997, and obtained a license to provide telecom services over the West Bank and Gaza Strip, which included land line phone services, wireless phone, and data services. Paltel constructed Global System for Mobile Communications (GSM) network and presented wireless phone (mobile) services in 1999, and established Jawwal (subsidiary company) to manage mobile services. Alongside the mobile network, Paltel constructed data networks based on Asynchronous transfer mode (ATM) technology and during the year 2000 it launched data services (leased lines and frame relays) targeting corporate customers. Furthermore, a limited number of companies were started to provide internet services to Palestinian customers via dial-up connection over Paltel telephones lines. Even so, the internet market was poor and limited for a certain proportion of the population till the end of 2004. In 2005 the internet market in Palestine began to grow rapidly when Paltel announced free subscription to the internet over fixed telephone lines in corporation with virtual internet service providers (ISPs). This was followed by another improvement in the beginning of 2006 when it launched broadband services. Later on, in 2007, Paltel launched internet protocol - 15 virtual private network (IP-VPN) service for corporate customers only. So, competition began to appear during 2005-2008 in the internet services. Also, even the role of ISPs was limited to reselling services as virtual ISPs, more than twenty ISPs appeared in market. On the other hand, Wataniya mobile acquired the licensed to provide wireless services in Palestine as a second operator in this field. The real competition of internet services in Palestine started in the year 2010 when the Ministry of Telecommunication and Information Technology (MTIT) liberated the internet market by announcing Bit- Stream Access (BSA). Bit-Stream Access (BSA) enables an ISP to offer its End Users Internet services using the infrastructure of the Palestinian telecommunications company (PALTEL)'s, Asymmetric Digital Subscriber Line (ADSL) access and core infrastructure. BSA provides an ISP with access to PALTEL's internet protocol / Multiprotocol label switching (IP/MPLS) Core network to provide Internet services to the end users using PALTEL's ADSL access services. BSA is an intermediate input service under which the ISP gets Backhaul or Handover Links from PALTEL to combine with ADSL access service (offered by PALTEL) to end users, as well as other wholesale services, such as Internet Capacity, offered by PALTEL or other licensed broadband providers to deliver Internet over ADSL services to End Users. Since 2010, ISPs have become actual internet service providers rather than reselling it. Moreover, ISPs started to compete with each other in providing internet and related value-added services to both new customers and the 16 existing ones (Gazi, 2017) Moreover, there are a plenty of development opportunities in the immediate future, both mobile operators, Jawwal and Wataniya, are waiting for Israeli approvals to launch 3G services which include wireless internet, in addition to voice services. Even so, being aware of the threat of wireless internet, PALTEL is looking for selling high speed internet access line by using new technologies such as Very high bitrate Digital Subscriber Line (VDSL) and fiber to the Home (FTTH). Such high speed lines exceed achievable speeds by 3G wireless. Moreover, Jerusalem Electricity Company became authorized to provide internet service to corporate subscribers using their own fiber optic network, while they are evaluating the introduction of business of land phone lines and FTTH. However, BSA ISP’s attempts to increase its market share and total revenue by developing a special low price campaigns for the new customer only. Therefore, the competition between the BSA ISP’s intensifies as the switching cost for BSA Customers is very low, the focus of providers’ strategy shifts from a product to a consumer orientation in order to discriminate themselves in the mind of the customers. The companies recognize that, given the difficulty of new gross additions, the challenge is to create a healthy relationship with the existing customers so as to keep them. Since the customers can choose their service provider without any restrictions, or they can change their current provider, or they can move to 3G when it becomes available without any significant cost if any. The research tries to test the relationship among perceived quality 17 performance, customer satisfaction, and loyalty. The five dimensions of SERRVQUAL model and their relation to customer satisfaction and loyalty were used in this study based to some extent on the methodology and approach employed by previous authors. (Angelova & Zekiri, 2011; Arshad, 2014; Ladhari et all, 2011). 1.7 Problem Statement In a developing country, such as Palestine, broadband internet connectivity is becoming an imperative step toward the development of the information and communication technology (ICT) sector. Mobile and wireless internet technology is currently available in Palestine. Jawwal and Wataniya offer internet and data service through their networks. Their systems relies on Enhanced Data Rates for GSM Evolution technology (EDGE). GSM is considered as a low internet speed in comparison to the upcoming 3G, 4G, or to the BSA model. ISP’s in Palestine strive for long lasting success through building long and solid relationship with their customers. Meeting customers' expectations are a challenging task for ISP’s. Palestinian Internet sector is characterized as a highly competitive market. Therefore, it is highly required that ISP companies evaluate the level of quality they offer to their customers. They also have to understand the critical service quality (SQ) factors that affect customer loyalty to accomplish greater benefits and high returns. This complicated picture needs ongoing studies by the ISP’s sector to obtain quantitative results as outputs. Such results may clarify the real picture of 18 the ISP’s market and could lead to well-informed decisions. However, there is no data available in the open literature that deals with the internet sector in Palestine in terms of the SQ it provides and its relationship to customer loyalty. Therefore, this research is an attempt to study the effects of service quality on customer satisfaction and loyalty. The research attempts to study SQ in the BSA ISP’s in Palestine using SERVQUAL tool in order to enhance quality and to promote customer loyalty and therefore to decrease the rate of customer churn. The possibility of introducing new technology into the ISP market such as 3G or 4G may have an influence on service quality and customer loyalty. This factor is not covered by this study. 1.8 Research Questions The current study attempts to develop an understanding of the relationship between ISP service quality and customer loyalty in Palestine, if any, and to assess the strength of such relationship, and how ISP’s have to change their business model in order to increase customer loyalty. It is planned to accomplish the above through answering the following overall questions: 1. Does service quality lead to customer satisfaction in internet service sector in Palestine? 2. Is a satisfied customer in internet service sector in Palestine a loyal one? 3. Is customer satisfaction with service quality in internet service sector in Palestine a prerequisite for loyalty? 