Parks Associates Blog

Friday, September 12, 2008

Cable Voice Services #1 in Customer Satisfaction?

There has been much written recently about how poorly cable operators stack up against satellite television providers in terms of customer satisfaction. I cited a report from the American Customer Satisfaction Index back in May, showing how the big cable operators (Comcast and Time Warner in particular) were ranked well behind DISH Network and DirecTV. Our recently-completed consumer study TV 2.0: The Consumer Perspective also revealed some interesting data in customer satisfaction. Whereas 51% of satellite TV subscribers declare themselves highly satisfied, only 40% of digital cable subscribers indicate this (and 59% of Telco/IPTV subscribers are highly satisfied). At the same time, 7% of digital cable subscribers declare themselves to be highly dissatisfied, compared to 4% of satellite subs and 3% of Telco/IPTV subs.

Although cable suffers for truly satisfied television subscribers, a recent J.D. Power and Associates report indicates that the cable providers are doing quite well with keeping their voice customers happy. satisfaction averages 641 on a 1,000-point scale among Web users, compared with 626 for telephone users, the study found. The J.D. Power and Associates 2008 Residential Telephone Customer Satisfaction Study measured customer satisfaction with both local and long-distance telephone service. Five factors were examined in determining overall satisfaction; in order of importance, they are: customer service, performance and reliability, cost of service, billing, and offerings and promotions.

This is obviously a disturbing trend for telcos, who obviously should view the cable voice threat as yet one more challenge to overcome in building and retaining their own voice customer base. I had the chance to attend and speak at this week's Occam Networks User Group conference in San Diego. Although Occam's customers are predominantly Tier 2 and Tier 3 carriers (among which many are not competing head-to-head with cable operators for the same customes), the cable threat is very real. Several speakers cited Comcast's iteration that it would like to capture 20% of the small and medium-sized business voice market in the next few years. If carriers choose to ignore this threat, cited both Russ Sharer, Occam's VP of Marketing, and Michael Brown from FairPoint Communications. Telcos should ignore this threat at their peril, noted Andrew Randall from MetaSwitch. He said that 10 million lines have churned from telco to cable just in the last year.

There are some interesting applications occuring with voice services, including fixed-mobile convergence and femtocell deployment (which we cited in a report earlier this year titled Enabling Solutions for a Rich Broadband Experience). EMBARQ™, which is the largest Tier 2 provider, offers a handset called the eGo™ that combines standard calling features (Caller ID, etc.) with widget-like information (customized news, weather, etc.), and local directory search with automated dialing. Randall from MetaSwitch argued that these sort of features - combining the best of the Web with Internet-like applications - will be necessary for telcos to succeed in keeping their voice customers satisfied.

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