Is Merger with Time Warner good for Consumers?




This Article appeared in the Huffington Post on Friday ,
February 14, 2014



 



They say two wrongs don't make a right, and consumers are
about to get proof of that with the merger of Comcast and Time Warner Cable.



The $45 billion merger announced Thursday might
be a win for both companies, but it will be no victory for their combined 30 million customers, who are
already among the least-happy customers in all of Corporate America.



The two companies last year were the lowest-scoring cable companies in the
American Customer Satisfaction Index, mainly because of the weakness of their
customer service. That made them the least-loved companies in one of the
least-loved industries for customer satisfaction. The only two industries with
worse customer-satisfaction ratings, according to Consumerist, are newspapers
and internet providers. By the way, Comcast and Time Warner Cable are also
internet providers.



Little wonder, then, that the two companies were near the
top of Consumerist's Worst Company In America contest last year, based on
unscientific online polling. Comcast, which took home the title of Worst
Company in 2010, reached the Final Four in 2013, after
beating Time Warner Cable in the Elite Eight.



The companies, naturally, are putting the best face on
the merger.



"The combination of Time Warner Cable and Comcast creates
an exciting opportunity for our company, for our customers, and for our
shareholders," Comcast CEO Brian Roberts said in a press release. The company
did not immediately respond to a request for further comment.



"When you consider Comcast's accomplishments in
delivering cutting edge television and broadband services in their markets,
bringing their innovations on an accelerated basis to Time Warner Cable markets
is a big win for consumers," Time Warner Cable spokesperson Bobby
Amirshahi said in an email to the Huffington Post.



The history of mergers suggests customer service might
only get worse for these two companies. Coupling companies typically struggle
to knit together their massive systems, and customers get lost in the process.
When Comcast bought AT&T Broadband for $50 billion in 2002, customer
billing problems led to such a backlash that the company ultimately
launched a "Think Customer First" training program.



A BusinessWeek study of 28 mergers between
1997 and 2002 found that customer-satisfaction ratings dropped significantly
after the unions, with the effect lasting for years. Cable companies suffered
some of the biggest drops in that study. (Strangely, a more recent study,
focusing on nearly the same time period as BusinessWeek, came to a different, completely counterintuitive, conclusion.)



More recently, customer ratings for BMO Harris Bank,
United Continental and Exelon tumbled after their big mergers, Joe Cahill
of Crain's Chicago Business noted last April.



"So much can go wrong - computer integration snafus,
recordkeeping glitches, you name it," Cahill wrote, "and almost all
of it affects customers."



Satisfaction ratings do tend to snap back eventually, as
companies scramble to keep customers from fleeing. But after a long history of industry consolidation, Comcast and Time
Warner Cable have so little competition that their customers might have nowhere
to flee.



"[I]f this deal goes through, customers...will
probably see prices rise, with no corresponding improvement in service," Harvard Law School
professor Susan Crawford wrote last month, when the merger was still
just a rumor.



If there's any reason to hope, it's that both companies
are suffering from the broader long-term trend of customers dropping cable
subscriptions in favor of other alternatives. One of those alternatives is
broadband Internet, which both companies also offer -- although they are the lowest-rated providers in that space, too.


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