19 The research will attempt to answer these question through the five dimensions of SERVQUAL tool. 1.9 Significance of the Research Having loyal and repeat customers are a crucial factor in order to have a successful business. This requires providing excellent customer experiences across all channels and all the time. In addition, it is very important to understand the expectations of such customers and what your competition is up to. Getting feedback from them may help the business grow. Such feedback could include what other products a business should provide, prices, etc. Doing so can prevent customer churn and may attract new customers. Therefore, it is very important for any business to regularly assess the level and quality of the services they provide to their customers. And given the apparent lack of research in the subject, the current study attempts to measure the quality of internet services provided to the customers, as the quality of the service is one of the main pillars that help ISP Sector increase their profitability by improving their services and to gain new market share. This can assist the management of ISP Sector in Palestine to identify areas which they need to address in order to improve the quality of service to its customers. 1.10 Expected Outcome This study aims to find the aspects of quality that affect the customer loyalty of BSA ISPs, and therefore is expected to provide suggestions and 20 recommendations to the BSA ISP’s company in order to enhance its service quality and to improve customer loyalty 1.11 Structure of the Thesis This study is organized in five chapters. Chapter one focuses on problem statement, and importance of study. Literature review and the hypothesis development are presented in chapter two. Chapter three, presents the study methodology, population and sampling method, survey instrument and data collection method. Chapter four focuses on data analysis, results and discussion. Finally, the conclusions, recommendation, limitation, future research and the implications of the study are presented in chapter five. 21 Chapter Two Literature Review 22 Chapter Two Literature Review 2.1 Chapter Overview This chapter is a review of the literature supporting the current research. It discusses the relevant concepts of service management including services versus physical products, service quality, service loyalty, service quality versus physical products quality and customer loyalty. 2.2 Concepts Related to Service Management 2.2.1 Service Concept Service can be defined as those activities and intangible events that aim to satisfy the final consumer needs in exchange for payment of a certain price, without any exchange or sale of physical goods. It is also defined as any act or performance of an intangible provided by one party to another without resulting in the ownership of something (Customer Service, 2017) (Service Sector, 2017), (Amina et al, 2012). In this regard, services can be defined as the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself (Al-Zoubi, 2013). 2.2.2 Services versus Products It is essential to differentiate between services and goods. Services have four features which explain essential differences between services and physical products. These differences are: intangibility, simultaneity (also 23 called co-production or inseparability), heterogeneity and perishability (Olgun et al, 2013). Intangibility means that services are not similar to physical entities, and are actions that cannot be touched, felt, tasted, or seen. (Fraering & Minor, 2013). Simultaneity (or inseparability) means that most services are produced, delivered and consumed at the same time (Potluri & Hawariat, 2010). It reflects the simultaneous delivery and consumption of services (Fraering & Minor, 2013). Therefore, the service provided can’t be tested before it is delivered to the customers. Heterogeneity represents the divergence in delivered service relies on time, customer, provider and circumstances. This cause a problem in the services that relay on several workers due to differences in labor performance from day to day and from one to another (Antonio & Lobo, 2014). Service providers use heterogeneity as an advantage to offer customized and flexible services to their customers (Al-Zoubi, 2013). Perishability means that services cannot be kept in stock retained and sold when demand, resold, or returned (Amina et al, 2012). Therefore, it is possible to conclude that service providers will lose unused service capacity and service demand that exceed service capacity. 2.2.3 Service Quality (SQ) Various institutions and companies in the world are seeking to consolidate the principles and concepts of total quality management (TQM) in their manufacturing processes, service and productivity management. The new 24 challenges associated with strong competition, free trade that allows free flow of goods and services between nations, and the abolition of custom barriers, give the customers various options. In the process, these challenges emphasize the need for TQM implantations in both service and tangible industries. This becomes even more important as the purchasing decision is no longer just price-dependent as there are other variables brought about by new options. The new options include the quality of the product which represent one of the main determinants of the purchasing decision (Yohanes et al, 2012). Quality in services is a critical factor for the growth and development of service sector business enterprises (Fraering & Minor, 2013). Service quality works as an antecedent of customer satisfaction (Potluri & Hawariat, 2010). Moreover; it has become so important for businesses not only to succeed, but, in some cases, to survive (Hossain, 2015). Antonio and Lobo (2014) noted that the delivery of services with high level of quality is the key strategy for the success and survival of any business organization. Boshoff and Gray (2004) pointed out that paying more attention to service quality can distinguish the services of a provider from another, which can lead to attaining a continuous competitive advantage. Olgun et al, (2013) stated that service quality can also be defined as an inference regarding the superiority of a product or service based on a rational assessment of its characteristics or attributes, or as an affective judgment or emotional response similar to an attitude. 25 Ali et all, (2013) claimed that service quality means organization’s trial to design and deliver the service properly the first time, to perform better the next time, and to achieve customer satisfaction at the same time, and enjoy competitive advantages compared to the service offered by similar organizations. As well, service quality can be defined as measuring the ability of service delivered to the customer is compatible with the level of expectations, so as to achieve conformance with the expectations set by the customer, (Agus et al, 2007). 