Pay TV and ISPs: Dead Even, Dead Last in ACSI

It doesn’t take a lot of imagination to glean that U.S. consumers find little to like about their subscription television or internet service—especially when it is provided via cable. According to customers, internet service providers constitute the bottom of the barrel when it comes to customer satisfaction, and this year pay TV is no better. Both come in dead last among 43 industries in the American Customer Satisfaction Index, and many of the same companies dominate both categories.

While other telecom industries improve in 2017—most notably wireless phone service rises nearly 3% to 73—pay TV slides 1.5% to meet ISPs at 64. And some cable providers are scraping down toward the bottom of the entire Index. Comcast’s Xfinity tumbles 6% to 58, just ahead of Mediacom (56). The best pay TV can offer comes via fiber optic or satellite, as DISH Network, AT&T’s DIRECTV and U-verse, and Verizon’s Fios score in the range of 67 to 71. For internet service, Fios and U-verse also take the top (71 and 69, respectively) with Xfinity at 60, just ahead of several providers who languish in the 50s (Frontier, Windstream, Mediacom, and CenturyLink).

For pay TV, the very real threat of competition has not turned the tide for customer satisfaction. Increasingly, customers are forgoing the poor service they are receiving and switching to streaming services. In the first quarter alone, over half a million subscribers defected from cable and satellite service—the biggest loss in history.

Overall, the ACSI report does not bring good news for broadband and as other options proliferate, cord cutting is unlikely to subside or slow down. As such, the ACSI will be adding measurement of VOD (video on demand) in 2018 to capture the on-demand services of traditional providers, along with coverage of competing stand-alone video streaming services.

ACSI Telecommunications Report 2017 »

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Will Mega-Telecom/TV Mergers Mean Mega-Headaches for Consumers?

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.

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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.

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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.

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Download ACSI Telecommunications and Information Report 2014 »