i

INFLUENCE OF INTERNET SERVICE PROVIDER'S

SERVICE QUALITY ON CUSTOMER LOYALTY

BY
Bikram Pun
T.U. Regd. No: 7-2-50-0586-2019
Exam Roll No.: 23692/19

A Summer Project Report Submitted to

Faculty of Management, Tribhuvan University
in partial fulfillment of the requirement for the degree of

Bachelor of Business Administration (BBA)

at the
Butwal Multiple Campus
Tribhuvan University

Butwal, Nepal
April, 2024

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DECLARATION

I hereby declare that I have completed the Summer Project entitled “Influence of
Internet Service Provider's Service Quality on Customer Loyalty” under the
guidance of Mr. Lal Bahadur Pun in partial fulfillment of the requirements for the
degree of Bachelor of Business Administration at the Faculty of Management,
Tribhuvan University. This is my original work and I have not submitted it earlier
elsewhere.

Date: April, 24, 20024 ………………

Bikram Pun
BBA 7th Semester

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CERTIFICATE FROM THE SUPERVISOR

This is to certify that the summer project entitled “Influence of Internet Serv ice
Provider's Service Quality on Customer Loyalty” is an academic work done by Bikram
Pun submitted in the partial fulfillment of the requirements for the degree of Bachelor
of Business Administration at the Faculty of Management, Tribhuvan University
under my supervision. To the best of my knowledge, the information presented by
him/her in the summer project report has not been submitted earlier.

…………………..
Lal Bahadur Pun
Supervisor
Faculty of Management
Butwal Multiple Campus
Butwal, Rupandehi

Date: April 24, 2024

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APPROVAL SHEET

We have examined the summer project report entitled “Influence of Internet Serv ice
Provider's Service Quality on Customer Loyalty” presented by Bikram Pun for the
degree of Bachelor of Business Administration. We hereby certify that the summer
project report is acceptable for the award of the degree.

……………………….
Mr. Lal Bahadur Pun
Supervisor

…………………….
………………………
External Examiner

……………………….
Dr. Om Prakash Aryal
BBA Program Director

Date:

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ACKNOWLEDGEMENT

I want to express my gratitude to everyone that has assisted me in putting up this project
report. I would like to thank Tribhuvan University for providing us such project work
to broaden our theoretical knowledge into real practical life. And also want to thank
my college, Butwal Multiple Campus (BMC) for guiding me for the completion of the
project. I am also thankful to Mr. Lal Bahadur Pun, Butwal Multiple Campus for his
direct and indirect support during my research that counts in my study.

I would like to express my sincere thanks to Dr. Om Prakash Aryal Co-ordinater of

BBA Programme for the summer project for guiding me throughout. His suggestions
were very useful and have helped me to a successful completion of this report. It will
be my pleasure and shall consider it my success if this report could be of any help to
anybody concerned.

Thank You,
Sincerely
Bikram Pun
BBA 7th Semester

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TABLE OF CONTENTS
Page. No
Title Page i
Declaration ii
Certificate from the Supervisor iii
Approval Sheet iv
Acknowledgment v
Table of Contents vi
List of Table vii
List of Figures viii
List of Abbreviations ix
Executive Summary x
CHAPTER I: INTRODUCTION
Context Information 1
Problems Statement 3
Objectives of the Study 5
Significance of the Study 5
Limitation of the Study 6
Literature Survey 6
Research Method 15
CHAPTER II: DATA PRESENTATION AND ANLAYSIS
Respondents Profile 20
Findings 30
CHAPTER III: CONCLUSION AND ACTION IMPLICATION
Conclusion 36
Action Implication 37
REFERENCES
APPENDICES

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LIST OF TABLES

Table Title Page No.

Table 1: Age of Respondents 20
Table 2: Gender of Respondents 21
Table 3: Academic Qualification of Respondents 21
Table 4: Occupation of Respondents 22
Table 5: Income/Pocket Money (Monthly) 22
Table 6: Descriptive result 23
Table 7: Reliability analysis of variables 25
Table 8: Pearson Correlation 26
Table 9: Coefficient Table of Independent and Dependent Variables 27
Table 10: ANOVA Table 29
Table 11: Model Summary of Regression Analysis 30
Table 12: Summary of Demographic Factors 30
Table 13: Summary of Descriptive Analysis 31
Table 14: Summary of Pearson Correlation 32
Table 15: Summary of Reliability analysis of variables 32
Table 16: Hypothesis Testing Results 32

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LIST OF FIGURES

Figure No. Title Page No.

Figure 1: Conceptual Framework 15

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ABBREVIATIONS

NTA Nepal Telecommunication Authority

ISP Internet Service Provider
NQ Network Quality
CS Customer Service and Technical Support
IW Information Quality and Website Support
SP Security and Privacy
SD Standard Deviation
SPSS Statistical Package for Social Sciences

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EXECUTIVE SUMMARY

The purpose of this research is to investigate the factors influencing customer loyalty
in ISPs, in Rupandehi, Nepal. For this purpose, this paper has used five dimensions of
service quality - network quality, customer service, and technical support, information
quality and website information support, security, and privacy, as proposed by
Thaichon, P., Lobo, A. and Mitsis, A. (2012). The target population of this research was
the users of Internet subscribers. The researcher collected the data from 124 respondents
during March 2024 using convenience sampling. The required data for the study has
been collected using a structured questionnaire. The method used is descriptive and
analytical, which tested the connection using the Pearson correlation analysis, to test
the hypothesis by multiple regression analysis, and to determine the accuracy of
measurement using the reliability test. All the data was analyzed using Statistical
Package for the Social Sciences (SPSS) version 20. From the result, the majority age
range was 20-30 years old (65.3%) and it showed that most respondents were male
(58.9 %). And had academic qualifications of bachelor’s degree (45.2%) and most of
them were students (57.3 %), earning below Rs. 10,000 (57.3%). Results show that the
correlation of service quality dimensions namely network quality, customer service &
technical support, information quality & website information support, security, and
privacy with customer loyalty is in a moderate positive relation based on the
interpretation of the r-value correlation coefficient. To test the hypothesis, multiple
linear regression was tested at a significant level of 0.05, from the result, the value of p
of service quality dimensions namely network quality, customer service & technical
support, information quality and website information support, security, and privacy
were lesser than the significant level of 0.05. Hence, the hypothesis is proved that there
is an influence of service quality dimensions on customer loyalty. Furthermore,
"Network Quality" is the strongest dimension of service quality that impacts customer
loyalty followed by Information quality and Website Information Support. From the
findings, the researcher concludes that the results from this research will help Internet
service provider to improve their services. This research will help the Internet service
provider to better understand the perceived service quality of the customers and help to
improve it.

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CHAPTER I: INTRODUCTION

Context Information

In recent years, Nepal's telecommunications business, particularly the internet sector,

has grown at a rapid pace. The fact that more people in Nepal are using Internet services
is evidence of this. According to Saadat and Soltanifar (2014), the Internet is one of the
most significant innovations of the 20th century.In today's digital age, the Internet has
become an indispensable part of everyday life, serving as a fundamental tool for
communication, information access, and commerce. Although in 2011 only about 9.0%
percent of Nepal's population used the Internet, the use of the Internet in Nepal is
growing rapidly. As of October 2023, 98.98% of the population has access to the
Internet according to Nepal Telecommunications Authority (NTA). The rapid
development of the internet was triggered by the presence of a new technology called
broadband internet or wide band internet. As a result, many Internet service provider
companies or ISPs (Internet Service Providers) have also started to stand up. The
number of Internet users in Nepal has multiplied which has led to competition among
companies aimed at gaining a bigger market share and profits by penetrating markets
to attract new customers and developing the ability to maintain customer loyalty. An
Internet service provider (ISP) is an institution managing all the activities regarding the
operation and distribution of Internet services to the public. ISP is a product in the form
of services or services in the field of internet service providers. Major ISPs in Nepal
run their firms and provide their services under the regulations of the Internet Service
Providers’ Association of Nepal (ISPAN). According to Telecommunication Insight
Asoj, 2080 (18 September-17 October 2023) report of NTA, there are 62 Broadband
Internet Service Providers offering Internet access to businesses and regular consumers,
and number of subscribers (Based on Total subscription) were 2,911,284. As of October
2023, the top 10 major Internet Service Providers in Nepal which has the largest market
proportion of Fixed Broadband service are World Link Communications Pvt. Ltd., Dish
Media Network Ltd., Nepal Telecom Limited, Vianet Communications Limited, Classic
Tech Pvt. Ltd., Subisu Cable NetPvt. Ltd., Websurfer Nepal Pvt. Ltd, TechMinds
Network Pvt. Ltd., CG Communications Ltd., Broadlink Network & Communication
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Limited. Due to the exceptional growth in ISPs as well as internet users, there exists a
strong rivalry among Internet Service Providers, thus Service quality is becoming one
of the most important aspects in the field of services.