2.3 Measuring Service Quality (SERVQUAL Scale) Measuring service quality has raised huge interest and debate in the literature. Measuring service quality allows comparison before and after changes to determine the effectiveness of service development. Potluri and Hawariat (2010) stated that, the starting point in developing quality in services is analysis and measurement. There has been no general agreement on the measurement of the concept. Most of the researchers attempted to use SERVQUAL model, which is a conceptual model developed by Parasuraman et al, 1985) and improved in 1988 to measure SQ. The Gap Model, (2017) identified five "gaps" that can cause quality problems in organizations. The first gap can result from discrepancies between the perceptions of management and consumers' expectation, while the discrepancies between management perceptions and service specifications represented the second gap. The third gap is due to the 26 difference between service specifications and service delivery. The fourth gap is the actual service delivery-external communications gap. The fifth gap is the difference between the customers' expectations and the perceptions of service actually received, the SERVQUAL GAP model is depicted in figure (2-1). Figure (2.1): SERVQUAL Gap Model (Parasuraman et al. 1985; Curry et all, 1999; Luk and Layton, 2002) 27 More specifically: Gap 1: Between customer expectation and management perception of those expectation. Gap 2: Between management perceptions of customers' expectation, and service Quality specification. Gap 3: Between Service Quality Specifications and Service delivery. Gap 4: Between Service delivery and external communications to customer's delivery. Gap 5: Between customer expectations and perceived Service 2.4 Dimension of SERVQUAL The SERVQUAL scale has been the major instrument used to measure consumer’s perceptions of SQ by measuring the difference between customer expectations and their perceptions of the service delivered. SERVQUAL has five dimensions as follows (Malang & Siswanto, 2011): 1. Tangibility: The physical aspects of a service firm such as buildings, equipment, interior design of buildings and facilities necessary to provide the service, and the presentation of staff (Malang, and Siswanto, 2011) 2. Reliability: expressed as the organization's ability from the viewpoint of customers to provide service at the time required by the customer and accurately satisfy his/her ambition, as well as reflect the extent of the fulfillment of its obligations towards customer expectations. 3. Responsiveness: It is the ability to deal effectively with all customer 28 requirements and to respond to complaints and work to resolve them quickly and efficiently. This includes convincing customers that they are appreciated and respected by the institution they are dealing with. In addition the response reflects the initiative to provide service by the staff willingly. 4. Assurance: It is the confidence that the service provided to customers is free of error, danger or doubt, including psychological and physical confidence. 5. Empathy: The provision of caring, individualized attention to customers including access, communication, and understanding the customer. The process of measuring quality gaps using SERVQUAL scale (van Iwaarden et al., 2003) depicted Figure (2-2) Figure (2-2): Measuring Quality Gaps using SERVQUAL scale (van Iwaarden et al., 2003) 29 2.5 Level of service quality The five dimensions that are used to measure the quality of services constitute a general framework to measure the quality and to determine their level. There are five levels of service quality which can be summarized as follows (Luk et all, 2002; Shahin & Samea, 2010): 1. The expected quality by customers, which represents the level of quality of the services they expect to get from the service provider. 2. Perceived quality by the provider which is perceived by the management in the service provided to its customers and the management would think it satisfy the needs of its customers 3. Quality is the way that leads out of service by the firm’s employees, which are subject to the guidelines of the quality of service provided. 4. The actual quality (perceived by customers) delivered by the service provider, which reflects the extent of compatibility and the ability to use the methods of service, which will satisfy customers. 5. The desired quality for customers of any level of satisfaction and acceptance that you can get from the company customers, when they receive the services. 2.6 Customer loyalty Antonio & Lobo (2014) stated that the cost of serving a loyal customer is less than the cost of serving a new customer. Ladhari et al. (2011) defined the customer loyalty as “the degree to which a customer exhibits repeat purchasing behavior from a service provider, possesses a positive 30 attitudinal disposition toward the provider, and considers using only this provider when a need for the service exists. According to Boohene & Agyapong (2011), loyalty is the actual re-buying of a brand, regardless of commitment. Chen et al. (2010) noted that it is not always the case that customer defection is the inverse to loyalty, while Al-Zoubi (2013) suggested that, “even a problem is not solved; approximately half of the customers would remain with the firm”. This may be due to switching costs, lack of perceived differentiation of alternatives, location constraints on choice, time or money constraints, habits or inertia that are not related to loyalty (Chen et al, 2010) . Customer loyalty is perceived as the strength of the relationship between an individual's relative attitude and repeat patronage (Boohene & Agyapong, 2011). In line with Amina et al. (2012), Rauyruen et al. (2007) there are three fields of research in customer loyalty: behavioral loyalty, attitudinal loyalty and composite loyalty, where behavioral loyalty is focuses on the patterns of repeat purchasing, attitudinal loyalty is focuses on the willingness to recommend a product or service and the positive word of mouth. Composite loyalty is a mix of both. This study will focus on composite loyalty, as it fully explains the concept of customer loyalty. Gee et al, (2008) stated several advantages of customer loyalty summarized as follows:  Service cost for loyal customer is less than that of unsatisfied customer. 31  The company can sell the loyal customer at a higher price.  Loyal customers will serve as a marketer by word-of-mouth marketing. Customer loyalty is a key component for a brand’s long-term viability (Ganesh et al, 2000). It helps a company face certain uncertainties and problems in an intense competitive market. Potluri & Hawariat (2010) defined customer loyalty as a deep held commitment to repeat patronage from a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing despite situational influences and marketing efforts that may potentially cause switching behavior. Customer loyalty has been found to be the key mediating variable in explaining customer retention, which is the likelihood of a customer returning, making business referrals, providing strong word-of-mouth, as well as providing references and publicity (Argaez, 2016), (Olgun et al, 2013). 