Dissatisfaction with the cost of service, offerings and promotions has led to a year-over-year drop in customer satisfaction with residential high-speed Internet service, according to the latest 13th annual J.D. Power and Associates survey. Overall satisfaction averaged 634 on 1,000 point scale in 2010, a five-index-point drop from 2009, the market research company found.

The “2010 Internet Service Provider Residential Customer Satisfaction Study” ranks customer satisfaction with high-speed Internet service across four geographic regions according to five factors: performance and reliability; cost of service; billing; offerings and promotions; and customer service.

Regional Rankings

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Optimum Online (Cablevision) ranked highest in the East region with a score of 659, performing particularly well when it comes to offerings and promotions and customer service. Verizon and Earthlink, with respective 658 and 643 followed.

Verizon ranked highest in the South with a score of 675, performing well in the reliability and offerings and promotions categories. Earthlink ranked second with a 672, followed by Bright House Networks’ RoadRunner service with a 661.

WOW! ranked first in the North Central Region, scoring well across the board with an overall score of 722. Cincinnati Bell followed in second with 674 while Cox came in third in the region with a 671. Cox took top honor in the West with a 659, performing particularly well in performance and reliability, cost of service, billing and offerings and promotions. Cable One, with a 646, and Earthlink, with a 642, came in second and third.

Cable vs. DSL

With an overall score of 638, cable modem services closed the gap in customers satisfaction with DSL, narrowing eight index points from last year. With overall satisfaction with cable modem services coming in at 621 for 2010, the satisfaction gap now stands at 17, according to the report. Troubleshooting and service restoration accounted for 63% of DSL technicians’ house calls as compared to 53% for cable modem users.

Indicating that competition leads to better overall service and greater customer satisfaction, overall satisfaction averaged 556 for customers with only one choice of service provider as compared to 653 among respondents with five choices of service provider.

Declining Satisfaction; Less Churn

Customer satisfaction with cost of service averaged 584 in 2010, 12 points below 2009’s 596. Decreases in satisfaction with fairness of prices paid and ease of understanding pricing options were the main factors underlying the decrease. Customer satisfaction with the fairness and ease of understanding pricing options was lower than the industry average among customers who intend to switch service providers. The percentage of customers who actually switched providers for reasons other than moving declined by more than 25% in 2010 as compared to 2009, however.

“Although product performance is most important in retaining customers, the top reason they switch providers is cost-related,” Frank Perazzini, director of telecommunications at J.D. Power and Associates, was quoted as saying in a news release. “Customers who give low ratings to their provider in the areas of fairness of fees and understanding the prices paid are the most likely to switch because of price.

“The good news for incumbents is that from 2009 to 2010, industry-wide intention to switch remains unchanged, while the percentage of consumers who intended to switch for price actually declined one percentage point. With price being key to retaining customers, providers must establish that their pricing is competitive and their service is a good value.”

Service providers may change how they allocate spending on acquisition and retention programs if the decline in switching rates continues, Perazzini says. “For instance, implementing best price guarantees, which are commonly seen in retail stores, could reduce switching rates even further.”

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