ACSI: Phone, Cable Satisfaction Falls

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After two quarters of declines, the Ann Arbor-based analysts behind the American Customer Satisfaction Index reported an increase for the quarter.

ACSI officials said gains for utility and health care companies more than offset satisfaction decline in the information sector. 

For the first quarter of 2011, the Index rose 0.4 percent 75.6 on the ACSI’s 0-100 scale. 

 “For an economic recovery to take hold and generate long-term profit potential, which would be necessary in order to make a significant dent in unemployment, repeat business is going to be critical,” said Claes Fornell, founder of the ACSI and author of “The Satisfied Customer. “And, for that to occur, customer satisfaction is important.  However, in view of the lack of overall strength in aggregate customer satisfaction, it is difficult to envision much of an increase in consumer spending in the near future, except from inflation in gasoline, commodity, and food prices.”

Even though customer satisfaction in the aggregate rose, the news for the information sector is mixed.  The sector as a whole dropped 0.7 percent to 72.3, second lowest in ACSI next to government services, and many more companies decline than improve.  For this release, ACSI covers customer satisfaction with information services, including cell phones, computer software, fixed-line and wireless telephone service, motion pictures, newspapers, subscription TV service, and TV news.

 Wireless Telephone Service

Customer satisfaction with wireless telephone service dropped 1.4 percent to an ACSI score of 71, but remained much stronger than it was prior to 2010.  Customer satisfaction with the cell phone devices themselves also dipped slightly, down 1.3 percent to 75, with Motorola (up 1 percent to 77) outpacing last-place Nokia (down 4 percent to 73), whose United States market share has contracted.

The aggregate of smaller wireless providers, such as TracFone and U.S. Cellular, continues to lead the category, up 1 percent to an ACSI score of 77.  Among the big providers, Verizon Wireless dipped 1 percent for a second straight year, falling to 72 to tie Sprint Nextel, which continued its upward trend, rising 3 percent following consecutive double-digit gains.  In just three years, Sprint has emerged from 15 points below even the second worst in the category to claim a share of the industry lead.

 In the wake of their proposed merger, AT&T and T-Mobile showed a large deterioration in customer satisfaction and in customer service.  T-Mobile fell 4 percent to an ACSI score of 70, matching a 5-year low, while AT&T descended by 4 percent to 66, its worst score since 2006 — the year before the launch of the iPhone.

“It is common to find a reduction in customer satisfaction after mergers, but it is rare for customer satisfaction to drop ahead of a merger,” Fornell said.  “Assuming the deal is approved, it remains to be seen if a much larger AT&T can regain the strength of its customer relationships.”

 Fixed-Line Telephone Service

As telecommunications companies devote fewer resources to the shrinking fixed-line telephone business, customer satisfaction fell by 2.7 percent to an ACSI score of 73.  The aggregate of smaller local and long distance providers such as Vonage and Frontier also fell 3 percent to a score of 76, but remained ahead of the top two larger companies:  Qwest at 73 (up 1 percent) and Cox Communications at 72 (down 3 percent).

Other major fixed-line providers either declined or were statistically unchanged.  AT&T dropped 5 percent to 71, erasing the gain it earned one year ago and tying Verizon (down 3 percent).  CenturyLink was unchanged at 70.  Comcast advanced for a second straight year, up 1 percent to 69, but remaining at the bottom of the industry.

Subscription TV Service

Customer satisfaction with subscription TV service was unchanged at an ACSI score of 66, a year after surging 4.8 percent to an all-time high.  Quality, especially from fiber-optic and satellite, has improved in recent years, but higher fees are significantly dampening customer satisfaction, more so than in other industries.

“Bundling of services such as phone and Internet access may have been both a blessing and a curse for the industry,” Fornell said.  “A couple of years ago, a variety of bundling promotions boosted what people saw as value for money; but now, as many of these promotions have ended, subscribers with bundled services are becoming less satisfied and more concerned about price.”

Verizon’s fiber-optic service, FiOS, holds the top ACSI spot for a second straight year even though its ACSI score dropped slightly by 1 percent to 72.  DirecTV was next at 69 (up 1 percent), recapturing the satellite lead from Dish Network, which fell 6 percent to 67.  AT&T’s U-verse, Verizon’s fiber-optic competitor, dropped 6 percent to 68.  Customer complaints about picture quality, particularly for HD channels, have increased, as AT&T grapples with bandwidth challenges across several of its telecommunications services.

Cox Communications remained the highest-scoring cable provider (unchanged at 67), well above the other three cable companies.  Comcast (down 3 percent), Time Warner (down 3 percent), and Charter Communications (down 2 percent) are all tied at the bottom of the industry with ACSI scores of 59, well below the score of 69 considered to be a level of poor customer satisfaction.

Computer Software

Customer satisfaction with software surpassed all other information-related categories, rising 2.6 percent to an all-time high ACSI score of 78.  Smaller software companies like Adobe, Intuit, and Symantec led, up 3 percent to 79, with Microsoft close behind after a 3 percent improvement to 78.  This year marks a third straight year of ACSI gains for Microsoft.  Nevertheless, recent sales of Windows software have declined as a result of a similar drop-off in PC shipments.  Customers are more satisfied with Microsoft software, but, for now, the company is selling less of it.

Information and Entertainment Media

Reader satisfaction with the waning newspaper industry is unchanged at a very weak score of 65 — the lowest of all ACSI categories.  Both TV news and motion pictures do better, but they are moving in opposite directions.  Network and cable TV news programs improved 4 percent to 77, while motion pictures retreated 4 percent to 73.

The American Customer Satisfaction Index is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the United States.  ACSI releases results for various sectors of the economy on a monthly basis to provide up-to-the-moment coverage over the entire calendar year.  The national index is updated each quarter and factors in scores from more than 225 companies in 47 industries and from government agencies over the previous four quarters.  The Index was founded at the University of Michigan’s Ross School of Business and is produced by ACSI LLC.  ACSI can be found on the Web at www.theacsi.org.

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