Satellite Satisfies Subscribers, But It's All Relative

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First Quarter American Customer Satisfaction Index


May 15, 2007
National Quality Research Center
Stephen M. Ross Business School, University of Michigan
www.theasci.org

Direct-broadcast satellite providers continue to top cable operators in satisfying their customers, according to the latest quarterly American Customer Satisfaction Index issued by the University of Michigan. But that ranking is relative, because the video sector overall continues to be the lowest-ranked industry covered in the report.

Other industries in the grouping — including airlines, cellular providers, power companies, newspapers, TV-news outlets and restaurants — all ranked higher on service than entertainment providers, according to the report. The results also show that cable-telephony providers are also losing ground in customer satisfaction.

SHORT-LIVED GAINS

The cable-and-satellite sector reversed a six-year slide in last year's survey, but the gain was short-lived. On ASCI's scale, the industry averages 62 as a whole, down 1.6% from last year's 63 score. The highest scorer, DirecTV had a score of 67, a 5.6% drop from last year. EchoStar Communications's Dish Network was next, scoring above the sector average with a 67, albeit off 1.5% from last year.

Cable's best performer, Cox Communications, scored 63 — the same level as last year. Charter Communications, with a score of 55, was also unchanged from the same quarter last year. But Time Warner Cable dropped 4.9%, to a score of 58; and Comcast fell off 6.7%, to a 56.

Commentary on the study by Prof. Claes Fornell, director of the National Quality Research Center, Stephen M. Ross Business School at the University of Michigan, said high system loads, such as the infrastructure stress experienced by Time Warner Cable and Comcast as they absorbed former Adelphia Communications customers, attributed to the drop in scores. Product price is also a key factor in consumer satisfaction, he added. Product bundling was initially embraced by consumers, as evidenced by the score uptick in first-quarter 2006. But outages mean the lost of multiple products, which causes consumers to lose confidence in the provider, he added.

Fornell noted that satisfaction scores don't necessarily correlate to company finances. For instance, Comcast's satisfaction eroded last year but profits increased by 12% and its stock price climbed 50%.

TELEPHONY TOLL

In 2006, the ASCI added Cox and Comcast to the list of telephone providers it rates. Scores for both companies dropped from a year ago: Cox fell off 7.9%, while Comcast's score decreased 2.9%. The report suggests phone customers were initially drawn in by low rates but once promotions expired, cable was just another provider. After that point, the satisfaction score hinged on reliability of all three products in the bundle.

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