Screwing customers is a business model

Bob Garfield continues his jihad against Comcast with a live podcast (oxymoron?) on December 11 featuring me on the same bill with Ralph Nader and Harry Shearer. Bob’s not letting up.

Yesterday, I sent Bob what I thought was astounding statistics from the oft-quoted University of Michigan’s American Customer Satisfaction Index on Comcast and cable and satellite TV, which reported that the industry suffers “the lowest level of customer satisfaction among all industries covered by ACSI.” Yes, even worse than airlines, hospitals, and Microsoft. Yet, of course, they still make money money because they enjoy monopolies … for now. Says ACSI:

There seems to be an element of monopoly-like pricing in the cable industry: basic cable services rose 5 percent in 2006 and 93 percent over the past decade, nearly four times the rate of overall consumer prices during the period. Such pricing power usually comes with some level of monopoly protection and most cable companies have little competition at the local level. This also means that a cable company can do well financially even though its customers are not particularly satisfied. Comcast is one of the lowest scoring companies in ACSI. As its customer satisfaction eroded by 7% over the past year, revenue increased by 12%. Net income went up by 175% and Comcast’s stock price climbed nearly 50%. In the first quarter this year, Comcast added 75,000 new cable TV subscribers, a 49% increase, and posted an 80% rise in earnings over the previous first quarter.

In short: They can still make money screwing their customers.

But be warned, cable oligarchs: Your monopoly will end, as newspapers’ did. You will fall. But for you, no one will cry.

I wish Google would win wireless spectrum and use it to create an open network that will finally bring cable and phone companies the competition they, and we, so richly deserve. Cable’s business is built on telling its customers what they cannot do. Google is built on letting us do what we want to do. Cable needs an attitudectomy.

  • Scott Crawford

    Anecdotal only, I know, but a data point nonetheless. As a former investor in Comcast, I was growing irritated with the brand mis-management and was toying with the idea of winding down my investment. After reading Bob’s initial post on AdAge.com, I dumped the stock. I invest in brands not stocks. Comcast is a mess.

  • Bob Garfield

    jeff,
    thanks for the plug for my show Dec. 11 at 9 pm est, that’s 9 pm est December 11 on Comcastmustdie.com.

    oddly, i had only just posted the stats when your post popped up. as my headline says, The “Tiny Percentage” of Dissatsified Comcast Customers Turns Out to be 44.

    thanks also for coming on the podcast. after Mona Shaw, the “Hammer Lady,” you were the best.

    regards,
    bob

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  • http://steveclancy.com Steve Clancy

    Here’s a great example of Comcast screwing their customers. My mom on principal only gets regular cable and has resisted Comcast’s digital cable offers. Slowly, though more and more services are being offered only on digital cable. Apparently this month they decided to move the TV Guide Channel to Ch. 100, since this is channel is only available to digital subscribers. So now my mom is going to have to dig around for a print TV guide whenever she wants to know whats on. She may have the last laugh though because this might push her over the edge to finally cancel cable TV altogether.

  • SteveSgt

    I just can’t get that worked up about a cable TV monopoly. In fact, if I didn’t have television set at all, I would still find plenty of ways to stay informed and otherwise occupy my time.

    NetFlix is the closest thing I have to a cable/satellite provider. I go for days without turning on the TV at all, except to watch DVDs. I don’t watch much video on the computer either, though that’s where I watch anything produced by CNN or MSNBC.

    So the fact that Comcast is our cable provider in this neighborhood doesn’t bother me one little bit. I really don’t even notice.

  • http://opensourceinnovation.wordpress.com Innovation Catalyst

    Comcast has a monopoly on cable services but not on video. You can get more/better channels and service from DirecTV and Dish Network. But Comcast still owns the market.

    Why? I believe it is because of the way it integrated product systems before anyone else. They rolled out their digital TV and cable modem services simulataneously and in doing so gave video customers something DirecTV could not – premium high speed internet. Later Comcast added VOIP and offered a great HDTV selection, again before anyone else.

    I would love to switch to DirecTV but they don’t offer what I need – regular analog basic cable to my analog TVs plus digital DVRs to my two HDTVs. Plus they have no internet offering near as good as Comcast’s.

    Verizon’s FIOS is the only thing that could unseat Comcast but it will be years before they upgrade the infrastructure to approach ubiquity.

  • Jeff Verhoef

    Comcast is starting to get raked over the coals here in the Detroit area (again) because they, in they’re imminent wisdom, have decided to tier all PEG access channels in the 900 range, so that they are only available to digital subscribers. Now, to some, or maybe most, people, that just means fewer channels to surf over. For others, however, particularly the elderly, that could very well mean their only access point to government information is now cut off. And, it certainly curtails the public’s ability to exercise free speech though it’s government access and public access channels.

    The move is slated for mid January, and the opposition is ramping up.

  • jeffrey C.

    jesus tap dancing christ! i haven’t encountered a worse way to spend 70+ dollars a month. let me give you the saga:

    so it all begins with my initial installation. i paid $59.99 for a basic installation which supposedly included the installation of 1 cable jack if necessary. well, where the main source of cable and internet modem were to be accessed is in the second bedroom of our 2 bedroom apt. it was brought to my attention that due to my residence being an apt., the installer could not install the second room cable jack.

    THEN, i proceeded to lowes home improvement store and purchased $35.00 worth of cable, splitters, and connecters to complete the install myself. bringing the total to $148.00 ($59.99 install fee, first month bill, and price of materials to complete installation.).

    NOW, i have a paper bill from comcast stating that i owe an additional $23.75… due now. infuriated, i began to read the back of my statement. they were indicating $69.99 for installation (which i had previously paid $59.99 upon install) which left a balance of $10.00. in addition, was another $13.75 for “taxes, surcharges, and fees”. now, why wasn’t i previously informed that taxes and such for my first month bill were not included in the installation “one time charges”? and furthermore, why was i not reimbursed for a portion of the installation fee, since the work wasn’t
    actually complete. to top that off, the remote control randomly decides to take the occasional night off, and they pulled my favorite program from on demand. i honestly would change providers, but the competition is far from a step up. i just feel like i have been treated unfairly. if there was an online petition to end comcast’s monopoly, i would gladly sign it.

  • Pat

    Consumers need to know who is willing to screw American consumers for competition. It’s as vital as knowing who is willing to pollute the environment for profits – and amounts to one and the same thing.