Service quality is an important differentiator in a competitive business environment,

and a driver of service-based businesses (Zhao and Benedetto, 2013). Service quality
measures how well the service delivered matches customer expectations (Zhao and
Benedetto, 2013). The quality of service offered by ISPs encompasses various aspects
such as network quality, customer service and technical support, website information
support, and security and privacy. Customers are now more aware of the level of the
service they get which has led the organization to give more attention to the level of the
service they provide to their customers. By enhancing service quality, businesses can
influence customer satisfaction. It is important for business success and long-term
customer loyalty. Customer loyalty increasingly becomes very important and appears
to be the main concern of many businesses, especially when many companies are facing
costly challenges in customer acquisition (Abdolvand et al., 2006). The relationship
between service quality and customer loyalty has been a focal point of research across
various industries, including the telecommunications sector. In the context of Internet
services, customer loyalty refers to the likelihood of customers continuing to use the
services of a particular ISP over time and recommending it to others.

Despite the increasing importance of internet service quality, there remains a gap in
understanding the specific influence it has on customer loyalty within the ISP industry
of Nepal. However, the study of Yee et al. (2011), Al Otaibi and Yasmeen (2014), Khan
and Fasih (2014), Liu and Wang (2017), etc. documented that service quality has a
significant influence on customer loyalty. Furthermore, some empirical evidence (e.g.,
Obeidat, et al., 2012; Liu & Wang, 2017; Khan & Fasih, 2014; Nguyen et al., 2020)
documented that service quality also significantly influences customer loyalty.
Furthermore, in an increasingly competitive market, where customers have a multitude
of options to choose from, building and maintaining customer loyalty is essential for
ISPs to sustain growth and profitability. Therefore, this research aims to analyze the
influence of ISP’s service quality on customer loyalty.
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Problem Statement

As defined by Parasuraman et al. (1988) service quality is the evaluation of a service

by customers achieved by comparing its actual performance and the general
expectations of its performance. It can also refer to the difference in expectations by
customers regarding its performance and its actual performance (Parasuraman et al.,
1988; 1985). Parasuraman et al. (1988) identified five dimensions of service quality as
SERVQUAL dimensions: tangibles, reliability, assurance, empathy, and
responsiveness. SERVQUAL was initiated based on Parasuraman’s et al. (1985) gap
model between performance and expectations: as performance exceeds expectations,
quality increases and vice versa. In other words, the central idea in this model viewed
service quality as a function of the different scores or gaps between expectations and
perceptions (Zeithaml et al., 1996).In addition to SERVQUAL, E-S-QUAL has been
developed by Parasuraman et al. (2005) as an attempt to capture the measurement of
service quality in the new information age. Nonetheless, both of these scales do not take
into account the specific issues relevant to customers of high-tech ISPs. SERVQUAL
and E-S-QUAL focus on service providers who operate via the Internet platform
(Vlachos and Vrechopoulos, 2008) and not those who provide the Internet connection
and platform for online business-to-business and business-to-customer activities. In the
context of Nepal, several studies have been found to analyze the impact of service
quality on customer satisfaction and customer loyalty in commercial banks,
Restaurants, Telecommunication sector. However, none of them have analyzed the
ISPs’ service quality dimensions. This area therefore deserves further investigation.

In addition, Customers will feel satisfied and loyal to the company if the company
provides maximum service quality. The customer who is not satisfied with the product
or service received, by comparing the expected quality based on information received
before purchasing a product so the customer will make a response in the form of
complaints or suggestions for improvement (Al-Haqam, R. F., & Hamali, A. Y. 2016).
These complaints can be conveyed verbally, over the phone, in person, or written forms
like letters, text messages, or distributed questionnaires. It is crucial for ISPs to
promptly address all customer complaints to uphold optimal service quality. Previous
studies have indicated a direct link between service quality and customer loyalty.
According to NTA, the complaint resolution received from customers is presented in
table below:
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Table 1: Recapitulation of Customer Complaints

Customer’s Complaint No. of complaints

No internet connection 18
Internet speed fluctuation/Bandwidth/Slow internet 28
Maintenance issues 6
Billing/Refund issues 10
Toll Free Number related issues 3
Router issues 2
Others 10

Source: NTA’s Telecommunication Insight Asoj, 2080 (18 September-17 October

2023)

Data in Table 1 shows that complaints submitted by Internet users are still high enough
in number. The complaints submitted by Internet users also indicate that the service
quality provided by IPSs of Nepal has not been maximal to fulfill customer expectations
and needs. Consequently, customers are switching ISPs frequently which has led to
customer turnover in the ISP industry in Nepal.

Based on the above explanation and data above, the analyzed problem can be
formulated. First, it is how service quality and customer loyalty are in the ISP industry
of Nepal. Second, whether there is the influence of ISP’s service quality on customer
loyalty significantly. There is limited research on consumer retention and brand loyalty
in ISP markets globally, despite high churn rates (see: True, 2010; Spiller, Vlasic &
Yetton, 2007). The goal of this research is to find the relationship between service
quality given by the ISPs toward customer loyalty to keep continuing to use the services
of a particular ISP over time and recommending it to others.

Hence, this study aims to investigate the specific ISP-based service quality dimensions
and attributes, and their differing influence on customer loyalty in the Nepalese context.
Thus, this study has tried to address the following research question:

a. Is there a relationship between Network Quality and Customer loyalty?

b. Is there a relationship between Customer Service & Technical Support and
Customer loyalty?
c. Is there a relationship between Information Quality Website Information
Support and Customer loyalty?
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d. Is there a relationship between Security and Privacy Customer loyalty?

Objective of the Study

The primary objective of this study is to get an insight into the influence of ISP-based
service quality dimensions on customers in the Nepalese context. In line with the
primary objective, specific objectives are as follows:

a. To identify the level of internet service quality.

b. To analyze the influence of the service quality dimension on customer loyalty.

Significance of the Study

This study contributes both theoretical and practical implications. Understanding the
relationship between service quality and customer loyalty is not only academically
compelling but also holds practical implications for ISPs. By identifying the factors that
contribute most significantly to customer loyalty, ISPs can tailor their service offerings
and strategies to better meet the needs and expectations of their customers, ultimately
enhancing customer satisfaction and retention. ISPs’ overall service quality is widely
considered as one of the key factors determining customer loyalty. This study aims to
examine the individual influence of each service quality dimension on an ISP’s
customers’ evaluation. This study provides valuable insights into customer loyalty in-
home Internet services. The proposed research will develop an understanding of
consumer buyer behavior of services and will create an ideal model for retention.
Beneficiaries of this study include various stakeholders, including consumers of ISPs,
ISPs themselves, the government, and other commercial interests. Practical
implications that can be produced from this research will form a foundation for the
service providers in the home ISP to develop new retention strategies. The research will
help Internet Service Providers to identify and improve their service quality by
identifying and eliminating the gap in quality, thus, increasing the quality level of their
services in the future. Additionally, it will help ISP organizations rearrange the
organizational structures if needed to meet the quality expectations of customers. The
quality level and reliability of the internet service provider can be measured with the
help of the research. The customer must be happy with the service of the firm so that
they can be retained for a longer period by the service provider. The addition of value
to the service will help to get the attention of a large number of new customers. The
educational level of the customers may be vital in choosing an Internet service provider.
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The research will be handy for the betterment of the ISP industry and it will encourage
the customers to identify the lapse in the service and create the situation for the
improvement of the service of the firm. Customers are always demanding, and the
research will identify the service quality dimensions to be improved.

Limitation of the Study

Every study is conducted under any constraints and limitations. Likewise, this study is
also limited by some constraints. There are many aspects related to the research topic
that should be analyzed to address the topic in a broader sense. However, due to several
limitations, not all issues could be addressed. This research only focuses on the issues
raised in the research questions. The following are the limitations of the study:

a. The choice of destination where this study took place (i.e. Nepal) might limit the
generalization of the findings due to cultural differences in other countries.
b. The model in this study only includes customer satisfaction and customer loyalty as
customers’ responses. An investigation into other factors such as value, trust, and
commitment could generate more insights.
c. Several factors like limitations of budget, and time limitations for data collection
will be some restrictions for doing in-depth and intensive research on the topic.
d. The sampling will consist of random sampling and the survey will done online and
anonym. Thus, the information will be collected through the survey, which depends
on the reliability of customers' feedback to the survey questionnaire and will also
be assumed to be correct.

Literature Survey

Any study will not be complete without taking a critical look at some past empirical
studies in terms of the purpose of the studies, the methodology that was adopted, and
the findings of the studies.

