Cable Companies Don't Fare Well in Customer Surveys

  •  Satisfaction in Cable Lags
  •  The Wall Street Journal
  •  JULY 29, 2010


Even though cable-TV operators have worked to address complaints, customer-satisfaction surveys consistently show they aren't held in high regard, while fiber-optic and satellite-video providers rate better among consumers.

Industry experts say one reason cable customers express more discontent is that cable companies have simply been around longer. Still, cable companies say they're exploring ways to improve services.

In the latest University of Michigan American Customer Satisfaction Index (ACSI) survey in May, closely held Cox Communications had the highest score among cable operators for the seventh year in a row, with a 67. Comcast Corp.'s ACSI number was 61, tied with Time Warner Cable Inc. Charter Communications came in last among the four largest cable providers with a ACSI score of 60.

Those scores fall below fiber-optic providers. Verizon Communications Inc.'s FiOS received the top score of 73, with AT&T Inc.'s U-verse coming in at 72. Among the satellite providers, Dish Network Corp. scored a 71 while DirecTV had a 68.

For the telephone companies that have moved into video in recent years, implementing newer technology has been a boon.

"Cable has had to migrate from a multiple-system platform that was pretty primitive," said Daniel Brenner, a partner in law firm Hogan Lovell's Technology practice, which specializes in issues involving cable operators, programers and suppliers. "In contrast, FiOS is starting out with a 21st-century platform. In some markets, cable still isn't where it needs to be.

"The history of cable systems makes a difference. When there's a system that had a lot of outages when it was in the analog world, that's what people remember about cable," Mr. Brenner added.

Then there is the matter of price, another albatross for cable. "Cable isn't far behind the telcos in technology...but there's a reservoir of resentment against the industry-rightfully or wrongfully-because cable rates have increased far beyond the rate of inflation," said Gary Schultz, founder and president of Multimedia Research Group.

Prices for cable service have gone up by about 3% to 5% a year over the past several years, according to Ian Olgeirson, senior cable analyst at SNL Kagan. Programming costs, most notably the National Football League and other sports rights, have been higher for content providers, and they pass those costs on to cable operators.

Other video providers raise prices too, but with the longest track record, cable receives the lion's share of the criticism.

As for the satellite providers' strong showing in surveys, their performance speaks to how well they know their targets, said Frank Perazzini, director of wireline telecom services at J.D. Power and Associates. "For customers who aren't interested in bundling video, Internet and phone together, but are looking for a more pure videophile experience-the satellite players have succeeded in promoting a product that resonates with their subscribers," he commented.

Comcast's showing on the ASCI does represent a 13% improvement over 2008, a reflection of the fact that cable is trying to change its image.

Three years ago, Comcast began a series of nationwide discussions with customers and says it is starting to benefit from lessons learned in those talks.

In the past three quarters, the percentage increase of additional customers generating revenue has been right around 5%, which is pretty good considering that a weakened economy has resulted in fewer new housing starts (and therefore fewer people who need to set up video, phone and Internet service) since the latter part of 2008.

During Comcast's discussions with customers across the United States, subscribers complained that company technicians were arriving after the scheduled "window" of service hours, and that the windows themselves were too broad, recalled Mr. Perazzini, who helped moderate the talks. A scheduled appointment between 8 a.m. and 4 p.m., for example, would simply mean an entire workday lost.

On the upside, he said, Comcast customers were "pleased" with the degree of courteousness they received from the company's telephone staff.

As a result of the so-called listening tour, Comcast rolled out its National Customer Guarantee, which offers subscribers a $20 credit if technicians are late or don't show up for an appointment, and offers a free service if a problem is not resolved the first time. In addition, the company now has a 30-day, money-back guarantee on new services.

"When it comes to customer service, the issue is having enough personnel," said Robert Rosenberg, president of Insight Research. "The customer-service software programs used by cable, phone and satellite are pretty similar. So it really comes down to how much money cable is willing to spend to get better at this."

Comcast spent $1.88 billion on customer service in 2009, up from $1.71 billion in 2007, according to company spokeswoman Jennifer Khoury. Based on full-year revenues for both years, however, Comcast's customer-service expenditures have slipped from 5.53% of total revenue to 5.25%.

While satisfaction may be a factor in maintaining a subscription, it ultimately says little about actual loyalty to that service, said Jim Kane, a corporate consultant based in New York who helps companies identify and retain loyal relationships.

"The problem for cable, satellite and phone companies is that they expect to get credit for things they're expected to be doing," Mr. Kane said. "If you want me to be a loyal customer, you have to go beyond the things you're supposed to do."

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