Customer Satisfaction Falls, Across the Board, for Communications Services

There are some troubling signs about customer satisfaction with virtually every communications service in the latest American Customer Satisfaction Index survey.

Customer satisfaction scores for subscription TV, Internet, mobile and fixed line telephone service, plus computer software, collectively dipped 3.4 percent to an ACSI score of 68.8 on a 0 to 100 scale, the lowest level in seven years.

Some segments fared worse than others. Customer satisfaction with subscription TV service dropped to 63, the absolute worst score among 43 industries covered by the Index.

But Internet access service, which one might think would fare better, had the same score of 63, at the bottom of the index, across industries.

ACSI says the decline results from poor customer service and higher prices. The price issue is a bit of a paradox. For the most part, ISPs have been boosting speeds, while holding prices roughly steady, while adding higher-performance tiers, sold at higher prices.

So “prices” are going up, in some cases, but for services with much-higher performance.

Customer service might be another matter.

“There was a time when pay TV could get away with discontented users without being penalized by revenue losses from defecting customers, but those days are over,” says Claes Fornell, ACSI Chairman and founder.

The ACSI reports huge drops in customer satisfaction for Comcast and Time Warner Cable.

Already one of the lowest-scoring companies in the ACSI, Comcast shed 10 percent to a customer satisfaction score of 54.

Meanwhile, Time Warner Cable earns the distinction as least-satisfying company in the Index after falling 9 percent to 51.

Joining Time Warner Cable in the basement is ACSI newcomer Mediacom Communications (51), which serves smaller markets in the Midwest and South.

With a four percent gain to an ACSI score of 71, Verizon’s FiOS service had the best customer satisfaction score. DIrecTV dipped one percent to 68, while AT&T’s U-verse was unchanged, with a score of 69.

The perception problem for ISPs might be attributed to lack of choice. Some 61 percent of U.S. households have just one or no “high-speed” Internet providers, ACSI maintains.

Since most households have service from two fixed networks and two satellite providers, the issue is the perception of “high speed.” Consumers might no longer generally consider speeds below 25 Mbps to be “high speed.”

Customer satisfaction with ISPs remains unchanged at an ACSI score of 63.

But ACSI says customers are frustrated with “unreliable service, slow broadband Internet speeds and rising subscription prices,” as well as service contracts.

As always, some providers did better than average. AT&T U-verse gained six percent to an ACSI score of 69, while Verizon scored a 68.

Time Warner Cable gained seven percent to 58. Cablevision Systems and Frontier Communications scored a 61.

CenturyLink dropped eight percent, while Cox Communications lost nine percent to score 58.

Comcast’s Internet access service was worst at 56.

Customer satisfaction with mobile service also declined 2.8 percent to 70. TracFone Wireless achieved a score of 77. Verizon Wireless dropped five percent to 71. Both T-Mobile and AT&T improved to 70, while Sprint fell four percent to 65.

Fixed Line Customer Satisfaction Drops, After Years of "Higher" Ratings

In recent years, consumer satisfaction with fixed network phone service has generally been higher than for Internet access or subscription TV service, though consumer telecom, mobile and video entertainment services typically rank at the bottom of cross-industry rankings.

In 2013, for example, customer satisfaction with fixed telephone service was higher than for mobile service, Internet access or video entertainment. But that seems to be changing, which could indicate that the remaining customer base for fixed line voice now values the product much less than once was the case.

The thinking has been that since so many customers had abandoned all use of fixed line service, the remaining customers were a self-selected group of people for whom the value of fixed line service was relatively high.

But in the latest survey by the American Customer Satisfaction Index, customer satisfaction with fixed network telephone service fell 5.5 percent to 69. In 2013, the score had been 74. In terms of ACSI rankings, that is a big drop.

As sometimes is the case, specialized and smaller providers score better than larger providers.

Despite slipping three percent to 76, the average ACSI score of smaller local and long distance providers is much better than that of large providers, the ACSI says.

Vonage and Bright House Networks are near the top of the category (both 73). CenturyLink dipped one percent to 70, while Verizon declined seven percent to 68.

Cox Communications dropped three percent to tie Verizon’s score. Cablevision Systems scored a 67.

AT&T’s landline service dipped the most, down 10 percent to 65. Comcast slipped four percent to 64 while Time Warner Cable declined three percent to 63.

To be sure, customer satisfaction scores for subscription TV, Internet, mobile and fixed line telephone service, plus computer software, collectively dipped 3.4 percent to an ACSI score of 68.8 on a 0 to 100 scale, the lowest level in seven years.

That might seem an odd result, given the greater choice, and better prices, enabled by Google Fiber, third party ISPs, mobile service providers and other suppliers generally adding retail packages with higher value (faster speeds, bigger usage buckets) and lower price.

One might argue that fierce competition actually is reducing consumer satisfaction. That could happen for any number of reasons. Perhaps existing customers see new advertised offers and evaluate their existing services less favorably.

Customers might be more confused, wondering whether they now have the “best deal” or “best plan” or “best provider” for the combination of value, features and price.

In the case of fixed line voice, where satisfaction had been--at least for a communications service--relatively high, the lower satisfaction could indicate that even the remaining customers now are having greater questions about the value of the service.

In other cases, consumers might be irritated by the need to buy a triple play service, when all they really want is a double play (Internet access and video), to get the best price.

Overall, the dropping satisfaction scores now extend across every segment of the communications business.

Independent Telcos Buy SDN-based Cloud Services Provider

A consortium of 32 independent telcos that own  BLM Acquisition Corp. has acquired cloud service provider Codero, a cloud hosting company.

The deal gives the regionals a cloud hosting capability, while Cordero gets “out of market” distribution channels and access to investment it needs to expand.