ISPs' service quality dimensions

Previous research evidences that consumers are motivated by overall service quality,
which emerges from a stable and fast internet network quality, quick response, ready-
to-serve customer support team, information quality, and a high level of security and
privacy that is trusted by customers (Vlachos and Vrechopoulos, 2008). Lai et al. (2009)
research confirms that network quality is an important driver of overall service quality
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in the Chinese telecommunications market. Customer Service is an interactive activity

to provide what is needed by the customer regarding product or company information,
so if the customer is satisfied with the service provider then the level of loyalty will
also increase (Dimyati & Afandi, 2018). Moreover, company websites also provide an
effective communication and information channel between companies and their
customers (Grigoroudis et al., 2008). Thaichon et al. (2014) affirmed that security and
privacy are connected with a feeling of customer protection and security during their
transactions and usage, then this causes the security system offered by an internet
provider will be very important to maintain the security of customer data. Given the
above, we have identified the following four elements that impact the overall service
quality of internet service providers:

a. Network quality
b. Customer service and technical support
c. Information quality and website information support
d. Security and privacy

It is also our intention to identify this unique service quality measurement model using
the abbreviated acronym “NCIS quality model” (Thaichon et al. 2012). The explanation
of the four elements and development of related hypotheses follows

Customer loyalty

Customer loyalty may refer to the conscious evaluation of the quality or price ratio, the
price difference by consumers. Elsewhere, customer loyalty has been defined as the
willingness of customers to pay a high or premium price for a service (Supphellen &
Nysveen, 2001; Zaithaml, Berry & Parasuraman, 1996). According to Raju, Srinivasan,
and Lal (1990), customer loyalty encompasses loyalty behavior or customer retention,
which makes customers avoid choosing competitor brands and instead make repeat
purchases of a brand they are accustomed to. Raju, Srinivasan, and Lal (1990) added
that customer loyalty is the behavioral as well as attitudinal tendency of consumers to
choose one brand against others. This may be due to its convenience, performance,
satisfaction with the service or product, or simply comfort and familiarity with the
brand. Supporting this view, Supphellen and Nysveen (2001) opined that customer
loyalty often encourages customers to feel positive and enjoy the shopping experience,
spend a larger share of their wallet, shop more consistently, and helps attract customers
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to popular and familiar brands. According to Taylor (1997) prompting customer loyalty
involves a company building an emotional bond with its customers. Taylor (1997)
further noted that building loyalty in customers involves blending customer experience
management with the emotional, physical, and value elements of the shopping
experience into a cohesive experience. It has been suggested in the literature that it is
less expensive to retain customers than to acquire new ones and that it is considered the
most cost-effective strategy to drive customer retention, customer loyalty, and customer
satisfaction (Teeter, &Schointuch, 2000). Loyal customers are known to ensure sales
and are more likely to buy high-margin-supplemented services and products. These
customers are also known to help minimize costs associated with marketing and
consumer education, especially when these customers become the organization’s Net
Promoters (Taylor, & Baker, 1994). Different degrees and types of customer loyalty
have been identified in the literature: attitudinal, behavioral, polygamous, and
monogamous (Turow, Feldman, & Meltzer, 2005).

Customer loyalty is considered an important element in increasing the profitability of

the company (Oliver, 1997). Customer loyalty in the service sector is difficult to
maintain however, some benefits are associated with it like positive word of mouth and
loyal customers (Lewis and Soureli, 2006). In the services context, intangible attributes
such as reliability and confidence may play a major role in creating or maintaining
loyalty (Dick and Basu, 1994). Customer loyalty is frequently defined as observed
behavior (Lil Jander and Strand Vik, 1995). Aaker (1991) discussed the role of loyalty
in the brand equity process –focusing on customer loyalty and reducing marketing
costs. Customer loyalty has important managerial implications, but significant
conceptual and empirical gaps remain in this area (Chaudhuri and Holbrook, 2001; Lau
and Lee, 1999; Oliver, 1997; Fournier and Yao, 1997). Fornell and Wernerfelt (1987)
elaborated that the costs of customer retention are substantially less than those of
acquiring new customers. Bloemer and Kasper (1995) explained that similarly put
forward that one should take into account the degree of consumers' commitment toward
the service provider by repurchasing the brand; additionally, it should be noted that
repeating purchasing behavior alone does not imply a consumer is loyal to the service
provider. True loyalty points toward a commitment towards a company and not just
repurchasing due to inertia (Bloemer and Kasper, 1995).

Relationships between service quality dimensions and customer loyalty

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Network quality

It is commonly acknowledged that service quality drives customer loyalty and company
profitability (Prentice, 2014). This study has attempted to study the effects of each
service quality dimension on customer loyalty. Network quality includes the number of
errors, downloading and uploading speed, and system response time (Vlachos and
Vrechopoulos, 2008). Other scholars also confirm that network quality is one of the
most important drivers of customer loyalty when dealing with prepaid cell phones
(Miranda-Gumucio et al., 2012). In the ISP context, network quality refers to the quality
of the network or the quality and strength of the network signal of the network (Wang
et al., 2004. Hence, for the ISP, any dropped connection to the Internet can lead to low
network quality from the customers’ perspective. A company that can deliver high-
quality service has a better chance of recruiting customers who are willing to return and
pass the firm’s performance praises to others (Ojo, 2010). It is necessary for ISPs to
equally focus on both technical quality (i.e. Internet connection speed, download speed,
connection reliability) and functional quality (i.e. the effective and rapid solution of
technical problems, and employee behavior) to improve service quality (Deng et al.,
2010; Kyriazopoulos et al., 2007; Woo and Fock, 1999). Previous research confirms
that network quality is one of the most important drivers of overall service quality in
China (Lai et al., 2009), Hong Kong (Cheng et al., 2008), and Korean mobile service
provider markets (Kim and Yoon, 2004), as well as in Greece ISP industry
(Kyriazopoulos et al., 2007). Similar results are reported in the US wireless services by
Seo et al. (2008), who state that the connectivity quality of wireless is positively and
significantly related to customers' repurchase intention. Based on the above discussion,
we propose the following hypothesis:

H1. Network quality has a significant effect on customer loyalty

Customer service and technical support

It has been suggested that customer service has a positive and significant impact on
customer loyalty in technology-based banking services (Ganguli and Roy, 2011).
Responsiveness of technical and customer service staff has a significant positive
influence on behavioral loyalty in the Greek mobile telephony service (Santouridis and
Trivellas, 2010). Superior customer service is a crucial element of a service provider’s
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Value proposition and a fundamental driver of differentiation and competitive

advantage in almost every industry (Brohman et al., 2009). Leelakulthanit and
Hongcharu (2011) report that an ISP that differentiates itself by offering reliable
customer support will gain an advantage over its competitors. In addition, by equipping
employees with innovative technology and the right tools, the company grants them the
ability to take ownership of their jobs, and as a result, this will improve the overall
quality of the service provided (Asaari and Karia, 2003). A study in the Turkish
telecommunication industry confirms this view by demonstrating that customer
complaints handling is an important factor in determining service quality (Aydin and
Özer, 2005). Customer care is the major determinant of repeat purchase intention and
customer loyalty, while deficiencies in the quality of customer service are the main
reasons for customers switching (Miranda-Gumucio et al., 2012). In other words, an
ISP with outstanding customer service and technical support is more likely to have
higher perceived overall service quality. Based on the above discussion, the following
is a hypothesis:

H2. Customer service and technical support have a significant effect on customer
loyalty.

Information Quality and Website site information support

A service provider facilitating high levels of information quality and website support
can maintain a long-term relationship with customers (Canhoto and Clark, 2013).
According to Yang, Bi, and Zhou’s (2005) research, a lack of information completeness
makes it harder for customers to get the right message and picture of the offering. On
the other hand, excessive information might make it more difficult for customers to find
what they want. Moreover, information quality plays an important role in building
customers’ overall positive attitudes towards the company (A. K. Jaiswal, Niraj, &
Venugopal, 2010). Likewise, researchers report that website design is found to be a
determinant of loyalty of online customers in South Africa and Australia (Caruana and
Ewing, 2010). Other website characteristics such as ease of use and information are
significant influencers of customer loyalty in e-commerce (Toufaily et al., 2013) and
content websites (Jaiswal et al., 2010). In general, websites should deliver a wide
variety of information in a format that is easy to understand and follow (Kim and
Niehm, 2009). A service provider facilitating high levels of information quality and
website support is often perceived to have better service quality (Thaichon, Lobo, &
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Mitsis, 2013), and can maintain a long-term relationship with customers (Canhoto &
Clark, 2013). Based on the above discussion, we propose the following hypotheses:

H3. Information Quality and Website information support has a significant effect on
customer loyalty.

