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DBS, Overbuilders Satisfy Subs

The direct-broadcast satellite industry lost its bragging rights as the home of the most satisfied pay TV subscribers this year.

That's the good news for cable operators. The bad news: J.D. Power and Associates last week said that honor belongs to a telco-owned overbuild: Ameritech New Media's Americast service.

SBC Communications Inc.-owned ANM provides cable television service to roughly 300,000 subscribers in the Midwest, with franchises in 109 towns in the Chicago, Cleveland, Columbus and Detroit markets. SBC is selling its Midwestern cable operations to another overbuilder, WideOpenWest LLC, in a deal expected to close later this year.

This is the first year that J.D. Power has included ANM in its survey. It also added another overbuilder, RCN Corp., for the first time. RCN came in fifth.

"We continuously monitor our level of customer service and receive constant feedback," Americast vice president of marketing, sales and service Judy Blake told Multichannel News
via electronic mail. "Whenever we have a customer complaint, even on the smallest issue, we take immediate corrective action."

WOW may need to be extra vigilant if it wants to repeat Americast's win next year.

"We know from experience that mergers always depress satisfaction," J.D. Power senior director for telecommunications Steve Kirkeby said. The uncertainty surrounding a potential DirecTV sale could also affect customer satisfaction, to the extent that the direct-broadcast satellite company's subscribers are aware of it, he added.

But B.G. Marketing Inc. president Barbara Roehrig said WOW should benefit from Americast's customer-satisfaction reputation.

"It won't be automatic," Roehrig said. "They'll have to work at it."

It's much easier to reassure subscribers that they can expect the same level of customer satisfaction that they've enjoyed with their former provider than to try and turn around a "nightmare" operation, she noted.

Only one cable incumbent, Cox Communications Inc., ranked among the top five providers in the survey, which scores operators against an index of 101 for the industry average.

Americast scored 123, followed by EchoStar Communications Corp.'s Dish Network (118), DirecTV Inc. (114), Cox (104) and overbuilder RCN (101).

Last year, Cox trailed No. 10 MSO Cable One Inc. in the survey, which gave the highest marks overall to Dish Network and DirecTV.

Nine MSOs ranked at or below the combined industry average this year: Adelphia Communications Corp., AT&T Broadband, Cablevision Systems Corp., Cable One Inc., Charter Communications Inc., Comcast Corp., Insight Communications Co., Mediacom Communications Corp. and Time Warner Cable.

Direct-broadcast satellite companies continued to outperform cable in terms of satisfaction, according to the study.

"The overall customer-satisfaction performance gap between satellite and cable providers remains sizable," Kirkeby said in a press release issued Thursday. "Cable companies are attempting to strengthen their competitive positions by upgrading their systems to digital."

EchoStar spokesman Marc Lumpkin said in a statement that the company "was ranked first out of the top 10 MSOs and satellite TV companies" for the third consecutive year.

"Survey results show we have room for improvement, and Dish Network will continue to strive over the next year to once again set the industry standard," Lumpkin added.

DirecTV spokesman Bob Marsocci noted that as an industry, satellite has led cable in customer satisfaction, as reported by J.D. Power, for at least five years. Other third-party studies — including the recently reported American Customer Satisfaction Index — also confirm satellite's customer-satisfaction status.

If the overbuilder's customer satisfaction scores came as a surprise to some, ANM was not among them.

"The J.D. Power and Associates ranking is no surprise to us," Blake said by e-mail. "Customers tell us that we are doing things right."

Marsocci said that many of the customer-satisfaction improvements earned by cable over the past few years should be attributed to competition.

"Satellite has set a standard level of service," Marsocci said. "Cable operators had to improve their customer service. They had no choice."

Ideas and Solutions Inc. president Glen Friedman noted that one reason cable satisfaction scores continue to improve is that the most dissatisfied customers have left cable, and that helps bring cable's overall scores up.

Customers who drop cable for satellite are not just malcontents, Friedman said, because if they were, they wouldn't express satisfaction with their DBS providers once they switch.

"They're happy with satellite," Friedman said. "That doesn't bode well for cable's bringing them back" with buy-back offers once they've switched to DBS.

Cable and satellite providers conduct their own customer-satisfaction studies, and because they can be tailored to specific concerns and geographic locations, the companies often put more stock in them than in third-party reports, some said.

Industry sources who asked not to be named complained that marketers often feel strong-armed into buying the expensive J.D. Power reports each year. On top of that, the winning companies are asked to kick in licensing fees before they can use the award in promotions and advertising.

An SBC spokeswoman said the company has not decided whether it will buy the rights to the J.D. Power award for use in promoting Americast.

More than 4,100 households responded to the survey, which evaluated 14 providers on such factors as cost, billing, program offerings, equipment capabilities, customer service and reception quality.