Cable Operators

Comcast Watches the Clock

5/23/2011 12:01 AM Eastern

In the past several months,
Comcast investors and analysts have focused
intensely on the stock price as the cable giant
finalized its $30 billion NBCUniversal programming
joint venture.

Comcast’s cable-operations
executives have been
more focused on the clock.

Leaders at the nation’s
largest MSO have been
working feverishly to get
customers to associate
their company with a simple
phrase: on time. Comcast
is conducting an all-out
blitz on customer service,
retraining and segmenting
field techs and standardizing
practices across the organization,
in hopes of narrowing
the service-call windows
from three to four hours to
just two hours — and, in
some cases, to one hour.

While on-time guarantees
seem academic for cable-TV
providers, a narrow window has proved stubbornly
elusive. Over the years, it’s been one of
the most difficult hurdles for the entire cable industry.

And while some MSOs have made great
strides in customer service, the industry as a
whole has taken it on the chin in subscribersatisfaction
surveys — cable consistently finishes
toward the bottom in J.D. Power & Associates
video customer-service rankings.

Leichtman Research Group president and
principal analyst Bruce Leichtman said that
drastically reducing the service window could
combat the perception that cable customer
service hasn’t improved markedly.

DEFYING EXPECTATIONS

“That’s one of the challenges of the legacy of the
cable industry,” Leichtman said. “When you can
defy expectations like that, it can go a long way.”

The on-time guarantee and the compressed
service-call windows are part of a four-point plan
put forward by Comcast Cable Communications
president Neil Smit when he joined the company
from Charter Communications a year ago.
Smit’s strategy — which, in turn, built on initiatives
started by his predecessor, NBCUniversal
CEO Steve Burke — is based on a simple tenet:
a happy customer is a loyal customer.

In a recent interview, Smit said customer service
is just part of the plan — product innovation
and consistent rollouts are another. In fact, Smit
has set a goal of at least one
new “customer-impacting”
product rollout per quarter
and one new service improvement
per quarter. So
far, Comcast has been up to
the task — it released three
new versions of its iPad application
in the past nine
months.

“We’re getting a better
rhythm,” Smit said.

That new-product rhythm,
coupled with stronger and
more consistent customer
service, could lead to reducing
and maybe someday reversing
the basic customer
declines that have plagued
the industry over the past
decade. According to the National
Cable & Telecommunications
Association, the cable industry lost a
collective 7.1 million customers between 2001
and 2009. Between 2007 and 2010 Comcast lost
about 1.3 million customers, according to its
2010 annual report.

Smit said at an industry conference in March
that video is the next battleground, adding that
is where Comcast sees the biggest opportunity
for growth.

For most cable operators in the past, that usually
meant heavy discounting. But Smit said that
won’t be the case this time.

“I’m not a big fan of discounting our way to
growth,” Smit said. “It’s a slippery slope. I don’t
like to buy volume for volume’s sake. There are
approaches to that. If you can offer an upsell to
a customer, fine. But we are in the business to
make money.”

Changing the company’s customer-service
rep has been a years-long effort that doesn’t just
involve shrinking windows. While Smit is building
on efforts launched over the years by former
chief operating officer Burke — who moved over
to CEO of Comcast’s NBCUniversal programming
joint venture in January — some of the efforts
have the former Charter Communications
CEO’s imprimatur.

Smit served as Charter’s CEO from 2005 to
2010 and during that tenure stressed improved
customer service and consistent performance.
One of his first tasks when he joined Charter in
2005 was to create training programs for customer-
service representatives and technicians.

SMIT’S SERVICE-MINDED

At Comcast, Smit’s attitude toward customer
service hasn’t changed. For example, about
nine months ago, the MSO initiated monthly
conference calls for its field-operations executives,
where one group of field managers will
talk about a specific customer-service problem
and how they solved it.

One month, for example, the call was on customer-
retention efforts. Another month, it was
on how to sell more self-install kits and another
was on avoidable truck rolls.

