Infamously poor customer service has made this
business one of the most reviled in America.
The most hated companies in America have a knack for
angering people. Whether it's due to high prices, subpar
products, or terrible service, these companies excel at
creating outrage among their customers.
The cable industry in particular has its share of despised
businesses. It's a monopolistic arena, where the lack of
competition gives customers few choices among
providers. In turn, cable companies have little incentive
to offer low prices or top-tier customer service.
Maybe no company epitomizes this situation better than
Comcast (NASDAQ:CMCSA) . The cable titan was recently
named one of the most hated companies in America by
24/7 Wall St, after The Consumerist awarded it the title
of worst company in America last year.
A recent report by the American Customer Satisfaction
Index helps to explain why Comcast is so reviled.
The survey showed that customer satisfaction with
subscription TV service and Internet service providers
came in dead last among all 43 industries the index
covers. Worse still, the ACSI data, which is based on
14,176 customer surveys collected in the first quarter
2015, show that customer satisfaction continues to
deteriorate for the largest pay-TV providers, with the
decline resulting from poor customer service combined
with higher prices.
Yet even among pay TV providers, Comcast's
plummeting customer satisfaction score was noteworthy,
with the cable giant suffering a "huge drop" of 10% to a
score of 54 out of 100 after its failed merger with Time
Warner Cable (NYSE:TWC) .
Unfortunately, Comcast's satisfaction score for its ISP
business also fell, slipping 2% to 56 out of 100. In fact,
that placed Comcast at the bottom of the ISP category, a
segment for which ACSI notes that "Customers are
frustrated with unreliable service, slow broadband
Internet speeds, and rising subscription prices -- and
they resent being locked into service contracts."
All told, Comcast earned the distinction of ranking near
the bottom of the two lowest-ranked categories in the
American Customer Satisfaction Index.
"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," said Claes Fornell, ACSI chairman and founder.
"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."
The cord-cutting trend Fornell mentioned is beginning
to take a toll on Comcast's business, with consumers
abandoning their cable providers in favor of online video
streaming services. Netflix in particular is a major threat,
with the streaming leader's ubiquity and growing
original content library helping it rapidly expand its
subscriber base. Unfortunately for Comcast and its
shareholders, this trend remains unlikely to change in
the foreseeable future, and it may even accelerate .
Surprisingly, these issues have yet to be reflected in
Comcast's stock price. Over the past two years,
Comcast's stock has risen nearly 40%, compared with a
roughly 25% return for the S&P 500 during that time. Yet
analysts have begun to question whether Comcast's
strong stock price gains may be nearing an end, with
the commoditization of Internet services and the cord-
cutting phenomenon likely to continue to eat into profits
in the years ahead.
Management has announced a slate of initiatives to
combat these challenges, which include hiring more
customer-service reps and paying customers $20 if
technicians don't arrive on time for an appointment.
However, it's uncertain whether these more customer-
friendly actions can drive the type of lasting change
needed to rebuild Comcast's reputation. And even if they
do, it may not be enough to stem the decline in cable
subscribers that's likely to take place in the years
ahead. That's because consumer preferences are
changing, and they're moving away from Comcast.
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