Consumers would prefer to bundle communications services with
telecommunication companies by a 2 to 1 margin to cable companies if
given the choice, according to the second annual Telecom-Cable Industry
Satisfaction Study from CFI Group. However, cable companies still
provide bundled communications to twice as many consumers surveyed as do
The survey of over 1,200 households, which examined customer
satisfaction for video, broadband Internet access, and wireless
communications using the methodology of the University of Michigan's
American Customer Satisfaction Index, found that customer satisfaction
provides telecom companies with a competitive advantage. As the telecoms
roll out high-speed fiber services across their networks, they will be
able to challenge cable company dominance in bundles, high speed
Internet and video.
"The cable companies are asleep at the wheel
if they don't see the threat from the telecoms,"
said Phil Doriot, program director for CFI Group. "But
the network upgrades aren't going to happen
overnight, so cable companies still have the opportunity to improve
their customer service and cover their Achilles heel."
The study identified high rates and poor customer service as the two
biggest reasons customers would consider leaving a cable provider of
communications bundles. For telecom companies, customers cite the need
for faster access as a primary reason for switching. Video services like
AT&T's U-Verse IPTV and Verizon's
FiOS are beginning to make their mark, and 2% of survey respondents are
already using video services from a telecom company.
"Consumers stand to benefit most from the
battle between cable and telecom," said
Doriot. "Telecoms have no choice but to
upgrade their systems to offer video and faster Internet because they
are losing customers to cable. That should bring more choice to the
marketplace, stem the price hikes, and raise the satisfaction bar for
the whole industry."
Telecom companies own national wireless carriers, giving them another
potential advantage in the battle of bundled services. Only 8 percent of
surveyed consumers have bundles that include wireless telephone, and
more consumers are dropping landlines altogether in favor of wireless
telephony. The study suggests that this presents an opportunity for
telecoms and another challenge for cable companies.
"Without a wireless play, cable companies aren't
future-proofing their bundles, but new technologies like WiMax might
change the game," said Doriot.
Though telecom companies generally enjoy better satisfaction ratings
than cable companies, churn may be the biggest issue for wireless
carriers. According to CFI Group's research,
the top reasons customers give for switching carriers are better rates,
better plans, and better coverage and reliability.
The full report is available at no charge at http://www.cfigroup.com/.