Comcast’s plan to buy Time Warner Cable for $45.2 billion will face heavy government scrutiny to make sure it does not negatively affect consumers. One reason to be concerned is that both companies were already rated terribly for customer satisfaction, and mergers typically reduce customer satisfaction in the near term.
Time Warner’s television service received the worst score for a national company on the American Consumer Satisfaction Index, which evaluates companies each year based on some 70,000 customer surveys. The company’s telephone and Internet service also received abysmal scores.
Comcast’s Internet service tied for the second-worst score among national companies, with similarly bad scores for television and phone service.
ACSI has noted that telecom companies, like airlines and large banks, many have low customer satisfaction scores because they are in industries with low competition. Unlike retail stores that have to compete for every dollar, telecom companies know that customers are slow to switch providers and sometimes have no alternative. When competition is available, as with satellite and fibre optic providers like DirectTV and Verizon in the television market, traditional cable providers are increasingly losing out.
Common complaints about Internet Service Providers, for instance, include poor call center service, poor variety of plans, poor quality services, and high prices.
As for the prospect of a merger, this process has historically led to lower customer satisfaction scores due to complications in integrating two companies, according to ACSI. For instance, Delta’s acquisition of Northwest in 2009 led to a “two-year customer satisfaction free-fall.”
Generally, the concern with such a large merger — combining the two biggest cable companies in the U.S. — is that it would enable the combined company to take advantage of the lack of competition to screw over consumers, possibly raising prices, adding data caps, and diminishing quality of service.
Comcast and Time Warner are selling the merger in positive terms, promising “a leading technology and innovation company, differentiated by its ability to deliver ground-breaking products on a superior network while leveraging a national platform to create operating efficiencies and economies of scale.” In other words, they say they will be both better and cheaper.
Customers have reason to be dubious.
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