As regulators take on the implications of the broadband uber-company that could emerge from a Comcast-Time Warner Cable marriage, another scaled-up competitor is in the making. AT&T announced its $49-billion deal to acquire DIRECTV, a proposal reflecting a reality where TV and telecom continue to blend into “one mutant industry.”
ACSI data have long shown that mergers are no friend of customer satisfaction. Industries where competition is limited—including virtual monopolies like the U.S. Postal Service’s mail delivery—generally show lower satisfaction overall. The airline industry with its hub structure or cable TV with its service area limitations are good examples of poor customer satisfaction.
But in the land of media, voice, data, and video, customers also take a dim view of the quality and value of their service. On one hand, they may be paying for more than they want via supersized TV packages. On the other, Internet service speed still lags consumer desires. ACSI results show that all communication categories fall well below average for customer satisfaction, with ISPs and pay TV at the very bottom among 43 industries.
Comcast and Time Warner assert that their proposed merger will not reduce competition because there is little overlap in their service territories. Nevertheless, it’s a concern whenever two poor-performing service providers merge—as well as unlikely that combining two negatives will be a positive for consumers.
As for AT&T and DIRECTV, the two companies do well compared with other pay TV providers, but their ACSI scores have declined relative to 2013. Combining their operations may ultimately mean less choice for pay TV customers, as analysts anticipate that U-Verse subscribers will be shifted to satellite in order to free up space on AT&T’s landline network for better high-speed Internet.