Customer SatisfactionU.S. telecom service providers managed to reverse a two-year-long decline and register a gain in telecom industry customer satisfaction in 2016, according to the latest annual American Customer Satisfaction Index (ACSI), which was released today.

Collectively, telecom industry customer satisfaction with landline and wireless providers, cell phone manufacturers and subscription television and Internet service providers rose 1.9 percent year-over-year (YoY) in 1Q 2016 to reach 70.1 on ACSI’s 100-point ratings scale.

Telecom industry customer satisfaction scores improved for all five industry sectors, added ACSI, which surveyed 12,710 telecommunications customers in producing the report.

Cable Pay-TV Providers Post Gains
Customer satisfaction with Comcast and Time Warner’s cable services showed the biggest gains in the subscription TV industry group. That said, both cable MSOs remain among the lowest rated companies ACSI tracks. Comcast scored an average 62 ACSI points to tie with Suddenlink, while Time Warner Cable’s 59 ACSI points put it in a tie with Cox Communications.

Medialink holds the dubious distinction of being the lowest rated with an ACSI tally of 54.

ACSI scores for subscription TV services providers as a group climbed 3.2 percent to 65. That’s going to change once Charter Communications completes its merger with Time Warner Cable and Bright House Networks to become the nation’s second-largest cable company, according to ACSI.

The Time Warner Cable brand will vanish from the marketplace while customer satisfaction with Bright House Networks will likely decline in the aftermath of the merger, ACSI expects. Charter’s ACSI score dropped 5 percent to 60 in the latest survey, while Bright House’s rose 2 percent to 66.

“It’s not too hard for cable companies to improve when their starting point is the cellar,” ACSI Managing Director David VanAmburg commented. “But for Charter Communications, its challenge will be to keep satisfaction levels from falling in the wake of a merger because ACSI data show that there tends to be a drop in customer satisfaction as companies combine operations and customer accounts.”

Turning to telco subscription TV services providers, Verizon Fios and AT&T U-verse maintained the industry’s highest customer satisfaction ratings. Verizon Fios racked up a score of 70 and AT&T U-verse 69. Satellite TV providers DIRECTV and DISH scored 68 and 67, respectively.

telecom industry customer satisfaction
Source: ACSI

Customer Satisfaction with ISPs
Telecom industry customer satisfaction with ISPs also rose – 1.6% YoY, according to ACSI’s latest survey. That said, ISPs remain the lowest performing industry in the ACSI. While many are cutting the cord and canceling their subscription pay-TV services they have to rely on them for broadband Internet access, a requirement for alternative OTT streaming TV and movie services, ACSI points out.

“High-speed Internet access is a must-have in the digital age, making ISPs and wireless companies critical providers for the workplace as well as the home,” Fornell noted. “With relatively few options, consumers have limited means for punishing companies for poor service.”

Verizon Fios’ ISP ACSI score rose 7 percent to 73, the highest ever for the industry. Cablevision followed, posting a 13 percent gain to score 69. AT&T U-verse’s ACSI ISP score came in at the industry average 64, a drop of 7 percent.

Bright House Networks’ ACSI ISP score rose 6 percent to 67 and Time Warner Cable’s 14 percent to 66.

The ACSI ISP score for Bright House and Time Warner Cable’s future parent Charter Communications rose 11 percent YoY to 63. Comcast posted a 5 percent gain to 59, while scores for three other ISPs were in the 50s.

Cell Phones and Wireless Carriers
ACSI scores for cell phone manufacturers and wireless service providers also posted YoY gains in the 1Q´16 survey. Wireless phone services’ customer satisfaction rose 1.4 percent to 71, while that for cell phone manufacturers rose 1.3 percent to 79.

Gains for T-Mobile and Sprint, as well as a smaller uptick for AT&T, were the primary factors contributing to the gains registered for wireless carriers. T-Mobile’s ACSI score rose 6 percent to 74, the highest among national wireless carriers. Sprint showed the most improvement as its ACSI score rose 8 percent to 70. AT&T Mobility and Verizon Wireless tied at 71.

Smaller wireless carriers scored higher, an average ACSI score of 77. Prepaid phone provider TracFone’s customer satisfaction score dropped 3 percent to 75, but the company remained tops among peers.

“Now that contracts are becoming a historical relic, wireless companies are doing more to attract and retain customers in an environment where switching from one provider to another has never been easier,” VanAmburg said. “The challenge for wireless carriers is finding a balance between cutting prices to attract new customers and investing in faster, more reliable network infrastructure to keep them.”

“Innovation tends to be strongest in markets with multiple companies vying for consumer preference,” added ACSI founder and chairman Claes Fornell. “There are numerous wireless carriers and plenty of different cell phones to choose from. The same is not true for pay TV and ISPs, where consumers are usually beholden to a duopoly.”

Speaking of cell phone manufacturers, customer satisfaction with Apple smartphones rose 1 percent YoY to 81, putting it at the top of the industry group. Samsung followed with an ACSI score of 80, no change from a year ago.

Motorola’s ACSI score slipped 3 percent to 77, ranking it ahead of HTC, which lost 3 percent to score 75. LG and Microsoft Mobile (including Nokia-branded mobile phones) followed with ACSI scores of 74.

In contrast to wireless phone service, bigger appears to better when it comes to customer satisfaction and cell phone manufacturers, ACSI noted. Nearly 4 in 5 cell phones sold today are smartphones, ACSI pointed out. Taken together, Apple and Samsung account for 70 percent of the market.

“The cell phone market has been reduced to a two-horse race between Apple and Samsung, with everyone else fighting for scraps,” says VanAmburg. “Although some other smartphones get solid reviews from media, none have received the high marks that customers give Apple and Samsung.”

VoIP Dominant in Fixed Line Telephony
Telecom industry customer satisfaction with fixed-line telephone service rose 1.4 percent YoY to 70. Dissatisfied customers defected, which has left providers with a hard-core base of subscribers, according to ACSI.

VoIP calls have become the dominant mode for landline communications and carriers are losing long-distance calling to cell phones or other IP-based modes of communication, such as Skype and Apple’s FaceTime, ACSI says.

Specializing in OTT landline-based telephony, Vonage’s ACSI score rose 7 percent to 78. Vonage can devote more resources to customer service than less flexible peers who operate cable and Internet services as it doesn’t need to maintain costly network infrastructure.

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