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June 7, 2015

Customer View Darkens as Merger Mania Persists for Telecom Companies

Poor service and high cost is making consumers feel left out of the equation when it comes to telecommunications services. A year ago, the American Customer Satisfaction Index reported that customers were highly dissatisfied with subscription TV and Internet service—a situation that has worsened in 2015. While customer satisfaction with bottom-ranked ISPs has not budged, pay TV service has deteriorated further in the eyes of subscribers. The two telecom segments tie at an ACSI score of 63 (100-point scale), the lowest level of satisfaction among 43 consumer household industries. Fixed-line telephone service, often included in bundled packages along with Internet and TV, languishes as well—down 5.5% to 69.

While consumers remain frustrated with their service providers, options are growing. Streaming services from Amazon, Apple, and Netflix are just one alternative in a fast-changing landscape. Moreover, these companies all display much higher customer satisfaction.

Meanwhile, the big telecom players continue to focus on mergers. In spite of an aborted Comcast-Time Warner Cable (TWC) marriage, Charter Communications continues to pursue both TWC and Bright House Networks. If successful, Charter would become the second-largest cable company in the country.

As with the now defunct Comcast-TWC merger, a Charter-TWC union joins together two poorly performing coaxial cable providers—a dubious prospect for consumers yearning for better service. Bright House shows higher customer satisfaction than either Charter or TWC, but even so, ACSI data show that most mergers tend to dampen satisfaction, at least in the short term.

Among pay TV providers, fiber optic and satellite service beats cable. Verizon’s FiOS leads with an ACSI score of 71, followed by AT&T’s U-verse (69) and DIRECTV (68). AT&T’s bid for DIRECTV would allow it to deliver TV service via multiple technologies, which could benefit consumers. That said, neither AT&T nor DIRECTV shows any improvement in customer satisfaction over the past year, and their scores remain far below the national ACSI average.

Download ACSI Telecommunications and Information Report 2015 »

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