Pay TV Firms Eke Out Tiny Gains in Customer Satisfaction

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After two years of declining customer satisfaction, the telecommunications sector has halted the slide, according to the ACSI Telecommunications Report 2016, released Wednesday.

There was a 1.9 percent gain -- to 70.1 on a 100-point scale -- in satisfaction with pay TV services, Internet service providers, fixed-line telephone services, wireless phone services and mobile phone makers, based on the American Customer Satisfaction Index's recent survey.

Though ISPs improved slightly, with a 1.6 percent uptick to 65, they comprised the lowest-performing category in the survey. While many consumers may have opted to cut their pay TV cords, many still relied on the same companies to provide high-speed broadband connectivity.

"The reasons for poor customer satisfaction relate to performance and price," said ACSI Managing Director David Van Amburg.

When consumers don't get the reliable service they expect, satisfaction declines.

"To make matters worse, prices generally go up, so consumers resent paying more for a bad customer experience, especially when there are few competitive options, if any," Van Amburg told CRM Buyer.

Perhaps because there were fewer major outages and fewer price increases in the past quarter, customer satisfaction with the cable industry has been on the rise.

Comcast and Time Warner Cable each saw slight gains. Comcast earned an overall score of 62, an increase of 2 percent, while TWC saw a 3 percent satisfaction increase to 59 percent. That was tied with Cox Communications. Mediacom's score of 54 earned it the last rung of all companies in the survey, regardless of industry.

As an industry, pay TV services saw an overall increase of 3.2 percent to 65. By most grading standards that is barely passing, and in school grading terms would amount to a solid D.

Given that both Comcast and TWC declined last year, it could be argued the only direction left to go was up.

"Consumers still lack meaningful choices in many instances when it comes to broadband or pay TV, which limits their ability to punish a company for a bad customer experience by defecting to a competitor," noted Van Amburg.

"Even consumers who want to cut the cord must often use the same company for broadband in order to access alternative streaming video options," he noted.

"The higher ratings that satellite and telco TV service providers get relative to cable providers suggests that there are degrees to our dislike; that is, the cable segment in particular is viewed worse than all," said Greg Ireland, research director for multiscreen video at IDC.

"Part of this is we've had a long history of increasing fees, generally poor customer service, poor set-top box experiences, etc.," he told CRM Buyer.

Thus, when the telcos came in with a new platform that included new boxes and nicer guides, that only highlighted the problems with cable -- which now are being addressed.

"The efforts to improve the overall experience -- whether through investments in customer service or advanced boxes like the Comcast X1 can help," Ireland said.

Industry mergers have limited the options for pay TV and Internet service, even as providers offering alternative delivery methods, such as satellite and fiber optic services, have attempted to compete with the cable behemoth.

"It's a function of the power that providers have over people," said Joel Espelien, senior analyst at The Diffusion Group.

"As an individual, you really have no say whatsoever in the content, price, quality or speed of what you're getting," he told CRM Buyer. "You just have to accept whatever the leading provider in your area is offering."

The landscape could change when Charter Communications, which in this year's index actually saw a 5 percent drop to 60, completes its acquisition of Bright House Networks and TWC. That merger will transform Charter from regional player to second-largest cable company in the U.S., and the TWC brand will fade into history.

The truth is that the subscription cost of pay TV services has not outpaced inflation, while many customers are now bundling in phone and Internet. That means that instead of several bills spread out over the course of a month, consumers are seeing one large bill.

"We may balk at the high fees, but those fees are cheaper than what one will likely pay for a collection of a la carte channels if we move in that direction," said IDC's Ireland.

"Consumers claim they want a la carte, but many still like the big bundles of channels. One can't have it both ways," Ireland added. "Since we love our content, it's hard to blame the content companies or the talent that is paid a lot of money. We have to blame someone -- and the cable operator fits the bill for that."

Consumers tend to be more accepting of energy and utility cost increases than higher entertainment expenses.

"People don't really think about electricity and water any more -- except when they go out," said TDG's Espelien. "They do think about the Internet, though, and know that they can't live without it."

The historical analogue could be the way Americans felt about oil companies in the 1970s when gas prices shot up and people had to stand in line at the gas station, yet still drove big cars, noted Espelien.

"Customer service is not great, but could certainly be worse," he suggested. "Given the inherent frustration that the modern consumer has with anything that disempowers them or deprives them of choice, I don't see anything that's going to cause these guys to be beloved any time soon."

Peter Suciu is a freelance writer who has covered consumer electronics, technology, electronic entertainment and fitness-related trends for more than a decade. His work has appeared in more than three dozen publications, and he is the co-author of Careers in the Computer Game Industry (Career in the New Economy series), a career guide aimed at high school students from Rosen Publishing. You can connect with Peter on Google+.

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