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Oct. 2, 2008

According to new research performed by the CFI Group, mobile phone users today would rather get their bundled wireless services from telecom companies by a 2 to 1 margin over cable providers.

CFI Group’s second-annual Telecom-Cable Industry Satisfaction Study, which looked at customer satisfaction for video, broadband and wireless communications, said that about 70 percent of customers cited higher rates as one of the reasons for canceling their cable TV service.

Meanwhile, poor customer service accounted for over 41 percent of the churn for cable TV services.

The survey of more than 1,200 households said that overall customer satisfaction gave telecom companies a competitive advantage over cable operators. As the telecoms rollout high-speed fiber services across their networks, they will be able to challenge cable company dominance in bundles, high-speed Internet and video, according to the survey.

For telecom companies, customers cited the need for faster access as a primary reason for switching.

Video services like AT&T’s U-verse IPTV and Verizon’s FiOS are beginning to make their mark, and about 2.1 percent of survey respondents are already using video services from a telecom company.

Phil Doriot, program director for CFI Group says “overall, the cable companies are asleep at the wheel if they don’t see the threat from the telecoms. However, the network upgrades aren’t going to happen overnight, so cable companies still have the opportunity to improve their customer service and cover their Achilles heel.”

He added “mobile phone consumers stand to benefit the most from the battle between cable and telecom.

Telecoms have no choice but to upgrade their systems to offer video and faster Internet access simply because they are losing customers to cable. That should bring in more choice to the marketplace, stem the price hikes, and raise the satisfaction level for the whole industry.”

About 61 percent of the surveyed households have bundled services, which is a 13.2 percent increase compared with 2007's usage numbers.

CFI's survey also reveals that since telecom companies own national wireless carriers, it gave them another potential advantage in the battle of bundled services.

Only 8 percent of surveyed consumers have bundles that include wireless phone service, and more consumers are dropping landlines altogether in favor of wireless telephony.

The study said that this presents an opportunity for telecoms and another challenge for cable companies.

Though telecom companies generally enjoy better satisfaction ratings than cable companies, customer churn may be the biggest issue for wireless carriers.

According to CFI Group’s research, the top reasons customers give for switching carriers are better rates, better plans and better overall coverage and network reliability.

Doriot added “without a wireless play, cable companies aren’t future-proofing their bundles, but new technologies like WiMAX might change the game.”

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Source: CFI Group.