Security and privacy

Security and privacy are associated with customers’ feelings of protection and safety
during their transactions and usage (Vlachos & Vrechopoulos, 2008). Security is
defined as the extent to which a customer perceives an entire transaction, including
payment methods, and instruments for storing and transmitting all confidential
information, as safe (Chang & Chen, 2009). ). Previous research reports that security
and privacy are related to customer loyalty, especially in the e-commerce context (Ratna
Singham, 1998). Recently, Limbu et al. (2011) reported a positive link between
customer privacy and website loyalty in the USA. Privacy is often a concern of
customers of high-tech services, which relates to customers’ perception of the quality
of processes used for personal information transmission and storage (Özgüven, 2011).
Security and privacy are generally strongly related to an ISP’s reliability and
responsiveness (Thaichon, Lobo, & Mitsis, 2014). These attributes can be considered
as cognitive evaluations of performance over time which are anticipated in building
affective attachment (Fullerton, 2005). It has been confirmed that customer privacy
plays a significant part in determining loyalty in both retailing and content sites (A. K.
Jaiswal et al., 2010)

In terms of their relationship with service quality, privacy and security (security of
payments and privacy of given information) are positively related to service quality,
especially in e-commerce (Ha and Stoel, 2012), and in online retailing contexts
(Wolfinbarge and Gilly, 2003). In addition, Roca et al. (2009) report that when service
providers have a good reputation for their security practices, consumers tend to believe
that purchasing with them is safe. In other words, an ISP with an outstanding security
and privacy policy is more likely to have higher perceived overall service quality. Hence
the following hypothesis has been proposed:

H4. Security and privacy have a significant effect on customer loyalty.

Empirical Review
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Shafei and Tabaa (2016) conducted a study on “Factors affecting customer loyalty in
the mobile telecommunication industry”. The main objective of the researcher was to
identify the service quality constructs for the telecommunication industry and the effect
on customer satisfaction, the perceived switching cost, and their significance to the
customer. The researchers also aim to examine the effect of customer satisfaction and
switching barriers on customer loyalty as well as to test the mediating effect of
switching barriers on the customer satisfaction and loyalty link. The researchers
adopted the framework from qualitative and quantitative phases. The researchers
collected the data from 218 respondents via questionnaire survey and in-depth
interviews were conducted with consumers and experts in the field as well as surveys
with consumers. The results were analyzed using Cronbach’s α test, Pearson’s
correlation and regression analysis technique.

The result of the study revealed that network quality, customer support, and pricing
structure are the main dimensions of service quality that are highly correlated to
customer satisfaction. The researchers also stated that customers are more interested in
the core services than other benefits and value-added services. Furthermore, the
researchers also found that loss cost, adaptation cost, and attractiveness of alternatives
are highly correlated to switching costs. Moreover, the researchers also revealed that
customer satisfaction and switching costs have a significant correlation with customer
loyalty.

Quach, T. N., Thaichon, P., & Jebarajakirthy, C. (2016) investigated “Internet service
providers' service quality and its effect on customer loyalty of different usage patterns”.
This study attempted to investigate the dimensions of an ISP's service quality and its
effects on customer loyalty in high-tech services. The service quality dimensions were
network quality, customer service, information quality, and security. To test the
hypotheses, an online survey was designed and conducted in all regions of Thailand.
Data was obtained from 1231 internet users. The analysis includes segmenting ISPs'
customers based on their usage patterns and evaluating their perceptions of Internet
service quality dimensions. Through the use of structural equation modeling and bias-
correct bootstrapping techniques. AMOS version 20 (Analysis of Moment Structures)
was employed to analyze the data. The items used to assess the ISP's service quality
were factor analyzed to confirm dimensionalities. Confirmatory factor analysis (CFA)
 13

was performed to examine whether the theoretical relationship between items and their
hypothesized factors was supported or not.

The study confirms that service quality dimensions can influence both attitudinal and
behavioral loyalty. These effects, however, are different across different groups of ISP
customers. The researcher stated that each service quality dimension (except for customer
service and technical support), Network quality, information quality and website support,
and security and privacy were positively related to attitudinal and behavioral loyalty.
Information and website support was the predominant predictor of attitudinal loyalty
and behavioral loyalty of ISP customers.

Jurnal Manajemen Dan Pemasaran Jasa, (2020) conducted a study on “Service quality
role on customer’s loyalty of Indonesia internet service provider during Covid-19”.The
main objective of the researcher was whether customer loyalty to Indonesian service
providers was related to service quality dimensions (namely network quality, customer
service, information quality, security, and privacy) by providing empirical evidence of
the relationship among these variables. This is to fill the research gap generated by the
fact that many previous studies have only studied up to the intention phase and/or have
jumped to the action phase without looking at the intention phase. A quantitative
approach through a questionnaire survey was conducted in primary data collection. Out
of 400 internet service provider customers surveyed in this study that collected through
internet online survey.

The findings and results show that: Firstly, network quality directly influences
attitudinal loyalty. Secondly, customer service directly influences attitudinal loyalty.
Thirdly, information quality directly influences attitudinal loyalty. Fourthly, security
and privacy not only directly influence attitudinal loyalty but also influence behavioral
loyalty. Finally, attitudinal loyalty directly influences behavioral loyalty.

Thaichon, P., Lobo, A., & Mitsis, A. (2014) investigated “An Empirical Model of Home
Internet Services Quality in Thailand”. The researcher aims to investigate the
antecedents to service quality and their relationship with affective evaluations of
customers of internet service providers (ISPs) in Thailand. Data was collected from
residential internet users in Thailand. The web link of the online survey was relayed by
the chosen ISP to households in the sampling frame. A total of 3,803 surveys were
received of which 1,708 incomplete ones were discarded. Hence, the final usable
 14

sample size was 2,059. The researcher undertook advanced statistical analysis using
structural equation modeling (SEM).

The findings reveal that service quality is influenced by network quality, customer
service, information support, privacy, and security. Service quality in turn also impacts
customer loyalty attributes, including satisfaction, value, trust, and commitment.
Satisfaction is a determinant of customer trust, whereas the direct relationship between
value and customer commitment is not supported.

Thaichon, P., Lobo, A., & Mitsis, A. (2014) conducted a study on “Evaluating specific
service quality dimensions which impact customers’ behavioral loyalty in high-tech
internet services”. The researcher aims to investigate the antecedents to customer
retention and brand loyalty of Internet Service Providers in Thailand. To test the
hypotheses, an online survey was designed and conducted in all regions of Thailand
and the sample size was 2059. The researcher used advanced statistical analysis using
structural equation modeling (SEM).

The findings reveal that customers’ commitment and value are influenced by
information support, privacy, and security. Additionally, the positive relationships
between information quality privacy and behavioral loyalty were revealed. Customers’
commitment and value were positively associated with behavioral loyalty. However,
surprisingly, there was no support for the hypothesized positive association between
customers’ value with behavioral loyalty.

Conceptual Framework
The conceptual framework is the researcher’s developed model using the three
theoretical models. It helps to explain the relationship between independent and
dependent variables. According to Sekaran (1992), a dependent variable is affected by
an independent variable positively or negatively. The dependent variable is the main
focus of the researcher. In developing the conceptual framework, the researcher has
selected variables that contribute to customer loyalty. Thaichon, P., Lobo, A. and Mitsis,
A. (2012) investigated “Investigating the antecedents to loyalty of Internet service
providers in Thailand: developing a conceptual model”. This study attempted to
investigate the dimensions of an ISP's service quality and its effects on customer loyalty
in high-tech services. The service quality dimensions were network quality, customer
 15

service, information quality, and security. Finally, the modified conceptual framework
is shown in the Figure from all the above theoretical research.

Independent variables Dependent variable

Network Quality

Customer Service and

Technical Service Customer Loyalty

Information quality and

Website Information
Support

Security and Privacy

Source: Thaichon, P., Lobo, A. and Mitsis, A. (2012)

Figure 1: Modified conceptual framework of “Influence of Internet Service

Provider’s Service Quality on Customer Loyalty”

Research Methodology

Research methodology systematic way to solve a problem. It is the science of studying

how research is to be carried out. Essentially, the procedures by which researchers go
through their work of describing, explaining, and predicting phenomena are called
research methodology. This chapter explains the methodology that is employed in this
study which includes various sections describing the research plan and design,
description of the sample, instrumentation, data collection procedure and time frame,
validity and reliability of the study and analysis plan. In the absence of methodology,
the conclusions drawn may likely be misunderstood.

Research methodology describes the method and process applied in the entire aspects
of the study and helps to resolve systematic problems. Research methodology is used
to collect information and data to set out an overall plan associated with a study. The
methodology may include both present and historical information. It provides a basic
frame work on which the study is based. Before presenting the analysis and
interpretation of data, the research methodology must be described first.

