Press Three

12/01/2006 7:06 PM Eastern

New Castle, Del.— Comcast executives watch over the operations of their customer-service center here from “The Bridge,” named after the control room of the Starship Enterprise.

Rather than warp-speed settings on display on the wall of monitors in front of them are live, detailed reports tracking the performance of about 550 service agents, 24 hours a day, seven days a week.

This center handles calls from 1.2 million subscribers in eastern Pennsylvania and Delaware. On a busy October day, the screens show an overall service level of 83.22, meaning 83.22% of the calls are being answered within the first 30 seconds. The service level on the Spanish-language line is 60.87.

A year ago, Comcast had 500 agents in this center. It added 50, in a competitive drive to improve relations with customers, handle technical issues and sell more services, as it moves into telephone communications and delivers Internet access at ever-higher speeds.

But despite Comcast’s high-tech gear and an increased number of customer-service agents handling phone calls from its growing subscriber base, cable’s historic reputation of offering poor customer service still hurts Comcast and other operators.

Case in point: Comcast officials said about 25% of callers seeking technical support from the Delaware call center opt instead to call the sales line, figuring they won’t spend as much time waiting on hold.

The manner in which representatives in each of its call centers deal with customers is now taking on critical importance. Comcast, Cablevision Systems, Insight Communications and other cable operators are going head to head with telephone companies such as Verizon Communications and AT&T, which also are marketing “triple-play” packages of pay TV, high-speed Internet access and phone service for around $100 a month.

Even DirecTV and EchoStar Communications, through co-marketing agreements with companies such as Qwest Communications and BellSouth, are also pitching triple-play packages to consumers nationwide. Every customer has to be won — and re-won — each time they get on the phone.

“It’s absolutely paramount to our business today,” DirecTV president of sales and service John Suranyi said. “It’s something we control and something we focus on.”

Customer Satisfaction: By the Numbers
How cable and satellite service providers rate:
Customer Satisfaction Index Scores (Based on a 1,000-point scale)
North Central Region
Dish Network648
Time Warner Cable636
Region Average 625
Bright House Networks566
East Region
Cox Communications664
Dish Network648
Time Warner Cable637
Region Average 618
West Region
Cox Communications690
Dish Network662
Region Average 636
Time Warner Cable605
Cable One587
South Region
Bright House Networks682
Time Warner Cable651
Dish Network647
Cable One644
Cox Communications640
Region Average 638
*SOURCE: J.D. Power & Associates 2006 Residential Cable/Satellite Satisfaction Study

Visits to customer-service centers run by top pay-TV providers nationwide in recent months revealed a common picture, stemming from the recognition that competition means customers are easy to lose — and hard to win.

Most cable, telephone and satellite providers are expanding customer-service operations. Comcast alone hired 4,000 new agents in 2006. The video and telecommunications rivals are bringing on advanced technologies such as interactive voice-response computer systems that allow providers to reduce hold times and resolve up to 25% of calls with no need for a live agent to pick up the phone.

The escalation in combat for customers shows up in the financial results of the vendors that supply the firearms. Convergys, which sells customer-service computer systems and also provides outsourced customer service for several top operators — including Time Warner Cable and Comcast — saw its third-quarter revenue jump 9% to $702.7 million.

And it shows up in the complexity of the jobs that customer-service agents are asked to perform. They no longer just answer billing questions or switch on a higher tier of television programming. They have to sell increasingly sophisticated products, such as HDTV, digital video recorders and voice-over-Internet protocol services that displace traditional circuit-switched phone service in the home.

“The types of positions that are in call centers tend to be viewed as low-level. I think that’s really unfortunate and it’s a disservice to the people that do the jobs,” said Missy Mans, senior vice president of customer service at Time Warner Cable’s New York City division, whose call center in Flushing, Queens, serves 1.2 million subscribers. “It’s a very difficult job.”

In general, satellite providers have more centralized call-center operations, since they largely sell and operate their service on a nationwide basis.

Cable providers operate smaller customer-service centers, often tied to markets where they have clusters of systems. Telephone companies such as Verizon often convert old phone centers, where the process of connecting calls increasingly became automated over decades of operation, into service centers.

And, in the grind of trying to find a way to maintain profits while service delivery expands, a pay TV customer in Florence, Ala., just might wind up talking to a service agent in Mexico City about channel lineups — and where to send an installation truck.

