Psst. I have a confession to make. Don’t tell my cable company, but I’m preparing to make “the call” to become another cable cutter. Joining over 3 million traditional TV subscribers that defected in 2017.
I’ve been a customer of one of the major providers for many years, perhaps a couple of decades. Our family got the basic cable package and we’ve stuck with that over the years, usually in a bundle with Internet service and, more recently, a phone.
Our overall experience has gotten better, especially in the past few years. Faster Internet, better reliability, easier service calls, no-hassle set-top box replacement. Even support calls have been generally pleasant and helpful.
I like to watch a mix of cable news (don’t judge me, I’m trying to break that habit), HBO, sports, and a few other shows that come and go… like Justified or Fargo. So, I’m not unhappy about the programming, except that I only watch a small selection of the available channels in a so-called “basic” package.
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So if someone asked me to rate my satisfaction to all the things I’ve mentioned, I’d say at least “good.”
Then why am I actively looking to get rid of the subscription TV part of my bundle? I’m currently testing several Over The Top (OTT) providers like Hulu, Sling TV, and HBO Now, to try to find a lower-cost way to get the programming I want. I’m even going old school with free regular TV via an HD antenna.
CX Improvements Haven’t Increased Satisfaction
The modern “cable” industry is really a combination of Internet Service Providers (ISPs) and subscription TV. For as long as I can remember, satisfaction has been poor, and doesn’t seem to be getting better despite industry efforts. (If you don’t believe me, read a few articles and then continue below.)
The ASCI has been tracking subscription TV satisfaction since 2001, when it started with an index score of 64. Here we are 17 years later, and it has risen to … wait for it … 64!
Only Fios (Verizon) and U-verse (AT&T) cracked 70. To put this in perspective, the best of the cable industry would be the worst in nearly all of industries that the ASCI tracks.
Now, it’s important to note that the ACSI doesn’t just use one simple question like “how satisfied are you?” Rather, it assesses a number of factors that aggregate into a score that Managing Director David VanAmburg says measures “value for money” — how the consumer feels about what they get in return for the price paid.
The “what you get” includes programming, service calls, quality, etc. And the price is the bill… which has been going up and up in recent years. VanAmburg says that while the consumer experience has improved, price increases continue to foster the impression that cable costs too much for the value received, so satisfaction rates remain low.
That’s supported by TiVo’s “Online Video and Pay-TV Trends Report for Q4 2017,” which found high/increasing prices a factor in 87% of cord-cutters, and 83% of dissatisfied subscribers.
Innovation to the Rescue?
UpRamp is a startup accelerator launched a couple of years ago by CableLabs, which has helped build many of the foundational technologies we take for granted. Like DOCSIS, a telecommunications standard used to provide Internet access via a cable modem.
According to Scott Brown, UpRamp’s Executive Director, the cable industry is “looking at long-term innovation” to improve the customer experience. According to this article, UpRamp starts with the problems that member CTOs want to solve, then narrows them down with review from advisory panels, experts, and cable executives to settle on six that show the most promise in solving immediate problems.
It’s completely reasonable that CableLabs/UpRamp will want to service its customers — the member cable companies. But I have to wonder — are they solving the problems that end consumers like me want solved? What is the process that the cable CTOs use to get customer input? I’m skeptical that they have this quote up on their boardroom walls:
“You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to sell it.”
— Steve Jobs
To be fair, you can see evidence of innovation in the cable experience, including shorter install windows, using AI in customer service, chatbots, improved customer communication and more. DeviceBits, an AI-powered customer support platform, is one example of a company that’s gone through UpRamp’s process and is now “tracking six new opportunities with operators across the globe.”
Despite these improvements, Brown agrees that “too expensive is a common problem.” In fact, it seems like the core problem. Why?
According to Brown, the cable industry we know and don’t love today is a result of 50 years of evolution that started with geographically separated providers with a lock on their turf. Brown says that “carriage” agreements — which cover the content cable companies can transmit — are also a factor. If Comcast, say, wants to offer a popular service like ESPN, it has to negotiate a deal with Disney (the owner) that includes a bunch of not-so-popular channels and other restrictive terms.
So the consumer that only wants ESPN has no choice but to accept a package that includes more. This is not a knock on ESPN per se — every company wants to create a great product and exert pricing power. But these agreements are starting to break down as consumers say “no mas” to what they perceive as high prices. As usually, an entrenched industry is not changed from the inside, but from disruptors like NetFlix, Amazon, and now a host of OTT providers.
In a sign of “if you can’t beat ’em, join ’em” some cable operators are launching their own OTT services (e.g. Dish/Sling TV). Others are testing new “skinny” bundles. These are all positive signs that consumer voices are finally being heard.
Cut the Price?
The simple fix would be to cut prices. That is the core reason for customer dissatisfaction: not enough value for the size of the bill.
Personally, I think the cable industry — including the media companies that supply the programming — could have forestalled much of the current cable cutting by being more customer-centric regarding pricing and bundles. But no, when there’s money to be made, short-term thinking rules. Especially when customer choice is limited.
But let’s get real. If you were running one of these cable companies, would you have dared to cut prices to all your customers (assuming media companies wanted to play along), just to stem the defection of price shoppers? I think probably not unless you are Jeff Bezos with a board and investors willing to play the long game.
In my view, a more reasonable strategy would have been to maintain pricing and deliver more within that envelope. Improve the perceived value. Unfortunately, raising prices has poured salt in an open wound.
As Brown points out, cable operators have a valuable relationship with households. They could (and some are), supply other solutions like home security and even mobile communications. But I fear it’s a case of too little, too late. The core price/value issue will not be addressed by the legacy cable players, but rather the upstarts with nothing to lose.
What’s Your Solution?
I’ve questioned whether the cable/media industries really had their customer’s concerns at heart. What do you think they should do?
Please give your advice in the comments below. Who knows, maybe some cable executive will actually read them and take action!