Comcast has also beefed up its networkoperations
centers (they call them Excellence
in Operations Centers, or
XOCs). Comcast has about
750 highly trained employees
in the XOCs, tasked
with finding and correcting
glitches in the network before
they become a problem.

“A lot of the work going on
is in anticipating issues and
building the capability to go
deeper into the networks,
where we can sense there
are issues before customers
even call us,” said Comcast
Cable executive vice president and chief operating officer Dave Watson.

Watson, a long-time Comcast executive, likened
the employees at its 12 XOCs across the
country to Comcast’s own SWAT team, ready
to swoop in to any trouble spots.

“There could be something going on in a
node, it could be early afternoon, but before the
kids come home for their homework we’ve been
out taking care of the issue before we’ve gotten
call one,” Watson said.

Watson is spearheading the customerservice
efforts and said that the company is
looking at the whole picture, not just a particular
aspect. So in addition to shorter windows
and network SWAT teams, Comcast is
focusing on cutting down repeat service
calls, reducing the times spent on each call,
tying specific service tasks to the technicians
that can perform them best and most
accurately and also empowering service
employees to diffuse potential problems
on the spot, especially on installs.

“If we have to come back to you within 30
days, we have trained the tech to give the
customer a credit on the spot, either $20
or a premium level of service,” Watson said.
“That was our first focus. The window is really
the next thing.”

That focus on customer service appears to
be paying off . In the first quarter, Comcast lost
about 39,000 basic subscribers, about half the
82,000 customers it lost in the first quarter of
2010. That improved performance built on
better than expected fourth quarter results,
when the nation’s largest MSO lost about
135,000 basic customers, more than 30% less
than the 199,000 it lost in the fourth quarter
of 2009.

“The number of basic losses in the first
quarter was the lowest I’ve seen since 2007,”
said Collins Stewart cable analyst Tom Eagan.
“Obviously, they are doing something right in
their approach to the customer. Whether that‘s through retention
efforts or whether
that’s causing
customer-service
improvements to
reduce churn, I
think they’re doing
something right.”

Eagan added
that Comcast has
had a high hurdle
to climb on
the service front,
particularly because it is the largest cable
operator in the country, with 22.8 million
customers — and because it got there largely
through acquisitions. Said Eagan: “It was
hard to turn things around in some of those
systems. But their all-digital initiative has
helped them reduce calls.”

Comcast’s all-digital program, conducted
under the Project Infinity umbrella, is winding
down. About 80% of the MSO’s footprint is
now all-digital, with completion expected by
the end of the year.

Eagan said that the economy has played a
role in Comcast’s and other cable operators’
desire to reduce customer losses. “When there
is not a lot of natural household-formation
growth, it’s about keeping the subs you have,”
Eagan said.

Leichtman said: “A dollar spent on retention
is always better than a dollar spent on
acquisition.”

Watson said that one of the key turning points
for customer service across the entire cable industry
was when operators stopped using the
sheer volume of service calls and truck rolls as
an excuse not to do better and began analyzing
why they had so many calls in the first place.

“We asked, ‘Why are we taking 300 million
phone calls? Why are we rolling 40 million
trucks?’ and tied that to reliability, convenience
and getting it right the first time,”
Watson said. “Those three drivers should
result in customer service that reduces the
amount of telephone calls — and it already
has — and gives customers the tools, arming
the consumer with the ability to solve their
problems independently.”

And it has shown in the numbers. Comcast
said it reduced the total number of service
calls across the product line 8.9% in 2010;
repeat calls are down 9% between 2009 and
2010 and fi rst-call resolutions improved 7%
between 2009 and 2010.

“Our communications with the field are,
‘We’re not going to fuss about repeat activity,
but what we will fuss about is if there is
not improvement,’ ” Watson said. “The worst
thing you can do is to give it lip service, have
it be in somebody’s drawer, and not looking
at it as a business.”

March