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Survey: Consumers Loathe Cable, Love Smartphones

The cable industry’s recent push to boost customer service ratings couldn’t come at a better time, as satisfaction ratings for pay TV, Internet and wireless offerings have reached seven-year lows, according to a recent American Customer Satisfaction Index report.

According to ACSI, customer satisfaction with information services – including subscription TV, Internet, wireless and fixed line telephone and computer software, dipped 3.4% in its more recent survey to a 68.8 score out of a possible 100. ACSI said that satisfaction with subscription TV service deteriorated the most, dropping to 63 and tying with Internet Service Providers for the worst score among the 43 industries ACSI follows.  

ACSI data, which is based on 14,176 customer surveys collected in the first quarter 2015, show the decline results from poor customer service combined with higher prices.

“There was a time when pay TV could get away with discontented users without being penalized by revenue losses from defecting customers, but those days are over,” says ACSI chairman and founder Claes Fornell said in a statement. “Today people have more alternatives than ever before. Consumer abandonment of pay TV is shaking up the industry and lower satisfaction could mean even more cord cutting by subscribers ahead.”

On the subscription TV side, Comcast and Time Warner Cable had some of the biggest declines, with Comcast falling 10% to a 54 ACSI score. TWC, according to ACSI, earned the distinction of the least-satisfying company in the index, dipping 9% to a score of 51. Mediacom Communications also scored a 51 on the survey.

The news comes on the heels of major efforts by some cable operators to boost their customer service profile. In May, Comcast unveiled a sweeping customer service program aimed at enhancing the overall customer experience, opening new user-friendly Xfinity stores across the country, building new customer service centers and committing to hiring 5,500 new customer care reps over the next three years.

Charter Communications, which agreed to purchase Time Warner Cable on May 26 in a deal valued at $78.7 billion, has said improved customer services will be a major factor in the combined company’s expected $800 million in annual cost synergies.

Charter actually rose 5% in the ACSI survey to a score of 63 and its other merger target – Bright House Networks logged a score of 65 – for the title of most improved in the cable sector. But ACSI warned that momentum may be hard to maintain as its data typically shows that mergers usually result in lower customer satisfaction, at least in the short term.

“Cable companies are trying to strengthen their positions through consolidation, but the benefits to consumers of one coaxial cable company absorbing another are questionable,” said ACSI director David VanAmburg in a statement. “The AT&T-DIRECTV merger may be different, however, because it would allow AT&T to deliver TV service via multiple technologies.”

While cable operators continued to struggle, telco TV and satellite TV service providers showed gains. With a score of 71 (up 4%) Verizon’s FiOS snatched the lead from DirecTV (-1% to 68) and AT&T’s U-verse (unchanged at 69). Cablevision Systems enters the ACSI as the highest-scoring large cable company with a 67 score, tying the lowest-scoring satellite provider, Dish Network.

Customer satisfaction with ISPs remained unchanged at 63, tied with subscription TV for last place among 43 industries. Two large ISPs did improve – AT&T (U-verse) rose 6% to an ACSI to 69; and Time Warner Cable gained 7% to 58. Bright House Networks matched the industry average at 63, while  Cablevision Systems and Frontier Communications debuted at 61.

Several ISPs suffer large drops in customer satisfaction, including CenturyLink (-8% to 60), Cox Communications (-9% to 58) and Charter Communications (-7% to 57). Comcast stays at the bottom of the category, slipping 2 percent to 56.

Despite the volatility in the TV and Internet space, consumers continue their love affair with their cell phones, which logged in with a score of 78, the highest yet for the industry. With some of the strongest scores in the entire ACSI, the two largest smartphone manufacturers lead the way: Apple and Samsung Electronics. Apple advanced 1% to 80, going head-to-head with Samsung (-1%).

“Despite its high-scoring phones, Samsung may find it difficult to chip into Apple’s market share because of the need to overcome the brand appeal that is Apple’s mainstay,” VanAmburg said in a statement. “Samsung gained an initial advantage as the first manufacturer to introduce large screens for smartphones, but with the launch of large-screen phones by Apple, its loyal customers have little reason to look elsewhere.”

Meanwhile, customer satisfaction with wireless telephone service fell 2.8% to 70. The aggregate of smaller wireless companies has the highest customer satisfaction and even shows slight improvement (+1% to 79). Smaller companies tend to be no-contract carriers with lower fees, which many customers see as better value.