Industry executives say they must spend more on customer service these days to compete and to meet consumer demand for advanced services such as digital video recorders and HDTV. They said outsourcing some of those calls allows them to answer calls sooner and reduce costs.

“We’ve taken efficiencies and reinvested it back to the customer experience. Clearly, the pay TV business is getting more complex. Customers hold us accountable for maximizing that experience,” Suranyi said.

Consumer-satisfaction surveys have shown that Comcast and many other cable operators have their work cut out in order to improve satisfaction levels. The leading benchmark — the annual J.D. Power & Associates consumer survey of pay TV customers this past August —ranked Comcast below average in all regions of the country. Time Warner Cable, Charter and Mediacom were also ranked below average.


This year, J.D. Power ranked DirecTV as the top pay TV provider in the East, while cable overbuilder WideOpenWest was rated as the top provider in the North Central region. Cox Communications (West) and Bright House Networks (South) were the only cable operators to lead the rankings in any regions of the country.

DirecTV and EchoStar Communications’ Dish Network, the two major satellite-TV providers, rank as two of the top four pay-TV providers in customer satisfaction in all four regions of the country.

Comcast senior vice president of customer service Suzanne Keenan downplayed the J.D. Power report, noting that the survey was conducted in April — before most Comcast systems began widely marketing triple-play packages of pay TV channels, high-speed Internet access and telephone service. Internal surveys Comcast has conducted show that customers that subscribe to the triple-play are more satisfied than cable-only subscribers, Keenan said.

One of the biggest challenges for Comcast, Time Warner Cable, Cox and their peers is to overcome cable’s reputation of providing poor customer service, which has been cemented even in Hollywood, with TV shows and movies such as The Cable Guy.

Like Comcast, Cox stays on top of consumer needs by contracting with an outside vendor to poll consumers each quarter. If a subscriber says he or she was not satisfied with a service contact, a Cox manager will contact that customer within 24 hours to resolve it.

“We take those calls very seriously,” Siek said. The polls create a statistically relevant sample from every Cox market and there’s a lot of internal competition to be the best,” she said.


Comcast, which presently serves 23.3 million subscribers, owns 85 call centers, including three it recently acquired from Adelphia Communications. It employs 14,000 customer service reps all told.

By contrast, rival DirecTV Inc. owns just four customer-service centers, with 4,000 reps to serve its 15.6 million subscribers. But it is in the process of building a fifth service center in Missoula, Mont., which will be able to house 1,000 representatives.

Calls now go overseas as well, to keep costs down and response times up. Suranyi said DirecTV also outsources calls to 30 call centers owned by such outsourcing firms as ClientLogic of Nashville, Tenn., and PRC, a Florida division of IAC/InterActive Corp. That means calls can wind up at service centers in Mexico and the Philippines.

Rival EchoStar also outsources some of its customer service calls, routing some of them to India, spokeswoman Francie Bauer said.

EchoStar operates 11 call centers and employs about 8,000 customer service representatives, Bauer said.

Suranyi said DirecTV handles 10 to 12 million calls per month from customers, and that its busiest day of the week is traditionally Monday.

DirecTV and EchoStar can make better use of trained operators in foreign countries, because their satellites are stationary and their set-top receivers are fairly standard. Cable operators, on the other hand, have to deal with complaints that can come from cuts in wires or losses of service that can occur anywhere within thousands of miles of underground and overhead infrastructure, across the country.

The Stakes Are Rising
As television, Internet and phone services are all sold together, each customer becomes more valuable:
Comcast’s Average Monthly Revenue Per Subscriber
Third Quarter 2006$91.89
Third Quarter 2005$81.94
Third Quarter 2004$74.15
Third Quarter 2003$67.97
Third Quarter 2002$60.72
SOURCE: Comcast earnings statements


The standard nature of satellite customer inquiries makes it possible to outsource more work — and get more reps to handle incoming calls as a result. For instance, Suranyi said most of the calls that DirecTV receives are related to billing, programming and general troubleshooting issues. The most complex calls tend to be on the order of how to properly set up set-top boxes with digital video recorders.

Even with the emphasis on simplicity, calls are lasting longer, DirecTV’s Suranyi says. And executives at Comcast and Verizon agree.

