Customer Satisfaction Slides

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It was a bad week for incumbent providers as two research firms released reports that said cable is falling behind in the customer-service wars.

In a consumer poll by Michigan-based CFI Group, cable scored an “abysmal” 60 on a 100-point scale, a score topped by DirecTV and Dish Network, with 67 each. In that poll, Verizon’s FiOS TV and AT&T’s U-verse TV were not ranked, since they represented by just 2% of the 1,318 households polled.

The CFI 2008 Telecom-Cable Industry Satisfaction Report indicated that the average household spends $200 a month on telecommunications — but, as the economy sours, it found that consumers are unwilling to pay more for services that disappoint.

Customers said their top reasons for switching providers are high rates (71%), better pricing by a competitor (41%), poor customer service (41%), poor reliability (30%), an inferior channel lineup (27%), or a competitor’s better bundle or plan (22%). (Those surveyed gave more than one answer regarding switching, so percentages add up to more than 100.)

Regarding customers’ view of the service delivered by incumbent providers, CFI Group partner Phil Doriot said subscribers “put up with a lot because they want speed and a variety of content. But there’s a big shoe to drop on cable when consumers have another product access point.”

According to a J.D Power and Associates report released Oct. 1, that shoe appears to already be falling.

In the famed market-research firm’s 2008 Residential Television Service Satisfaction Study, AT&T’s U-verse TV was top ranked in customer satisfaction in three of the four regions in the ranking. Verizon’s FiOS TV was the top provider in the fourth region.

By contrast, J.D. Power said the highest-ranked cable operator, WideOpenWest, was 28 points behind the leader in the North Central region, AT&T, which had a score of 730. WOW, an overbuilder, was the only operator in any region to score higher than 700 on a 1,000-point scale.

J.D. Power rankings are based on five factors: performance and reliability; customer service; cost of service; billing; and offerings and promotions. This poll used a much bigger sample than the CFI survey: 18,938 responses, compared with 1,318 for CFI Group.

J.D. Power’s poll found that both U-verse and FiOS scored high on their bundled pricing options. Consumers also gave them high marks for crisp pictures.

Other findings in the two surveys:

J.D. Power’s report said high-definition television households have nearly doubled since 2007, with 55% of homes reporting owning a set. Digital-video-recorder penetration is now 44%, up from 38% in 2007. Customer satisfaction is 29 points higher in homes that receive electronic, rather than paper, bills.

CFI Group’s report said speed is the No. 1 reason consumers switch from telco digital subscriber line service to cable modems.

Sales of bundled products are predicted to rise between 9% and 17% over the next 12 months, according to CFI Group, a slower growth rate than in previous years.

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