ACSI Expands With Company Measures for Internet Service Providers

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ANN ARBOR — The American Customer Satisfaction Index, recognized for its comprehensive measurement of the goods and services available to U.S. household consumers, is adding Internet service providers to its monitored industries.

The ACSI will release inaugural results for the ISP industry as part of the Information Sector report in May. The initial data set will include customer satisfaction benchmarks for seven companies, as well as an aggregate score for “all other” smaller ISPs.

The individual measured companies are AT&T U-verse, CenturyLink, Charter Communications, Comcast, Cox Communications, Time Warner and Verizon FiOS.

The ACSI has a long history of measuring customer satisfaction with telecommunications services. The fixed line telephone service industry has been part of the Index since its baseline year of 1994 and subscription television service has been measured since 2001. With the addition of Internet service providers, the ACSI will produce 20 customer satisfaction benchmarks for companies that represent the largest providers of voice, video, and data services to American consumers.

“For telecommunications companies, the new ISP industry measure offers benefits that go beyond any single telecom category,” says David VanAmburg, ACSI director. “Most telecom companies in the Index are measured in more than one telecommunications category. With the addition of ISPs to the Index, these companies will be able to benchmark with their peers across the full spectrum of services they offer to consumers.”

Since 2001 and forward, customer satisfaction with fixed-line telephone service peaked at a high point of 75 in 2010. This score was roughly equal to the national customer satisfaction average at that time. For the next two years, the industry’s score trended downward, ending up at 70 in 2012 — which is well below the current national ACSI score of 76.3. Subscription television service, a measure that includes cable, satellite, and fiber operators, has never gotten out of the 60s for customer satisfaction. Overall, this industry is one of the very worst performers in the Index.

“The customer satisfaction track record for providers of both voice and video services is a case of poor and poorer,” VanAmburg said. “For subscription TV service, the industry’s satisfaction level would be even lower if the higher-scoring satellite and fiber providers were taken out of the mix. It will be interesting to see how many of the same companies fare when it comes to providing a satisfying customer experience for Internet service.”

ACSI research also shows that industries where there is less competition tend to have lower customer satisfaction. Up to now, many consumers have had little choice in who provides their voice, video, or data service, but this is starting to change with the expansion of fiber optic technologies and new developments like cloud services.

“As barriers to competition fall and new technologies proliferate, customer satisfaction certainly will become much more critical to the success of companies competing in the rapidly evolving telecommunications marketplace,” says VanAmburg.

The ACSI Information Sector report — which includes subscription TV providers, wireless telephone carriers, landline telephone providers, cell phone manufacturers, Internet service providers, and computer software –will be released on May 21.

The American Customer Satisfaction Index uses data from interviews with roughly 70,000 customers annually as inputs to an econometric model for measuring satisfaction with more than 230 companies in 43 industries and 10 economic sectors, as well as over 100 services, programs, and websites of federal government agencies.

ACSI results are released on a monthly basis, with all measures reported using a scale of 0 to 100. ACSI data have proven to be strongly related to a number of essential indicators of micro and macroeconomic performance. For example, firms with higher levels of customer satisfaction tend to have higher earnings and stock returns relative to competitors. Stock portfolios based on companies that show strong performance in ACSI deliver excess returns in up markets as well as down markets. And, at the macro level, customer satisfaction has been shown to be predictive of both consumer spending and gross domestic product growth.

The Index was founded at the University of Michigan’s Ross School of Business and is produced by ACSI LLC. The ACSI can be found on the Web at www.theacsi.org.

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