Comcast doesn’t pressure its service agents to rush through calls, for instance, because effectiveness is different from efficiency. And time varies by case.

“We look at all types. A sales call takes a different amount of time than a billing call or a triple-play service call or the bilingual calls,” Keenan said.


With cable distributors and telcos ramping up the marketing of triple-play products, many companies are hiring more customer-service representatives to support the advanced services.

Verizon, which now serves 118,000 pay TV subscribers, said it’s looking to hire an additional 320 employees to staff its Fiber Solutions Centers in New York, Rhode Island, Texas, Virginia and Washington.

Comcast, which relies on outsource customer-service firms such as Convergys to handle many of its calls, is also bringing more of its operations back in-house and ramping up hiring. Keenan said Comcast plans to build nine new call centers next year and expand 12 others. The top cable distributor will also hire 3,000 new agents to staff them.

To lower call volume and help consumers help themselves, Comcast has introduced “Desktop Doctor,” a self-healing technology consumers can download to fix computer problems, even if the consumer is unaware of them. In July, that program was able to fix 90,000 problems, according to Comcast.

More customers are using the service, with 3 million high-speed Internet customer downloading the software this year, up from 250,000 by mid-2005.

But automation and outsourcing only go so far. Verizon, for its part, is one of the few pay TV providers that does not outsource any customer-service calls for its FiOS TV and FiOS Internet products.


The telco, whose video service now passes 1.2 million homes, operates five Fiber Solutions Centers nationwide to handle calls for the FiOS services. If the center in Providence, R.I., receives a surge in calls that would increase hold times, calls are routed to other Verizon centers in New York, Texas, Virginia or Washington, said Donna Cupelo, region president for Massachusetts and Rhode Island.

“Anything is possible,” Cupelo said when asked if Verizon would consider outsourcing calls in the future for its pay TV service, as Verizon Wireless does. “We have not come to that yet with FiOS,” she added.

And while Comcast and Verizon ramp up, other operators are consolidating call centers in a bid to reduce costs and make their operations more efficient.

Charter is closing seven of its call centers and cutting 1,000 employees. It has already shuttered video customer-care centers in St. Louis and Bay City, Mich. In December, it will close centers in Birmingham, Ala; Ft. Worth, Texas; Irwindale, Calif., and in March it will shut call centers in Newtown, Conn. and Kingsport, Tenn.

Centers remaining open are in Vancouver, Wash.; Rochester, Minn.; and Louisville, Ky. As centers closed, more calls will be outsourced to the Philippines, Panama, Mexico City, Laredo, Texas, and Winnipeg, Canada.

Following the closures, Charter will have 2,500 reps staffing call centers in Michigan, Massachusetts, South Carolina, Kentucky and Missouri. Director of communications Anita Lamont said Charter’s new call-center infrastructure will allow it to route calls from centers with heavy volume to other operations in order to reduce hold times.

“The new service connects Charter’s care centers around the country, so every customer gets a good experience,” Lamont said.

Whether the reps are local or foreign, “in-sourced” or “outsourced,” watched from The Bridge or supervised by hired hands in another country, there are only two goals that drive the build-up of customer service operations: recruiting more subscribers — and keeping the customers the companies already has.

When it comes to pay TV churn rates, or the number of customers each provider loses per month, newcomer Verizon leads the industry with a 1.5% churn rate for its FiOS TV and FiOS Internet products.

DirecTV, which boasted churn rates of just 1.1% in the late 1990s, has seen its churn rate increase to 1.80% at the end of the third quarter. Rival EchoStar averages monthly churn of 1.76%, while cable operators post average churn rates of about 3% monthly.

That’s the equivalent of losing 30,000 of every 1 million customers every 30 days. Thirty percent of those losses come from moves to new homes, notes Leichtman Research Group president Bruce Leichtman.

But that still leaves 20,000 departures every month.

And with cable operators and telephone companies banking their future on selling triple-play packages of pay TV, high-speed Internet access and phone service, it’s not just keeping basic customers that matters, Leichtman said. The average bill for Cablevision, which enjoys strong phone and Internet sales, is now $115 a month. That’s compared to $4 in 1977, when basic TV service was all that was at stake.

“Clearly, the days of having basic subs as the No. 1 way of valuing a cable company seems to be diminishing,” Leichtman said.

Next Week: A Day in the Life of Customer Service Agents

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