Research design
 16

The research design refers to the overall strategy that you choose to integrate the
different components of the study coherently and logically, thereby, ensuring you will
effectively address the research problem; it constitutes the blueprint for the collection,
measurement, and analysis of data. This paper has employed descriptive and causal-
comparative research design. This paper aims to analyze the influence of ISP’s service
quality dimensions on customer loyalty. Thus, a descriptive research design is adopted
to identify the level of internet service quality of Nepalese ISPs. This paper also aims
to analyze the influence of ISP’s service quality on customer loyalty. Therefore, a casual
comparative research design has been applied.

Population and sample procedure

The research was conducted inside Rupandehi with a population of around 1.1 million
(Source: Central Bureau of Statistics). However, it is impossible to research the whole
population. So, the basic part is going through sampling of the population. One hundred
and fifty internet subscribers are selected as a sample based on the convenience
sampling technique. Thus, this study has distributed 150 questionnaires to internet
subscribers of Rupandehi. Out of 150 questionnaires, only 124 complete and usable
questionnaires were returned from the respondents, which produced a response rate of
83 percent. The sample consisted of 124 Internet subscribers of different ISP
companies. The sample size of 124 consisted of ISP customers of different ages,
incomes, and occupational and educational backgrounds.

Methods and procedure of data collection

This paper is solely based on the primary data. Well-structured questionnaire survey
methods will be applied to collect the needed data. Both offline and online mediums
(i.e. Google Forms) will be used for data collection to cover large samples and to
minimize the cost and non-response rate. The questionnaires were divided into two
parts. The first part is related to the service quality dimensions and customer loyalty,
and the second is related to the respondent profile. This paper used five service quality
dimensions: network quality, customer service and technical support, information
quality and website support, and security and privacy (Thaichon. et al. 1991). Five
different statements based on the five-point Likert scale were included in each service
 17

quality dimension. The researcher will distribute the questionnaire to the respondents
who are currently using the service provider and have experience with the service.

Methods and procedure of data analysis

After the collection of data, the researcher will use quantitative tools for data analysis.
Analysis of data is a process of inspecting, cleansing, transforming, and modeling data
to discover useful information, suggesting conclusions, and supporting decision-
making. After the collection of data, various tools will be used to analyze them and find
out the conclusions. The data collected from respondents will be analyzed using
mathematical tools like Statistical Package for Social Science (SPSS) and results will
be presented graphically for easy understanding. Similarly, to show the effect of
different variables on customer loyalty, the 5-point Likert scale has been used and data
have been analyzed through the statistics using mean and standard deviation.
Relationships between variables have been tested using regression analysis and
hypothesis testing.

Mean

It is the sum of the values of all the elements in the sample.

Symbolically,

X = ∑X/N

Where,

X= population of the variable ‘X’

∑= sum of all the observed values.

N= Total number of observations.

Standard deviation

Standard deviation is the measure of the dispersion or variation of a set of data values.
Mathematically, the standard deviation is indicated with the Greek letter symbol σ, or
sd or s. A low σ indicates that the data values are tightly clustered around the mean or
expected value, whereas a high value of σ represents a wider distribution of the data
values from the mean value. The standard deviation is generally used to measure
confidence in statistical conclusions, for instance, the margin of error or standard error.
 18

The standard deviation of a random variable, statistical population, data set, or

probability distribution is the square root of its variance. Mathematically, the standard
deviation is denoted by the formula:

Multiple Linear regression analysis

Multiple linear regression analysis permits the simultaneous exploration of two or more
independent variables on a single interval-scale or ration-scale dependent variable
(Ticehurst, 2000). Multiple linear regression analysis is used for analyzing the
affiliation between single and dependent variables and multiple independent variables
as defined by Hair et al. (2000). Multiple linear regression helps the researcher to
predict the single dependent value with the use of independent variables whose values
are known. All the independent variables are analyzed through a regression analysis
process. This helps the researcher to predict the overall contribution of independent
variables. Multiple linear regression is a dependent statistical technique. By using this
method the variable should be divided into independent and dependent variables (Aaker
et al., 2000). It is only applicable when the variables are metric and the data can be
suitably transferred.

The equation of multiple linear regressions is:

𝑌 = 𝛽0 + 𝛽1𝑋1 + 𝛽2𝑋2 + ⋯ + 𝛽𝑛𝑋𝑛 + 𝜀

Where,

Yi – dependent random variable,

X1, X2…. Xn – values of independent variable,

β0, β1… βn – model parameters (regression coefficient)

εi – random error

Typically, the regression line is fitted with the method of least-squares by calculating
the best-fitting line for the observed data by minimizing the sum of the squares of the
vertical deviations from each data point to the line. Because the deviations are first
 19

squared, and then summed, there are no cancellations between positive and negative
values.

Tables

The collected data were classified and tabulated to make them more understandable and
clearer. Simple tables were used to classify and represent the data.
 20

CHAPTER II: DATA ANALYSIS AND PRESENTATION

This chapter will present the significance of the data analysis for the study of the
influence of internet service provider’s service quality on customer loyalty. This section
consists of three important. The first part is descriptive analysis, which comprises of
demographic factors of the respondents, which are the main target for this research. The
interpretation of the first part is described in frequency and percentage of each category.
The analysis of the mean and standard deviation of each variable will be presented in
this part. The second part is the reliability test of this study by using Cronbach’s alpha
test. The third part covers the analysis of the regression model including the correlation
of this collected data.

Respondent Profile

This part of the research will analyze the demographic factors, which consist of age,
gender, academic qualification, occupation, and income/pocket money. The researcher
will describe in the form of frequency and percentage from the highest to the lowest
numbering. The total number of respondents was 124. The distribution of the collected
sample based on these demographic profiles is presented as follows:

Classification based on Age

Table 1: Age of Respondents

Age Frequency Percent

Under 20 9 7.3

20-30 81 65.3

30-40 24 19.4

40-50 6 4.8

Above 50 4 3.2

Total 124 100

Table 1 investigates the results of age categories, the highest age category is 20-30 years
old with the result of 65.3 percent 81 respondents, followed by 30-40 years old with
19.4 percent having 24 respondents, then under 20 years old category with 7.3 percent
having 9 respondents. Followed by 40-50 years old with 4.8 percent having 6
 21

respondents and the lowest respondents were above 50 years old category with 3.2
percent having 4 respondents.

Classification based on Gender

Table 2 illustrates the gender distribution of respondents from the survey questionnaire
conducted for the research. A total of 124 responses were collected from the survey.

Table 2: Gender of Respondents

Gender Frequency Percent

Male 73 58.9

Female 51 41.1

Total 124 100

According to the collected information, 73 of the respondents were male. This

accounted for 58.9% of total respondents. Similarly, 51 of the respondents were female
with 41.1%. Thus, a higher percentage of respondents were male.

Classification based on Academic Qualification.

Table 3 illustrates the classification of respondents concerning their academic

qualifications. For this purpose, the classification is done by sectioning the academic
qualification into four main subcategories according to the education system of Nepal:
SLC/SEE, Plus 2, Bachelor, Master, and PhD.

Table 3: Academic Qualification of Respondents

Academic Qualification Frequency Percent

SLC/SEE 8 6.5

Plus 2 42 33.9

Bachelor 56 45.2

Master 18 14.5

Total 124 100

From the above table, it can be observed that only 8 out of 124 respondents were found
to have an academic qualification low of SLC/SEE. Similarly, 42 respondents have
 22

acquired a Plus 2 level academic qualification. Moreover, 56 respondents have achieved

or are pursuing a bachelor's degree. On the other hand, 18 out of total respondents have
a master's degree.

Classification based on Occupation

Table 4 shows a distribution of respondents based on occupation. For conducting this
study, the respondents have been classified into eight groups of occupation: Self-
employed, Service, Business Person, Home-maker, Salaried Worker, Student,
Unemployed, and Other.

Table 4: Occupation of Respondents

Occupation Frequency Percent

Self-employed 6 4.8

Service 7 5.6

Business Person 11 8.9

Home-maker 2 1.6

Salaried Worker 23 18.5

Student 71 57.3

Unemployed 1 0.8

Other 3 2.4

Total 124 100

As shown in the table, only 6 respondents were self-employed, 7 respondents were in

service, 11 respondents were Business Persons, only 2 respondents were Home-maker,
23 respondents were Salaried Workers, 71 respondents were Students, 1 respondent was
Unemployed and the remaining 3 respondents were other of the mentioned occupation
category. The majority of the respondents were Students with 57.3% followed by
Salaried Workers with 18.5%.