2.6.1 Framework for measuring customer loyalty in telecommunication market Corporate image, perceived service quality, trust and switching cost are the main dimensions that affect customer loyalty in choosing desired telecommunication service providers, (Serkan & Gökhan , 2005). Corporate image is defined as the general impression made in the minds of community about a firm which is associated with physical certain behavioral aspects of the firm (Nha & Gaston , 2001). It is a result of an accumulation process which incorporates diverse information used by 32 consumers to form a perception about a firm. A good corporate image can be created to help form and maintain loyal relationship with customers (Leelakulthanit & Hongcharu, 2011) and power repeat patronage (Ladhari et al, 2011). The degree of divergence between customers’ perception of service performance and their normative expectations for the service is called perceived service quality (Antonio & Lobo, 2014). According to Boohene & Agyapong (2011), in order to increase profitability, the organization must have high level of customer retention, which can be achieved by high service quality. It has been found that repurchase intention, recommendation, and resistance to attractive and better alternatives are positively related to perceived service quality (Amina et al, 2012; Al- Zoubi, 2013; Hossain, 2015). A customer buying retention to a certain brand is positively related with trust towards the brand (Fraering & Minor, 2013). On the other hand, the costs associated with changing the service provider which will not occur if a customer stays with the current service provider, is called switching cost. An increase in this cost would result in higher risk and burden on the customer (Ladhari et al, 2011). According to Amina et al (2012), perceived service quality, corporate image, trust and switching cost are factors not only directly influence customer loyalty, but also interact with each other in influencing customer loyalty in telecommunication industry. 33 2.7 Customer Satisfaction The concept of customer satisfaction is one of the concepts that aroused the interest of several researchers and those interested in the field of management and marketing. As a result, most institutions strive for excellence based on respect for the customer and working hard to please him. This concept has been studied in details by several researchers (Alhemoud, 2010). Al-Zoubi (2013) did a comprehensive research to examine customer satisfaction. He defined customer satisfaction as emotional or cognitive response, relates to a particular focus on expectations, product or consumption experience, and happens at a specific instant in time after experience or consumption. In customer satisfaction literature, numerous authors found empirical evidence for the relationship of customer satisfaction with customer loyalty such as Agus et al, (2007) and Al-Zoubi, (2013). Antonio & Lobo, (2014) and Leelakulthanit & Hongcharu, (2011) showed that customer satisfaction is strongly related to service quality. Olgun et al, (2013) stated that there is a double connection between service quality and customer satisfaction. Perceived service quality is a comprehensive decision or attitude concerning the superiority of the product or service, whereas satisfaction is associated with a specific transaction (Chen et al, 2010). Furthermore, customer satisfaction has repeatedly been suggested to be the prominent cause of loyalty (Fraering & Minor, 2013). Hossain (2015) claimed that there is a significant positive relationship between customer satisfaction 34 and customer loyalty retention. 2.8 Interaction between satisfaction and quality According to Al Zaubi (2013), the chronology of the relationship between customer and the institution could be clarified in four stages: 1. In the beginning, future customer has expectations. The process of carefully listening to the customer can uncover the expectations of a future customer. Then the organization can transform these expectations to the desired quality. The goal of this process is to answer and meet the customer's expectations. 2. The second phase represents the path that lead to achieving the desired quality upon delivering the service to the customers. This stage includes effective participation of the client in achieving quality. 3. After obtaining the expected quality, the next stage is to transfer the future customer into buyers by contracting and selling, which after the purchase process, allows customers to use the service, then configured perception (perceived quality) is established. 4. At this stage, the comparison between the expected quality (before buying) and perceived quality (after the purchase and use) is made in order to evaluate customer satisfaction or dissatisfaction. 2.9 Linking service quality, customer satisfaction and loyalty Potluri & Hawariat (2010) assessed and reviewed fixed line telecom customers’ perception of the quality of after-sales services provided by Ethiopian Telecom. The population of their study was 450 respondents of 35 telecom customers who are in Addis Ababa. The results show low customer satisfaction due to in part to lack of clarity of bills, delays in decision-making regarding customer complaints, and inefficient staff when delivering good quality after-sales service. The study concluded that the after-sales service, such as maintenance, service bills, and dealing with the complaints were at the lowest level of quality. Mosahab et al, (2010) showed that customers’ expectations were higher than their perceptions, but quality was low. Service quality did not satisfy customers’ expectations. In direct relation, customer loyalty was positively affected by service quality. That was an important indicator that customer satisfaction plays a role as a mediator regarding the effects of service quality on service loyalty. Their study concluded that loyalty and customer satisfaction resulted from the level of quality of services, and the quality of services is the result of the level of after-sales services in the telecommunications sector. Angelova & Zekiri (2011) measured customer satisfaction with service quality using an American Customer Satisfaction model. The aim of this research was to apply the American customer satisfaction index (ACSI) model in the context of service quality in the Macedonian mobile telecommunication industry. The main variable of the study was the effect of perceived quality and customer expectation on customer satisfaction and perceived value. The result showed that mobile users in Macedonia were not satisfied with service quality, this was related to customers’ expectations being higher than customer perception. The study http://www.theacsi.org/about-acsi/the-science-of-customer-satisfaction 36 recommended that companies can better allocate resources to provide better service to their customers. Thus, understanding customer satisfaction with service quality is very important and challenging. Amina et al, (2012) conducted a study which aimed to find factors contributing to customer loyalty towards telecommunication service provider in Malaysia. The data was collected from 185 telecommunication users among university students. They found that corporate image, perceived service quality, trust and switching cost were significantly and positively related to consumer loyalty. Service quality is the main factor effecting customer loyalty. This study concluded that customers are able to judge the quality of excellent service offered by telecommunications service providers, and therefore commitment and repeat purchase of telecom service providers. The study by Al-Zoubi (2013) aimed to find the effects of customer loyalty in the Jordanian telecom sector. The purpose of this study was to verify how customers perceive and judge service quality in mobile telecom industry. The population of this study was IT and MIS university students. He found that there was a significant effect