Customers would rather get their bundled services from telecom providers by a 2:1 margin over cable providers, according to a new study released today by the CFI Group,.
CFI Group’s second-annual Telecom-Cable Industry Satisfaction Study, which looked at customer satisfaction for video, broadband and wireless communications, said that 70% of customers cited high rates as one of the reasons for canceling their cable TV service, while poor customer service accounted for 40% of the churn for cable TV services.
The survey of more than 1,200 households said that customer satisfaction gave telecom companies a competitive advantage over cable operators. As the telecoms rollout high-speed fiber services across their networks, they will be able to challenge cable company dominance in bundles, high-speed Internet and video, according to the survey.
“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.”
For telecom companies, customers cited 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,” Doriot said. “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.”
Nearly 60% of the surveyed households have bundled services, which is a 13% increase compared with last year.
The survey also said that because telecom companies own national wireless carriers, it gave them another potential advantage in the battle of bundled services. Only 8% of surveyed consumers have bundles that include wireless phone service, and more consumers are dropping landlines altogether in favor of wireless telephony. The study said 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,” Doriot said.
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.