Classification based on Income/Pocket money:

Table 5 shows the distribution of respondents based on their monthly income in NRP.
For conducting this study, the respondents have been classified into five income/pocket
money groups.
 23

Table 5: Income/Pocket Money (Monthly)

Income/Pocket Money (Monthly) Frequency Percent
Below Rs. 10000 71 57.3
Rs. 10000-30000 20 16.1
Rs. 30000-50000 17 13.7
Rs. 50000-70000 5 4
Rs. 70000-90000 4 3.2
Above Rs. 90000 7 5.6
Total 124 100

From the data of the respondents, 71 respondents were earning or had less than 10,000
NRP per month. This represents 57.3% of the total respondents. On the other hand, 20
respondents were earning in the range of 10,000-30,000 NRP accounting for 16.1% of
total respondents. It was found that almost 13.7% of the respondents i.e. 17 respondents
earned in the range of 30,000-50,000 NRP per month. Similarly, only 4% of respondents
were earning between 50,000 and 70,000 NRP per month. Only 4% of respondents were
earning 70,000-90,000 NRP monthly. Only 7 respondents were earning above 90,000
NPR per month.

Descriptive analysis

This part is an analysis of the independent variables and dependent variable that consist
of network quality, customer service and technical support, information quality and
website information support, security and privacy, and customer loyalty.

Table 6 shows the analysis of independent variables and dependent variable by using
mean and standard deviation.

Table 6: Descriptive result

Statements Mean S.D

I have not experienced any Internet disconnection from this ISP (Internet Service
Provider). 2.42 1.16

The Internet downloading and uploading speed meets my expectations. 2.80 1.02

The Internet speed does not reduce regardless of peak or off-peak hours. 2.38 1.07
 24

The quality of the network is always constant. 2.17 1.06

Network Quality 2.44 0.85

Customer service personnel are skillful. 3.28 1.02

Customer service personnel are ready to respond to my inquiries. 3.06 0.99

My technical problems get solved promptly. 2.65 1.06

The employees are never too busy to respond to my requests. 2.76 1.02

Customer Service and Technical Support 2.94 0.79

This ISP provides sufficient information on its website. 3.19 1.04

This ISP keeps its website updated. 3.16 0.96

The information given on the ISP’s website is relevant to me 3.08 0.93

Information is easily accessible on its website. 3.28 1.02

Information Quality and Website Information Support 3.18 0.80

I feel that my personal information is protected at this ISP. 3.11 1.06

I feel that my financial information is protected at this ISP. 3.23 0.99

I feel that the transactions via this ISP are secured. 3.23 0.88

I feel this ISP has high-security features. 2.97 0.95

Security and Privacy 3.14 0.80

I would consider this ISP as my first choice. 2.76 1.13

I will say favorable things about this ISP. 3.00 0.99

I will recommend this ISP to other people. 3.05 1.15

I will remain loyal to this ISP. 2.73 1.28

Customer Loyalty 2.88 0.96

Table 6 shows the respondents’ responses on the ISP service quality dimension and
customer loyalty. Table 6 depicts that the mean value of all the statements included on
Network Quality is below 3 (Between 2.17 to 2.80) and an overall mean value of 2.44,
which indicates that respondents mostly agree that ISPs have below network quality.
 25

Similarly, another dimension, i.e., Customer Service and Technical Support, also shows
an overall mean value of 2.94, which implies that respondents also believe that the
service provided by ISP is below average. Furthermore, the overall mean value of all
the statements of another ISP service quality dimension, i.e., Information Quality and
Website Information Support, shows an overall mean value of 3.18, which indicates
that the ISP provides adequate information through the website to its customers.
Another dimension of ISP service quality, i.e., Security and Privacy, shows an overall
mean value of 2.88. Thus, it can be said that respondents believe that ISPs don’t provide
secure service to their customers.

On the other hand, customer loyalty shows an overall mean value of 2.88, which
indicates that the respondents are not loyal to ISP.

Reliability Analysis

The reliability of the questionnaire is examined by the reliability of each variable from
questionnaires and by using Cronbach’s Coefficient Alpha (α) Scale as Sekaran and
Bougie (2013) have defined. The researcher has tested the reliability of all the five
variables which are network quality, customer service and technical support,
information quality and website information support, security and privacy, and
customer loyalty. The result of the reliability test is given below:

Table 7: Reliability analysis of variables

Cronbach's
Statement Alpha

I have not experienced any Internet disconnection from this ISP (Internet Service
Provider). 0.612

The Internet downloading and uploading speed meets my expectations. 0.615

The Internet speed does not reduce regardless of peak or off-peak hours. 0.547

The quality of the network is always constant. 0.63

Network Quality 0.791

Customer service personnel are skillful. 0.456

Customer service personnel are ready to respond to my inquiries. 0.685

 26

My technical problems get solved promptly. 0.708

The employees are never too busy to respond to my requests. 0.5

Customer Service and Technical Support 0.779

This ISP provides sufficient information on its website. 0.721

This ISP keeps its website updated. 0.574

The information given on the ISP’s website is relevant to me 0.687

Information is easily accessible on its website. 0.66

Information Quality and Website Information Support 0.831

I feel that my personal information is protected at this ISP. 0.646

I feel that my financial information is protected at this ISP. 0.665

I feel that the transactions via this ISP are secured. 0.661

I feel this ISP has high-security features. 0.689

Security and Privacy 0.833

I would consider this ISP as my first choice. 0.67

I will say favorable things about this ISP. 0.696

I will recommend this ISP to other people. 0.784

I will remain loyal to this ISP. 0.736

Customer Loyalty 0.866

The result shows the value of Cronbach's alpha 0.791 for the four items of Network
Quality, 0.779 for the four items of Customer Service and Technical Support, 0.831 for
the four items of Information Quality and Website Information Support, 0.833 for
Security and Privacy, 0.866 for four items of Customer Loyalty. The value of
Cronbach’s alpha for all dimensions is above 0.70, indicating that the instruments’
reliability is acceptable (Nunnally, 1978).

Correlation between ISP Service Quality Dimensions and Customer Loyalty

Correlation analysis is a method used to determine the strength and direction of the
relationship between two variables. The correlation between the variables measures the
 27

degree of influence of one variable on another. A higher correlation value indicates a

stronger relationship between the two variables. When the correlation is 1 or -1, it
indicates a perfectly linear relationship between the two variables. Conversely, when
the correlation is zero, there is no relationship between the two variables. A positive
correlation indicates a positive relationship between the two variables, while a negative
correlation indicates a negative relationship.

Table 8: Pearson Correlation

Dimension NQ TS IW SP CL
Network Quality 1
Customer Service and Technical Support .562** 1
Information Quality and Website Information Support .267** .443** 1
Security and Privacy .405** .283** .339** 1
Customer Loyalty .572** .542** .478** .469** 1
** Correlation is significant at the 0.01 level (2-tailed).

Table 7 shows the value of Pearson’ r – i.e., the correlation coefficient of Network
Quality is 0.572 which indicates a moderate positive correlation on Customer Loyalty.

Similarly, the value of r of Customer Service and Technical Support is 0.542 which
indicates moderate positive correlation on Customer Loyalty. Furthermore, the value of
r of Information Quality and Website Information Support is 0.478 which indicates a
moderate positive correlation on Customer Loyalty. Lastly the value of r of Security
and Privacy is 0.469 which indicates a moderate positive correlation on Customer
Loyalty.

Thus, we can conclude that the service quality dimensions of ISP network quality,
customer service and technical support, information quality and website information
support, security and privacy are moderately correlated with customer loyalty. This
means, that any impact or change on a ISPs service quality dimension consequently
leads to its effect on all other dimensions too. On other words, an improvement or a
degradation in the quality standard of one ISP service quality dimension follows a
similar change in other remaining dimensions.

Influence of ISP service quality dimension on customer loyalty

In this part, the researcher will focus on the multiple linear regression analysis. Multiple
linear regression helps the researcher to predict the single dependent value with the use
 28

of independent variables whose values are known. The relationship between the
dependent variable (Customer Loyalty) and the independent variables (Network
Quality, Customer Service and Technical Support, Information Quality and Website
Information Support, Security and Privacy) was determined using linear regression
analysis.

Multiple Regression Analysis

Table 9: Coefficient Table of Independent and Dependent variables

Variables B Std. Error Beta (β) t p-value VIF

Constant -1.529 1.31 -1.167 0.245

Network Quality 0.353 0.094 0.31 3.747 0.000 1.623

Customer Service and

Technical Support 0.249 0.103 0.205 2.425 0.017 1.693

Information Quality and Website

Information Support 0.280 0.09 0.234 3.118 0.002 1.331

Security and Privacy 0.249 0.089 0.206 2.800 0.006 1.285

a. Dependent Variable: Customer Loyalty

CL = a+ b1 NQ + b2 CS + b3 IW + b4 SP

CL = 1.529+ 0.353 NQ + 0.249CS + 0.280IW + 0.249 SP

Where,

Customer Loyalty (CL) = Dependent variable

a = Y-intercept

b1, b2, b3, b4 = Slope of independent variable

NQ = Network quality,

CS = Customer Service & Technical support

IW = Information Quality & Website Information Support

SP = Security & Privacy

A constant of -1.529 indicates that if there is no network quality, customer service &
technical support, information quality & website information support, security &
 29

privacy, then customer loyalty will decrease by -1.529. The network quality regression
coefficient of 0.353 states that each additional 1 unit of network quality will increase
customer loyalty by 0.353. The customer service & technical support regression
coefficient of 0.249 states that each additional 1 unit of customer service & technical
support will increase customer loyalty by 0.249. The information quality & website
information support regression coefficient of 0.280 states that each additional 1 unit of
information quality & website information will increase customer loyalty by 2.80. The
security & privacy regression coefficient of 0.249 states that each addition of 1 unit of
security & privacy will increase customer loyalty by 0.249.

