Customer Satisfaction With Pay-TV, ISPs Hits New Low

“Customer first” is the motto businesses live by — or should — but that doesn’t seem to resonate with companies providing pay-TV or Internet-access services, based on American Customer Satisfaction Index (ACSI) data gathered in the first quarter of 2015.

Customer satisfaction with information services — including subscription TV, Internet, wireless and fixed-line phones, and computer software — fell in Q1 to 68.8 percent, its lowest level in seven years.

Subscription-TV and Internet service providers are at the bottom of the 43 industries covered by the index, each scoring 63 percent.

That’s a 3.4 percent fall, which ACSI attributed to poor customer service combined with rising prices.

The findings are based on nearly 14,200 surveys collected during the quarter.

Comcast, TWC Riling Customers the Most

Comcast, one of the lowest-scoring companies in the ACSI, lost another 10 percent in Q1 to hit a customer satisfaction score of 54 for its subscription-TV services.

Time Warner Cable has the dubious distinction of being the least satisfying company in the index overall. It dropped 9 percent in Q1 for its subscription-TV services to score 51 percent. That means nearly half of TWC’s customers are mad at it.

Verizon’s FiOS service scored 68 percent, and AT&T’s U-verse subscription TV service scored 69 percent.

ISPs Give Customers No Choice

Meanwhile, customers are not happy with their lack of choice when it comes to ISPs. Sixty-one percent of households in the United States have either one or no high-speed ISP servicing their region, ACSI found.

Customers are frustrated with unreliable service, slow broadband Internet speeds, and rising subscription prices — and they aren’t happy about being locked into service contracts.

“Lack of meaningful choice typically means companies do not have to try as hard to please customers, because they do not fear customers will defect — especially for services they feel are must-haves rather than like-to-haves,” ACSI Managing Director David VanAmburg told CRM Buyer.

Less Is More

“People generally dislike paying for a lot of content they don’t want, to get content they do want,” said Mike Jude, a research manager with Stratecast at Frost & Sullivan.

“That’s one reason we find that about 22 percent of people we surveyed would switch to over-the-top video if they could get the content they want,” he told CRM Buyer.

Comcast, AT&T and Verizon for some time have been offering so-called “skinny bundles” — scaled-down selections of TV channels bundled with broadband access — but they are essentially teaser packages designed to lure in new customers, and the prices go up after an initial trial period.

However, new players are flocking in. Verizon’s FiOS service introduced a skinny bundle in April, and Apple plans to introduce one this summer.

“If new players can put pressure on traditional TV/ISP providers, and the landscape is truly competitive — with lots of choice among companies, and plans or packages within companies — it will compel all the players to practically trip over one another to [satisfy] the customer,” ACSI’s VanAmburg remarked.

The Threat of OTT Boxes

“The market is waiting for viable OTT service packages,” Frost’s Jude said. “If content providers and distributors can resolve licensing for OTT video content, the conventional video subscriptions will likely have a very hard time competing.”

However, getting a foot in the door might not be easy, as the barriers to entry for new participants are “extremely high,” noted Jason Blackwell, director of service provider strategies at Strategy Analytics.

Customer satisfaction, or the lack of it, could be a point of competitiveness, but “for pay TV and Internet, the customer has limited options,” he told CRM Buyer, “and in many cases, it would be a decision between two low-rated companies for customer service.”

Still, the market is attracting new players.

“I was just on the phone with Vivint, which is rolling out a wireless Internet service across the U.S.,” Blackwell remarked. “They are aiming to be the third competitor in the market, facing up against the incumbent cable and telco providers.”

Richard Adhikari

Richard Adhikari has written about high-tech for leading industry publications since the 1990s and wonders where it's all leading to. Will implanted RFID chips in humans be the Mark of the Beast? Will nanotech solve our coming food crisis? Does Sturgeon's Law still hold true? You can connect with Richard on Google+.

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