of SERVQUAL on customer loyalty in the Jordanian Telecom market. Also, he found that the three dimension of SERVQUAL, empathy, reliability, and responsiveness were significant in effecting customer loyalty. While the others three dimensions (physical, appearance and assurance) did not affect customer loyalty. He recommended that the company should conduct more research to improve loyalty in the Jordanian market, since this market is characterized as highly 37 competitive and regulated. Telecommunication Company must focus on improving the performance of organizations, and on improving relations with customers through continuous improvement in the service quality, and on paying more attention on the two dimensions which appeared to have no effect on customer loyalty. Antonio & Lobo ( 2014) investigated the antecedents to attitudinal and behavioral loyalty of customers of Internet Service Providers (ISPs). In addition, this study endeavors to identify the relationship between overall service quality and cognitive, as well as affective evaluations of customers. An assessment of service quality dimensions is also included to fill the void of research on modeling service quality in high tech services. By making customers more central in company operations, these strategies can potentially reduce the expenses associated with acquiring new customers. This study found that overall service quality will affect customer trust, satisfaction and commitment. This leads to increase attitude and behavioral loyalty. Table 2.1 summarizes the major findings of the previous studies. 38 Table: 2. 1 Summary of the major findings of the consulted literature Author Variable Finding and conclusion Independent Moderating Dependent (Potluri& Hawariat, 2010) After-sales-services Information provision and service delivery Maintenance Billing service Complaint handling Service quality Dimensions Reliability Responsiveness Assurance Empathy Tangibles Customer satisfaction Low in customer satisfaction due lack of clarity of bills, delays in decision-making, and in efficient. (Mosahab, Mahamad, & Ramayah, 2010) Perceived Services Quality Reliability Responsiveness Assurance Empathy Tangibles Customer Satisfaction Customer Loyalty Service quality does not satisfy customers’ expectations. In direct relation service quality has positive effect on customer loyalty. This is an important indication that customer satisfaction plays role as a mediator in the effects of service quality on service loyalty. Loyalty changes can be explained by satisfaction and service quality (Angelova & Zekiri, 2011) perceived quality and customer expectation customer satisfaction and perceived value customer loyalty customer complain Mobile users in Macedonia were not satisfied with service quality. Due to customers’ expectations were higher than customer perception. Understanding customer satisfaction with service quality is very important and 39 Author Variable Finding and conclusion Independent Moderating Dependent challenging. Amina, Ahmad, & Huib, 2012 Perceived Service Quality Corporate Image, Trust, Switching Cost Customer Loyalty Perceived service quality, trust and switching cost are significantly and positively related to consumer loyalty. (Al- Zoubi, 2013) Physical Appearance Empathy Reliability Responsiveness Assurance Customer loyalty There is a significant effect of SERVQUAL on customer loyalty. Empathy, reliability and responsiveness have significant effect on customer loyalty. While two dimension (physical appearance and assurance) do not effect customer loyalty. Focus on improving relations with customers through continuous improvement in the service quality (Antonio & Lobo, 2014) Over all service quality Customer trust, satisfaction, commitment and value Attitude loyalty Behavioral loyalty Overall service quality will effect on customer trust, satisfaction and commitment. This leads to increase attitude and behavioral loyalty. 40 2.10 Theoretical Model of this Research The research theoretical model is shown in Figure (2-3), (Agus et al, 2007 and Caruana, 2002). This research will study the five elements of service quality, namely: tangibles, reliability, responsiveness, assurance and courtesy (Agus et al, 2007), and their relationship on customer satisfaction and loyalty. Figure (2-3): Research theoretical model (Agus et all, 2007; Caruana, 2002) The study aims to address the following hypotheses: H1: There is a significant effect of service quality (Empathy, Reliability, Responsiveness, Tangibility and Assurance) on customer satisfaction on internet Sector in Palestine H2: There is a significant effect of customer satisfaction on customer loyalty in internet Sector in Palestine. H3: There is a significant effect of service quality (Empathy, Reliability, Responsiveness, Tangibility and Assurance) on customer loyalty through customer satisfaction in internet Sector in Palestine. 41 Chapter Three Research Methodology 42 Chapter Three Research Methodology 3.1 Overview This chapter discusses the procedures and techniques employed in this research. This includes; the adopted approach of the study, its strategy, data collection and tools, and data analysis and validation. This chapter enables the reader to gain a fairly complete understanding of the various set of guidelines, tools, and methods which were employed in order to help achieve the objectives of the study. 3.2 Types of Research Based on the objective of a scientific research, the research can be categorized into three types; exploratory, descriptive, or explanatory (Saunders et al, 2003 and Robson, 2002). Exploratory research can be described as understanding what is happening in order to seek new insights, raise questions and to assess phenomena in a different way, identifying any new potential knowledge, developing a new understanding, and discovering other factors associated with the topic (Brink and Wood, 1998). Furthermore, exploratory study is a means which can be used in order to broaden the knowledge in a particular subject or to analyze and understand issue, or to determine an enigmatic problem (Saunders et al, 2003). This kind of research can be conducted using any of the following: interviewing focus groups, using qualitative approaches with experts in the 43 subject, and reviewing available literature (Saunders et al, 2003). Generally, exploratory research studies the related aspects in detail to attain suitable description of the realism of the existing circumstances (Brink and Wood, 1998). Descriptive research attempts to define the situation and phenomenon, which makes it possible to answer certain questions (Saunders et al, 2003). Therefore, it is intended to measure the characteristics described in the research questions. Hypotheses typically assist to monitor the progress of research and offer a list of measurable characteristics (Hair et al, 2003). Even though descriptive analysis defines the concepts and fundamentals of a theory (Snow and Thomas, 1994), it does not describe the nature of interactions between the various fundamentals (Smith and Albaum, 2005). The explanatory research is usually carried out in order to explain a cause- and-effect relationship that might exist between dissimilar factors during the study of a problem or specific circumstance (Saunders et al, 2003). Explanatory research can be designed to find out if one incident causes another (Hair et al, 2003). As a result, explanatory studies identify a comprehensive and reasonable set of causal actions connecting certain variables and construct in a story why they happen (Miles and Huberman, 1994). As the aim of this study is to determine relationship, if any, between customer satisfaction and loyalty for the Internet Service Provider (ISP) in Palestine, this study is mainly exploratory in nature and descriptive in its analysis of the data. http://www.amazon.com/s/ref=ntt_athr_dp_sr_1/188-8479680-4880451/188-8479680-4880451?