Hypothesis1

H1. The Network Quality of ISP service quality dimension has a significant effect on
customer loyalty.

As shown in Table 8, multiple linear regression was tested at a significant level of 0.05.
Here, the value of p is 0.00, which is p<0.05. Hence, the p-value is lesser than the
significant level of 0.05, hypothesis 1 is supported. From Table 9 above it can be seen
that unstandardized coefficients Beta network quality of 0.353 indicates that the
network quality variable has a significant effect of 35.3% on customer loyalty.

Hypothesis2:

H2. The Customer Service and Technical Support of ISP service quality dimension has
a significant effect on customer loyalty.

As shown in Table 8, multiple linear regression was tested at a significant level of 0.05.
Here, the value of p is 0.017, which is p<0.05. Hence, the p-value is lesser than the
significant level of 0.05, hypothesis 2 is supported. From Table 9 above it can be seen
that unstandardized coefficients Beta customer service and technical support of 0.249
indicate that the customer service and technical support variable has a significant effect
of 24.9% on customer loyalty.

Hypothesis3
H3. The Information Quality and Website Information Support of ISP service quality
dimension has a significant effect on customer loyalty.

As shown in Table 8, multiple linear regression was tested at a significant level of 0.05.
Here, the value of p is 0.002, which is p<0.05. Hence, the p-value is lesser than the
 30

significant level of 0.05, hypothesis 3 is supported. From Table 9 above it can be seen
that unstandardized coefficients Beta information quality and website information
support of 0.280 indicates that the information quality and website information support
variable has a significant effect of 28% on customer loyalty.

Hypothesis4

H3. The Security and Privacy of ISP service quality dimension has a significant effect
on customer loyalty.

As shown in Table 8, multiple linear regression was tested at a significant level of 0.05.
Here, the value of p is 0.006, which is p<0.05. Hence, the p-value is lesser than the
significant level of 0.05, hypothesis 4 is supported. From Table 9 above it can be seen
that unstandardized coefficients Beta security and privacy of 0.249 indicates that the
security and privacy variable has a significant effect of 24.9% on customer loyalty.

According to the results, all four hypotheses were supported by the multiple line
regression model as presented in above Table 9.

Table 10: ANOVA Table

Model Sum of Squares df Mean Square F Sig.

1 Regression 907.065 4 226.766 29.402 0.000

Residual 917.806 119 7.713

Total 1824.871 123

Because the F-value is 29.402, so it can be concluded that there is an influence of

network quality, customer service & technical support, information quality & website
information support, and security & privacy on customer loyalty simultaneously.

Analysis of the coefficient of determination (adjusted R2)

Table 11: Model Summary of Regression Analysis

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .705 0.497 0.48 2.777

Based on the table above, the Adjusted R Square value is 0.497 which means that the
customer loyalty of ISP is influenced by network quality, customer service & technical
 31

support, information quality & website information support, security & privacy, namely
49.7%, while the rest is caused by other factors that were not examined in the study.

Findings

This part consists of three main purposes, which are a summary of demographic factors
based on the highest characteristic, frequency, and percentage. Then, the researcher will
summarize the highest mean of the descriptive variables of each independent variable
and dependent variable. All of the results are present in the following Tables and
statements collected from 124 respondents.

The major findings of the research are as follows:

Table 12: Summary of Demographic Factors

Demographic factor Category Frequency Percentage

Age 20-30 81 65.3

Gender Male 73 58.9

Academic Qualification Bachelor 56 45.2

Occupation Student 71 57.3

Income/Pocket Money Below Rs. 10,000 71 57.3

Table 11 shows the summary of demographic factors, the finding showed that out of
124, the highest age range was 20-30 years old with 65.3 percent or 124 respondents.
The majority of the respondents were males’ 58.9 percent or 73 respondents. The
highest income/pocket money level range was Below Rs. 10,000 with 57.3 percent or
71 respondents. The highest number of academic qualifications was a Bachelor’s with
57.3 percent or 71 respondents.

Table 12 shows the summary of descriptive analysis by using mean and standard
deviation. In Network Quality, the highest mean was “The Internet downloading and
uploading speed meets my expectations” which equaled 2.80. The majority of the
surveyed respondents disagreed with the statements, as the average mean value was
found to be 2.44. Similarly, In Customer Service and Technical Support, the highest
mean was “Customer service personnel are skillful” which equaled 3.28. The majority
of the surveyed respondents agreed with the statements, as the average mean value was
 32

found to be 2.94. Furthermore, In Information Quality and Website Information

Support, the highest mean was “Information is easily accessible on its website” which
equaled 3.28. The majority of the surveyed respondents agreed with the statements, as
the average mean value was found to be 3.18. On the other hand, In Security and
Privacy, the highest mean was “I feel that my financial information is protected at this
ISP” which equaled 3.23. The majority of the surveyed respondents agreed with the
statements, as the average mean value was found to be 3.14. Lastly, In Customer
Loyalty, the highest mean was “I will recommend this ISP to other people” which
equaled 3.05. The majority of the surveyed respondents agreed with the statements, as
the average mean value was found to be 2.88.

Table 13: Summary of Descriptive Analysis

Variable Statement Mean S.D

NQ The Internet downloading and uploading speed meets my expectations. 2.80 1.16
CS Customer service personnel are skillful. 3.28 1.02
IW Information is easily accessible on its website 3.28 3.28
SP I feel that my financial information is protected at this ISP. 3.23 0.99
CL I will recommend this ISP to other people. 3.05 1.15

Table 13 shows the correlation coefficient (r) of Network Quality, Customer Service
and Technical Support, Information Quality and Website Information Support, Security
and Privacy between Customer Loyalty is found to be 0.572, 0.542, 0.478, and 0.469
respectively. This indicates the existence of moderate positive relationship between ISP
service quality dimensions and customer loyalty.

Table 14: Summary of Pearson Correlation

Dimension Customer Loyalty

Network Quality .572**
Customer Service and Technical Support .542**
Information Quality and Website Information
Support .478**
Security and Privacy .469**

The value of Cronbach’s alpha for network quality, customer service & technical
support, Information quality & website information support, security & privacy, and
customer loyalty are 0.791, 0.779, 0.831, 0.833, and 0.866. Thus Cronbach’s Alpha for
all variables is above 0.70, indicating that the instruments’ reliability is acceptable.
 33

Table 15: Summary of Reliability analysis of variables

Variable Cronbach's Alpha

Network Quality 0.791
Customer Service and Technical Support 0.779
Information Quality and Website Information Support 0.831
Security and Privacy 0.833
Customer Loyalty 0.866

Table 16: Hypothesis Testing Results

Hypothesis Statements p-value Results

The Network Quality of ISP service quality dimension has a
1 significant effect on customer loyalty. 0.000 Supported
The Customer Service and Technical Support of ISP service
2 quality dimension has a significant effect on customer loyalty. 0.017 Supported
The Information Quality and Website Information Support of
ISP service quality dimension has a significant effect on
3 customer loyalty. 0.002 Supported
The Security and Privacy of ISP service quality dimension has
4 a significant effect on customer loyalty 0.006 Supported

H1: The Network Quality of ISP service quality dimension has a significant effect on
customer loyalty at a significant level of 0.00. The hypothesis (H1) is supported. The
beta of unstandardized coefficients (β) which is equal to .353 shows that Network
Quality has a positive influence on customer loyalty.

H2: The Customer Service and Technical Support of ISP service quality dimension has a
significant effect on customer loyalty at a significant level of 0.017. The hypothesis
(H2) is supported. The beta of unstandardized coefficients (β) which is equal to .249
shows that Customer Service & Technical Support has a positive influence on customer
loyalty.

H3: The Information Quality and Website Information Support of ISP service quality
dimension has a significant effect on customer loyalty at a significant level of 0.002.
 34

The hypothesis (H3) is supported. The beta of unstandardized coefficients (β) which is
equal to .280 shows that Information Quality & Website Information Support has a
positive influence on customer loyalty.

H4: The Security and Privacy of ISP service quality dimension has a significant effect on
customer loyalty at a significant level of 0.006. The hypothesis (H4) is supported. The
beta of unstandardized coefficients (β) which is equal to .249 shows that Security &
Privacy have a positive influence on customer loyalty.