One practical angle: the owners are scattered over a wide area, but Cordero’s backbone uses software defined network architecture, with the practical implication that end user sites require very little hardware investment, allowing service providers  to log in to a portal and configure bare-metal servers, cloud resources and virtual networks on demand.

Codero has 4,000 customers of all sizes, from small to enterprise.

Codero customers will have enhanced connectivity options and Codero will gain access to what it calls one of the largest combined fiber networks in the United States.

The acquisition makes Codero a major cloud play in the cities that aren’t core markets and in smaller and rural towns. That isn’t necessarily unusual. But what is noteworthy is that use of SDN makes service delivery much more manageable, and cheaper.

French Mobile and Fixed Price Declines Moderate in 2014

French retail mobile and fixed telecom prices are decreased at a slower rate in 2014, compared to 2013, according to French regulator ARCEP.

Revenue earned by operators totalled €36.8 billion, a 3.4 percent decrease over the previous year, following a drop of 7.3 percent in 2013.

ARCEP says the moderating declines were driven by a more-moderate decline in fixed telephone service revenues as well as  and also by a similar trend in mobile pricing in the residential market segment in 2014.

The price of fixed services decreased by an average of one percent in 2014. In 2013, prices actually grew by 2.6 percent. Fixed network prices have been roughly flat since 2012, ARCEP notes.  

Retail high speed access prices decreased by 2.7 percent in 2014, following a  2.7 percent increase in 2013.

Overall, prices for faster access services between 2012 and 2014 were flat, down about 0.2 percent.

Though arguing that mobile service prices remained relatively stable over the course of 2014, ARCEP also says that post-paid contract prices (flat rate plans, which account for 85 percent of the market in terms of volume) decreased by 13.5 percent, compared to a drop of 25.6 percent in 2013.

Prepaid card prices increase since 2011 and were up 7.5 percent in 2014, on average.

Memory and Voice Costs Declined 3 Orders of Magnitude Since 1993?

The retail cost of memory, like the retail cost of texting, calling or messaging, is a fundamental reality for nearly any business or industry where product creation distribution and consumption has significant "information" content. 

The price of a product (a gigabyte of storage) falls from $9,327 to $2.48, a decline of three orders of magnitude over two decades. 

Nothing that dramatic has occurred for most carrier-provided voice calls. From 1965 to 1985, for example, U.S. originated international call prices dropped by about half, or about one order of magnitude ($10 for a three-minute call to $5 for a three-minute call). 

Between 1993 and 2013, the cost of a mobile-initiated voice call in the U.S. market dropped about one order of magnitude. 

Of course, it is hard to compare carrier voice with the cost of Skype-to-Skype calls or instant messaging services, which might have "zero incremental cost." 

But it would not be hard to attribute a three ordes of magnitude effective price decline, if one used an attributed cost model, where some percentage of the cost of Internet access was used as the indicator of incremental cost of usage. 

 

Asia Pacific Mobile Devices Will Consume 2.2 GB per Device by 2019

In the Asia Pacific region, mobile data traffic will grow 10-fold from 2014 to 2019, a compound annual growth rate of 58 percent, according to the Cisco Mobile Visual Networking Index.

In 2014 there were 2.2 billion mobile users in 2014, representing 56 percent of Asia Pacific's population.

By 2019 there will be 2.8 billion mobile users representing 69 percent of Asia Pacific's population.

In Asia Pacific, mobile data traffic will reach an annual run rate of 114 Exabytes by 2019, up from 11.7 Exabytes in 2014, growing three times faster than Asia Pacific fixed IP traffic from 2014 to 2019.

In Asia Pacific, mobile data traffic will account for 17 percent of Asia Pacific fixed and mobile data traffic by 2019, up from four percent in 2014, while 53 percent of mobile connections will be “smart” connections by 2019, up from 24 percent in 2014.

In Asia Pacific, mobile traffic per mobile-connected end-user device will reach 2.2 GB per month by 2019, up from 273 megabytes per month in 2014, a compound annual growth rate of 51 percent.

Trends are similar in many countries. In Indonesia, there were 155.1 million mobile users in 2014, representing 61 percent of Indonesia's population. By 2019 73 percent of Indonesia’s population, some 195.3 million people will be using mobile devices, according to the Cisco Mobile Visual Networking Index.

Perhaps significantly, mobile data traffic will grow an order of magnitude (10 times)  from 2014 to 2019, a compound annual growth rate of 59 percent.

Mobile data traffic will account for 41 percent of Indonesian data traffic by 2019, up from 17 percent  in 2014.

By 2019, 46 percent of mobile connections will be “smart,” up from 14 percent in 2014.

In Indonesia, mobile traffic per mobile-connected end-user device will reach 1.7 GB per month by 2019, up from 185 megabytes per month in 2014, a CAGR of 55 percent.

Mobile Data Traffic Will Grow 10X from 2014 to 2019

In Indonesia, there were 155.1 million mobile users in 2014, representing 61 percent of Indonesia's population. By 2019 73 percent of Indonesia’s population, some 195.3 million people will be using mobile devices, according to the Cisco Mobile Visual Networking Index.

Perhaps significantly, mobile data traffic will grow an order of magnitude (10 times)  from 2014 to 2019, a compound annual growth rate of 59 percent.

Mobile data traffic will account for 41 percent of Indonesian data traffic by 2019, up from 17 percent  in 2014.

By 2019, 46 percent of mobile connections will be “smart,” up from 14 percent in 2014.

In Indonesia, mobile traffic per mobile-connected end-user device will reach 1.7 GB per month by 2019, up from 185 megabytes per month in 2014, a CAGR of 55 percent.