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Comcast Can Afford to Buy Time Warner But Not To Improve Its Awful Customer Service?

February 13, 2014

While we’re getting used to decisions made in the telecommunications industry that do no favors to customers but large, multimillion-dollar favors to a handful of people near the top, it’s still a little jarring to wake up to the news that Comcast is proposing to purchase Time Warner (News - Alert) Cable for a staggering $45.2 billion. The merger, if approved, will put Comcast as the top of the list of dominant telecom and pay television providers in the country. It will also become the nation’s largest provider of broadband Internet access. Comcast's offer is for an all-stock transaction in which it will pay $158.82 for each Time Warner Cable share.

The merger isn’t a done deal, and will face significant regulatory pitfalls. While cable companies tend to serve customers geographically, and therefore don’t often compete with another (which means it won’t reduce the choices for consumers when it comes to pay television services), the amount of power Comcast will consolidate will not sit well with some.

But there’s a broader issue here, and it starts with the quality of service pay television and telecom companies (lately, they are on in the same) are offering. According to the American Customer Satisfaction Index (ACSI), both Comcast and Time Warner Cable have truly dismal customer service ratings, often dropping below 60 percent in previous years. (Charter was ranked with 64 percent in 2013, and Comcast one point below at 63 percent.) Both scores represented improvements from the year below, but consider that Verizon (News - Alert) ranked at 73 percent last year.

What this means is that both Comcast and Time Warner show up on the U.S.’s most hated companies lists regularly. Why? They offer lousy customer service. In fact, Comcast is actually ranked twice in the U.S. worst customer service list, once for its pay television services and once for its Internet services. Late last year, Comcast CEO Brian Roberts acknowledged this in an interview, but blamed the problem on high call volume.

“What unfortunately happens is we have about… 350 million interactions with consumers a year, between phone calls and truck calls,” Roberts told Marketplace in an interview. “It may be over 400 million, and that doesn’t count any online interactions which are over, I think, a billion. You get one-tenth of one-percent bad experience, that’s a lot of people — unacceptable. We have to be the best service provider or in the end, this company won’t be what I want it to be.”

For Fortune 500 CEO to admit that his company is a helpless victim of high call volume is about as stupid as stupid can get in the contact center industry. If your call volume is too high, you put more agents on the phone, bring more capacity online, put overflow resources into place and simply spend more money building a more robust customer support infrastructure. This is Contact Center 101.

Of course, since customers don’t have a lot of choice when it comes to pay television, it’s likely less about call volume and more about the fact that pay television companies simply don’t give a hoot that they are providing bad customer service. Unlike with cellular providers, pay television and Internet customers are often stuck with what’s available to them, which means they can’t switch.

But Roberts and others in the pay television industry should be concerned by the number of people who are “unplugging” from cable television. Faced with skyrocketing bills and a collection of channels that show nothing but infomercials, 40-year-old reruns and reality television, more Americans are ditching their cable or dish television services in favor of Netflix, Hulu (News - Alert), Amazon Prime and a host of other Internet-based content options. In fact, millions of American cut the pay television cord every quarter and instead run with digital viewing options or services such as those offered by Verizon and AT&T (News - Alert) (both of which rank much higher in customer service).

And while Comcast may still have millions of people cornered with Internet access, that gravy train may not ride forever, either, thanks to expanding options such as Google (News - Alert) Fiber project or the fact that 57 U.S. cities now offer free Wi-Fi.

So while the pay television and cable Internet subscribers sling around multiple billions of dollars trying to build monopolies, Roberts and others would be wiser to take a few million of that apparently easy money and stop antagonizing customers. Otherwise, it may find out it has no customers in a decade or so. 

Edited by Stefania Viscusi

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