_encoding=UTF8&sort=relevancerank&search-alias=books&ie=UTF8&field-author=Joe%20Hair http://www.amazon.com/s/ref=ntt_athr_dp_sr_1/188-8479680-4880451/188-8479680-4880451?_encoding=UTF8&sort=relevancerank&search-alias=books&ie=UTF8&field-author=Joe%20Hair 44 3.3 Approach of Research The research approach can be either qualitative, quantitative, or mixed (Creswell, 2003). The most important difference between a qualitative and quantitative research designs is that qualitative research focuses more on words than numbers (Bryman and Bell, 2007). The mixed approach attempts to take advantage of the strength of the two approaches and to reduce their weaknesses (Johnson and Onwuegbuzie, 2004). 3.3.1 Qualitative Approach Qualitative research approach depends on data collection that relies on words more than numbers and their sub equal interpretation. Qualitative research has four main characteristics; first, it happens in a natural environment; second, data is derived according to perspectives of both either the interviewee or the interviewer perspective; third, a flexible research design is used and therefore data collection or analysis can be modified due to definite restrictions; and fourth, there is no need to standardize the instrumentation methods or modes of analysis (Grönroos, 1984). This means that researchers in this study thinks in their normal situations and seek to interpret or make sense of phenomena according to the understanding people bring to them (Newman and Benz, 1998). There are several ways to collect data including; surveys, interviews, focus groups, conversational analysis, observation and ethnographies (Olds et al, 2005). 45 3.3.2 Quantitative Approach Quantitative research consists of the collection and treatment of a relatively large amount of data. Therefore, quantitative studies employ uniform measures to fit a diversity of views and experiences into previously determined categories of answers (Patton, 1987). Therefore, this approach is appropriate for easily measurable and descriptive information. In contrast, quantitative approach is intended to recognize and assess research hypotheses designed according to present theory (Cavana et al, 2001). Therefore, a specific scope of a given survey is essential in order to be able to apply statistical methods to assess the suggested hypotheses (Malhotra et al, 2004). There are diverse methods to conduct qualitative studies including; surveys, experimental designs, and statistical analysis (Olds et al, 2005; Malhotra et al, 2004). 3.3.3 Mixed Approach Mixed methods research refers to a type of research where combined quantitative and qualitative research techniques, methods, approaches, concepts or language are used (Johnson and Onwuegbuzie 2004, and Onwuegbuzie and Leech, 2004). According to Johnson and Onwuegbuzie (2004) the aim of mixed approach is to use the strengths of qualitative and quantitative approaches and thus to minimize their weaknesses in a research study. It tends to also converge or confirm findings from different sources (Creswell, 2003). The term "mixed methods" is sometimes referred to as the integration, qualitative, synthesis and quantitative method, multi- methodology, or multi-method (Tashakkori and Teddlie, 2010). 46 3.4 Strategy of Research The research strategy is a fairly comprehensive procedure of describing how the researcher will answer the research questions. The researcher should identify the sources of data, state the constraints that inevitably might be faced such as access to the data, time, place, and ethical issues (Thornhill et al., 2003). Moreover, the researcher must determine the approach and data collection tools, as well as the purpose of the data in order to accomplish the ultimate objectives of the study. 3.4.1 Research Method In order to properly answer the research questions in this study, the researcher conducted a literature review to define the aspects of quality in the service sector and its relationship to customer satisfaction and loyalty. The literature review also served to enrich the researcher on findings of previous empirical studies of the relationship of quality and customer loyalty and satisfaction in the service sector. Based on this review, a survey was developed and conducted. The survey contained demographic items, quality dimensions item, and items relied on the customer satisfaction and loyalty as outlined by SERVQUAL Tool. The following flow chart (Figure 3.1) outlines the steps of data collection and analysis adopted in this research. 47 Figure (3.1): Research Methodology 3.5 Research Population and Sample 3.5.1 Research Population The study population consists of internet Asymmetrical Digital Subscriber Line (ADSL) customers of Bit-Stream Access (BSA) ISP’s in Palestine were the estimated number of customers is about 300,000. Customers are the target in order to know the degree of their satisfaction, and loyalty with the quality of Internet services supplied by Palestinian companies. There are eight companies providing the Internet service in West Bank shown in Table 3.1. This study does not include Gaza Strip since the BSA ISP in Gaza offer the service in different model and that PALTEL faced difficulties in getting equipment from the Israeli authority to develop the network infrastructure there. 48 Table 3.1 Internet service providers in West Bank (2016) # Company Year of foundation Type Head quarter Location 1 B net 2010 Private Ramallah 2 Call u 2008 Private Ramallah 3 Gemzo 2006 Private Ramallah 4 Hadara 2005 Public (part of Paltel Group) Ramallah 5 Mada 2010 Private Ramallah 6 Super link 2002 Private Nablus 7 Zaytona 2010 Private Ramallah 8 Zone 2008 Private Ramallah 3.5.2 Research Sample Due to the relatively large size of the study population of about 300000, equation 3.1 was used to calculate the sample size based on a 95% confidence level, a margin of error of 5%, and percentage picking a choice, expressed as decimal (p) of 0.5 to ensure that the research sample is large enough, and therefore as representative as possible. The sample size according to the equation should be 385. The researcher used a random excel technique to choose 700 customers from a data base consisting of about 100,00 ADSL Palestinian subscribers. The list was distributed to 6 trainees in the Marketing Department at Zaytona company who conducted a telephone survey. The telephone survey was chosen as it is a relatively easy and effective collection method for a large number of data, in addition to being a straightforward way of contacting the population of study. This adopted approach gives the researcher the ability to assess the data and get the results, while targeting specific categories. The mode of instruction was in the Arabic language to ensure that the 49 answers as accurate as possible and free of ambiguity. In total, 431 questionnaires were subsequently collected after being answered by the respondents. After revising the collected questionnaires, the researcher accepted 403 only as all questions were answered, and rejected the other 28 questionnaire for missing answers. Equation (3.1) n: Sample Size Z: Z-score p: percentage picking a choice, expressed as decimal c: confidence interval, expressed as decimal α: significance level 3.5.3 Data Collection The researcher is an owner and the commercial manager in one of the largest ISP BSA companies in Palestine, with more than eleven years of experience in practicing different activities related to quality, customer’s satisfaction and customer’s loyalty. Such long experience gives the researcher the required knowledge to describe the BSA ISP model in Palestine. Several studies used only questionnaire in SERVQUAL (Al-Zoubi, 2013; Mosahab et al., 2010; Fraering & Minor, 2013; Naeem et al., 2009). 