Hence, Network Quality has the strongest influence on Customer Loyalty as it has the
highest beta of unstandardized coefficients (β) value (i.e. 0.353) among other ISP
service quality dimensions. Similarly, above table 10 shows an F-value of 29.402 which
indicates the model is fit and effective. Thus the model is {CL = 1.529+ 0.353 NQ +
0.249CS + 0.280IW + 0.249 SP}.

Discussion

The current study aimed at understanding the influence of ISP’s service quality on
reaching the status of customer loyalty. The results show that all service quality
dimensions were positively related to customer loyalty. The results show that there is a
significant effect between service quality dimensions (network quality, customer
service, information quality, website information support, security, and privacy) and
customer loyalty.

From hypothesis one, the network quality of ISP service quality dimension has a
significant effect on customer loyalty. As shown in Table 9, multiple linear regression
was tested at a significant level of 0.05. Here, the value of p is 0.00, which is p<0.05.
Hence, the p-value is lesser than the significant level of 0.05, hypothesis 1 is supported.
Network Quality was the predominant predictor of customer loyalty of ISP customers
in this research. The result was supported by previous work conducted by the likes of
Jurnal Manajemen Dan Pemasaran Jasa, (2020) and Quach et al. (2016), the researchers
found that higher network quality positively influences customer loyalty.

From hypothesis two, the Customer Service and Technical Support of ISP service
quality dimension has a significant effect on customer loyalty. As shown in Table 8,
multiple linear regression was tested at a significant level of 0.05. Here, the value of p
is 0.017, which is p<0.05. Hence, the p-value is lesser than the significant level of 0.05,
hypothesis 2 is supported. The result was supported by the previous research conducted
 35

by Santouridis and Trivellas (2010) reported similar findings in mobile service

providers Customer service is an important part of everyday encounters.
Responsiveness of technical and customer service staff is another key determinant
factor in choosing an ISP. Similarly, Abdolvand et al. (2006), also suggested that
businesses should pay attention to customer support to enhance overall service quality
perception and customer satisfaction to retain loyal customers

From hypothesis three, the Information Quality and Website Information Support of
ISP service quality dimension has a significant effect on customer loyalty. As shown in
Table 8, multiple linear regression was tested at a significant level of 0.05. Here, the
value of p is 0.002, which is p<0.05. Hence, the p-value is lesser than the significant
level of 0.05, hypothesis 3 is supported. This result was supported by previous research
works by Thaichon et al. (2014) and Jurnal Manajemen Dan Pemasaran Jasa, (2020),
information quality is one of the most important that can influence loyalty. As can be
seen in Table 9, information quality and website information support are the second
highest influencing service quality dimension on customer loyalty in this study. This is
because the quality of information that is complete, appropriate, and up-to-date
provided by the company to its customers can create attitudinal loyalty.

From hypothesis four, the Security and Privacy of ISP service quality dimension has a
significant effect on customer loyalty. As shown in Table 8, multiple linear regression
was tested at a significant level of 0.05. Here, the value of p is 0.006, which is p<0.05.
Hence, the p-value is lesser than the significant level of 0.05, hypothesis 4 is supported.
Following Quach et al. (2016), Security and privacy not only directly affect attitudinal
loyalty but also directly affect behavioral loyalty. It was found that the company has to
make customers feel that their information of personal is covered by their provider, their
information of financial is covered by their provider, and the transaction with the
internet service provider is secured.
 36

CHAPTER III: CONCLUSION AND ACTION IMPLICATIONS

Conclusion

The current study aimed at analyzing the influence of ISP’s service quality on customer
loyalty among a sample of Nepalese internet subscribers. The sample consisted of 124
respondents as a convenience. Through the use of the questionnaire, it appeared from
the statistical analysis that there is an influence of ISP service quality dimensions:
namely network quality, customer service and technical support, information quality
and website information support, and security and privacy on customer loyalty. The
results of the study indicated that a good and well-built service quality may lead to
customer loyalty. According to the findings, the relationship between service quality
(network quality, customer service, information quality, security, and privacy) and
customer loyalty is shown that network quality was the greatest one, then information
quality and website information support, security, and privacy, and, customer service
and technical support. The findings confirmed that service quality (network quality,
customer service, information quality, security, and privacy) affects positively on
customer loyalty. This means that customers who have good experiences in service
quality directly have the intention to be loyal to their internet service provider (Wilson
& Keni, 2018). In the time customers have the intention to be loyal, they will turn to
act faithfully if they feel confident with the service. This paper also concluded that
“Network Quality” is the most important dimension of service quality that significantly
impacts customer loyalty. Good network quality must-have network stability, and fast
download, and upload speeds as indicators that affect customer loyalty. The results
reveal that overall service quality dimensions were moderately associated with
customer loyalty. This suggests that a better service quality will undoubtedly display a
favorable post-purchase behavioral and attitudinal intention. The result shows that the
level of internet service quality is below average which leads to an increase in churn
rate. Thus, Nepalese ISP companies should also consider the overall dimension of
service quality to make customers satisfied and loyal.
 37

Action Implication

The result of this study has some valuable implications for ISPs, scholars, customers as
well as policymakers. This study helps to analyze the service quality of different
Internet service providers and its impact on customer loyalty. The proposed research
develops an understanding of consumer buyer behavior of home Internet services in
Nepal and creates an ideal model aimed at customer retention. It provides valuable
insights into consumer retention and brand loyalty in the home Internet services of
Nepal. Additionally, this research contributes a new body of knowledge about the future
potential of the ISPs. This study has also given some valuable suggestions to the ISPs
about the critical factors that should be focused majorly for improving customer
satisfaction in the Nepalese context. This research shows that different service quality
dimensions as leverage factors differ in their significance level as performance
indicators. Thus, ISPs should focus on improving quality standards by considering
critical factors, which are highly influential in determining the user perception of
Internet service quality. ISPs should focus more on developing internal strategies that
can help customers exchange feedback on their issues more easily and reliably. The
firms should develop a good strategy targeted at using more customer response to
maximize their market performance in such a way that it yields growth opportunities.
Practical implications that can be drawn from this research will form a foundation for
service providers in the home ISP to develop new retention strategies. By making
customers more central in company operations, these strategies can potentially reduce
the expenses associated with acquiring new customers. As a result, ISPs will be able to
reduce the current issues relating to customer switching in the ISP market in Nepal, as
well as in other countries that have similar demographic profiles.
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 Questionnaire

Dear Respondent,

My name is Bikram Pun. I am a student of Butwal Multiple Campus studying Bachelor

of Business Administration. I am researching on the topic “Influence of Internet Service
Provider’s Service Quality in Customer Loyalty”. The purpose of this questionnaire is
to collect relevant information for academic purposes and partial fulfillment of the
requirements of the Bachelor of Business Administration.

You are kindly requested to fill out the questionnaire. Your participation is highly
important to the study and all information gathered will be treated confidentially.

Thank you for your time and support.

Instruction: Please indicate with a tick mark (√) how strongly you agree or disagree
with each of the following statements:

(1= Strongly disagree, 2= Disagree, 3= Neither agree nor disagree, 4= Agree, and 5=
Strongly agree)

S. No. Statements 1 2 3 4 5
Network Quality
Q1 I have not experienced any Internet disconnection from this
ISP (Internet Service Provider).
Q2 The Internet downloading and uploading speed meets my
expectations.
Q3 The Internet speed does not reduce regardless of peak or
off-peak hours.
Q4 The quality of the network is always constant.
Customer Service and Technical Support
Q5 Customer service personnel are skillful.
Q6 Customer service personnel are ready to respond to my
inquiries.
Q7 My technical problems get solved promptly.
Q8 The employees are never too busy to respond to my requests.
Website information Support
Q9 This ISP provides sufficient information on its website.
Q10 This ISP keeps its website updated.
 Q11 The information given on the ISP’s website is relevant to me.
Q12 Information is easily accessible on its website.
Security and Privacy
Q13 I feel that my personal information is protected at this ISP.
Q14 I feel that my financial information is protected at this ISP.
Q15 I feel that the transactions via this ISP are secured.
Q16 I feel this ISP has high-security features
Customer Loyalty
Q17 I would consider this ISP as my first choice.
Q18 I will say favorable things about this ISP.
Q19 I will recommend this ISP to other people.
Q20 I will remain loyal to this ISP.
Demographics

Age

Under 20 20-30 30-40 40-50 50 and above

Gender

Male Female Other

Academic Qualification

SLC/SEE Plus 2 Bachelor Master PhD

Occupation

Businessperson Entrepreneur Salaried Worker

Home maker Student Unemployed Other

Income/ Pocket money (Monthly)

Below Rs. 10,000 Rs. 10,000 - 30,000

Rs. 30,000 - 50,000 Rs. 50,000 - 70,000

Rs. 70,000 – 90,000 above Rs. 90,000

Thank you!