50 3.5.3.1 Questionnaire Survey There are numerous approaches to conduct quantitative research in descriptive research that includes observational studies, developmental designs, correlation, and survey research (Williams, 2007). Specifically, for survey as a research technique, the researcher can use close-ended instrument or open-ended items to describe phenomena by taking a sample of the population (Williams, 2007). The questionnaire is a very important tool of scientific undertaking. It is quick and inexpensive. It involves systematic collection of information and data in an organized manner from the study sample. Typically, the survey questionnaire is designed to achieve a specific objective by asking groups or chains of closed-ended questions. The questionnaire then allows the respondents to choose an answer from a range of options presented to them (Kramer, 1991). Generally, the questionnaire has three distinctive characteristics. First, it is used in quantitative terms to describe a given aspects of a certain population. Second, the data obtained is “subjective” as collected without any influence from the researcher and the outcome can be generalized to the whole population. Third, the survey questionnaire can be made in several ways including; telephone, face-to-face, mail, or through the Internet using Web applications. Questions should have a positive or a negative formulation, i.e., they should not be a combination of both directions. For example, the use of the word I prefer to deal with the company, or I do not prefer to deal with the company. All question must be fixed. (Wright & Marsden , 2009). 51 Also questions must be as follows: 1. Understandable and clear and therefore do not bear multiple interpretations due to possible misunderstanding by the respondents which might lead to incorrect responses. 2. The questions should be brief so as not to lead to the refusal of the respondents to answer the questionnaire or to provide a fast and misleading answers. 3. Each question should provide enough options to enable the respondents to express different opinions in minutes. 4. Use kind words and regulation manners to positively affect the feelings of others, in order to encourage them to cooperate and respond in the mobilization of the questionnaire. 5. The survey questions should be coherent and the relationship between them and the subject of the research is very clear. 6. The question should not be embarrassing in order not to discourage the participant to provide ambitious answer. 7. Stay away from complex questions as this may lead to confusion by the respondent. 3.6 Questionnaire Developments The questionnaire was developed based on previous studies which dealt with the dimensions of service quality and customer satisfaction and loyalty. Certain changes and modifications were made in order to adapt the questionnaire to the conditions of this research. The study relied on the 52 following references tabulated in Table 3.2 for the creation of the study questionnaire (Table 3.2): Table (3.2): The questionnaire references Empathy 1) Employees in the Internet Service Provider understand particular needs of their customers (Olgun et al, 2013) 2) Employees in the Internet Service Provider dedicate enough personal attention to customers. (Olgun et al, 2013) (Arshad, 2014) 3) The Internet service Provider company leaves an impression that what is best for a customer is always the company’s priority (Olgun et al, 2013) (Arshad, 2014) 4) The services of the Internet service Provider company are available at the appropriate time for all categories of customers and subscribers Prepared by researcher 5) The company gives personal attention to its subscribers Prepared by researcher Reliability 1) The Internet Service Provider company provides its services without making mistakes (Olgun et al, 2013) 2) Promises given to customers are being met within agreed time frame (Olgun et al, 2013)(Arshad, 2014) 3) Employees in the Internet Service Provider company show sincere efforts to solve customers’ problems (Olgun et al, 2013) 4) Company service provide reliable information and free mistakes. (El-Kiki & Lawrence, 2013) 5) The company services provider staff is committed to providing services by the agreed upon deadlines. Prepared by researcher Responsiveness 1) Employees in the Internet Service Provider company provide fast service to customers (Olgun et al, 2013)(Arshad, 2014) 2) Employees in the Internet Service (Olgun et al, 2013) 53 Provider company are ready to assist clients at any moment 3) Employees in the Internet Service Provider company provide customers with all necessary information (Olgun et al, 2013)(Arshad, 2014) 4) Company services are available all the time (El-Kiki & Lawrence, 2013) (Arshad, 2014) Tangibility 1) The Internet Service Provider company uses modern equipment (Olgun et al, 2013) 2) Employees in the Internet Service Provider company have a professional appearance (Olgun et al, 2013) 3) Interior of the Internet Service Provider company is attractive (Olgun et al, 2013) 4) Internet Service Provider company are visually appealing and easy to understand (Olgun et al, 2013) Assurance 1) Employee behavior raises customer’s confidence (Olgun et al, 2013) 2) Employees in the Internet Service Provider company are polite to their customers (Olgun et al, 2013) 3) Employees in the Internet Service Provider company have necessary knowledge to answer all questions raised by customers (Olgun et al, 2013) 4) Company staff is friendly and aware of every service item (Arshad, 2014) Satisfaction 1) Based on your experience with the company, overall you are very satisfied with the Internet Service Provider company (Olgun et al, 2013) 2) Complete service offer by Internet Service Provider company is significantly above what is expected (Olgun et al, 2013) 3) Packages offered by company satisfy my needs (El-Kiki & Lawrence, 2013) (Almossawi, 2012) Loyalty 54 Based on previous studies, service quality could be one of the determinants of satisfaction and loyalty of customer. Due to the fact that services are not concrete, it is difficult to measure the level of quality compared to the physical characteristics of tangible goods. However, the consumer service, like consumer goods, has within it a set of characteristics which form the basis for comparison of alternative services, and/or implicit perceptions in the mind of the buyer, which cannot be expressed explicitly. The five dimensions of service quality used in the study are: Empathy of Service Provider: means to express empathy, care, and personal attention to the customer. The most important factors that measure the empathy index is employee understanding the particular needs of the customer and providing enough personal attention. Reliability: is considered to be the most important dimension in determining the customer's perception of the quality of services. This concept is linked to the capabilities of the service provider, which means that the service is provided in a timely and proper performance. On this basis, identified phrases that reflect the reliability index are: Provider Company which provides its services without making mistakes and on time and provides reliable information. 1) I would like to continue to deal with the Internet service Provider company that I am currently dealing with (Olgun et al, 2013)(Arshad, 2014) 2) I recommend my close environment to deal with the Internet Service Provider company that I deal with (Olgun et al, 2013) 3) I will continue to use this company’s service even if they slightly increase prices (Arshad, 2014) 55 Responsiveness: means the service is provided at the right time and the right place, the existence of a desire to help and provide customers with the service with immediate effect, paying attention to their problems and the ability to service immediately. It also means ability to answer customer questions, paying attention to their problems, and having the ability to provide the service with high flexibility. Suggested phrases which can reflect the response index is: employees are prepared to support clients at any moment with all necessary information. Tangibility: This component refers to the appearance of individual providers of services and also the appearance of physical facilities, tools and equipment used in providing the service. The most important aspects that can measure the index is the attractiveness of interior design of the ISP provider and its use of the most modern equipment Assurance: The staff of ISP need to exert maximum possible effort in order to win more customers by providing the required services as requested by the customers so as to create the necessary psychological comfort in the mind and heart of the customer. Service institutions should as much as possible try to get close to customers and listen to their aspirations and to respond to their needs in order to gain his trust and loyalty, allowing them to strengthen their competitive position and to ensure the continuity and growth. In addition to the previous five variables the study used the following two variables: Customer satisfaction: It is a feeling of happiness as a result of satisfying 56 human needs or desires. Satisfaction in business services and consumer satisfaction is derived from the utility through the consumption of a commodity or benefit from the service. It can be defined as the degree of awareness of the effectiveness of the organization in providing products or services that meet the expectations and needs. Achieving satisfaction leads to customer loyalty. Customer loyalty: It is a measure of customer repurchase intensions (customer's commitment to continue to deal with the company that they are currently dealing with), and positive word of mouth (customers recommendations to others for dealing with the same company that they are currently dealing with). The survey questionnaires were translated from various references into Arabic in order to facilitate better understanding by the respondents. The questionnaire consisted of three sections. The first included demographic information about the respondents. All questions have fixed-alternative answers. The second section consisted of three portions. The first portion dealt with service quality dimensions. Service quality was measured by asking nineteen questions for the five dimensions (empathy, reliability, responsiveness, tangibility and assurance) on five level Likert-scale ranging from "strongly agree" to "strongly disagree". The second portion consisted of customer satisfaction measurement. Customer satisfaction was measured by asking three questions using a five-point Likert-scale. The third portion consisted of customer loyalty assessment. Customer loyalty was evaluated by asking three questions, using a five-point Likert-scale. 57 Finally, the third section consists of two parts. The first part is related to which dimensions of service quality is most satisfying to the customer. In the second part the respondents were requested to provide general observations and comments based on their experience with their respective ISP 3.7 Data Analysis Framework The data collected was evaluated using a Statistical Package for the Social Sciences (SPSS) with its statistical methods that include Cronbach’s α to test reliability of the dat. Reliability refers to the consistency of a test; its ability to produce similar results each time it is used (Majmudar, and Gibbs, 2011). According to Majmudar and Gibbs, (2011) reliability requires both objectivity and consistency. In this study, the researcher secured the reliability of the survey by checking its consistency through the use of the Cronbach Alpha Test for all study variables (empathy, reliability, responsiveness, tangibility, assurance, satisfaction, and loyalty) in each item. • Means, standard deviations, and frequency distributions were calculated by descriptive statistics. • Relative degree level (shown in Table 3.3) was determined for each study variable as suggested by Sekaran and Bougie, (2010), and is defined in equation 3.2 (see also Table 3.3): 58 • Testing the study hypotheses was done by simple and multiple regression tests, and ANOVA test. Table (3.3): Degree level Degree level Mean score Low degree 1.00 – 2.33 Medium degree 2.34 – 3.66 High degree 3.67 – 5.00 Depending on Likert-scale that applied on the answers of the respondent’s attitude toward each statement of study variables, the researcher used the following scale: Strongly agree (5), agree (4), neutral (3), disagree (2), and strongly disagree (1). Degree level was classified based on arithmetic mean in three categories low, medium, and high. In order to get the relative degree level, the researcher applied equation 3.1, where the low degree lies between 1.00 -2.33, medium degree lies between 2.34 -3.66, and high degree lies between 3.67 -5.00. 3.8 Validity Test validity refers to a construct measuring what the test was intended to measure (Majmudar, 2011). To maintain test validity in this study, several measures were taken including:  The survey was constructed based on a thorough review of the literature and under supervision of a professor.  An expert translated the survey from English into Arabic as the native language of the respondents was Arabic 59  The survey was sent to several arbitrators who are specialists in the service sector and quality to refine the questions further and modifications to the instrument were made as required.  A quantitative approach was adopted for data collection to ensure more representative results. 3.9 Reliability Reliability refers to the consistency of a test; its ability to produce similar results each time it is used (Majmudar, 2011). According to Majmudar (2011) reliability requires both objectivity and consistency. In this study, the researcher secured the reliability of the survey by checking its consistency through use of the Cronbach Alpha Test for