Consumer Products

Pay TV, Airlines Score Worst for Customer Service

When it comes to the products and services consumers love to hate, pay TV, Internet service providers (ISPs) and airlines have little serious competition. Neither the airlines nor the pay-TV industry has scored above a 70% customer satisfaction rating since 2001, the first year that pay TV was added to the annual survey by the American Customer Satisfaction Index (ACSI). ISPs were first added in 2013 and have replaced the pay-TV industry at the bottom of the rankings.

The company that ranks lowest in customer service is Time Warner Cable Inc. (NYSE: TWC), both in the ISP and the pay-TV industries. The company’s ACSI score in the pay-TV business is 56, and in the ISP business it scores a dismal 54. Scoring just ahead of Time Warner in both categories is Comcast Corp. (NASDAQ: CMCSA) with satisfaction scores of 60 as a pay-TV provider and 57 as an ISP. If the two companies are allowed to merge, one can only imagine where the scores might end up.

No pay-TV provider improved its customer satisfaction score compared with 2013, and as an industry the average score was 65. AT&T Inc. (NYSE: T) and DirecTV (NASDAQ: DTV), another pair seeking merger approval, tied at 69 for the best score among pay-TV providers. The low ratings are likely related to the rising cost of a pay-TV subscription. Research firm NPD Group forecast that pay-TV bills would rise from a monthly average of $86 in 2011 to $123 in 2015. That is a steep enough increase to make a lot of subscribers unhappy.

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Internet service is another sore spot with U.S. consumers. Time Warner’s satisfaction score of 54 is well below the industry average score of 63, and far below the 71 posted by Verizon Communications Inc. (NYSE: VZ) for its FiOS service.

Airlines are the third-lowest scoring industry, with an average score of 69. United Continental Holdings Inc. (NYSE: UAL) is the worst, posting a satisfaction score of just 60. JetBlue Airways Corp. (NASDAQ: JBLU) scores highest among the airlines with a 79, followed closely by Southwest Airlines Co. (NYSE: LUV), which scores 78.

What these low-scoring industries have in common are rising prices and little visible improvement in service. Airline profits, for example, have been on a tear in 2014 as fuel costs have dropped and ancillary fee income rises. Passengers may not be aware that profits are rising, but they do notice that flying is a costly and generally unpleasant experience.

When it comes to Internet speeds, the U.S. average download speed of 31.93 Mbps ranks the country 26th in the world, behind such world powers as Bulgaria and Latvia. Intermittent service outages and rising costs add up to consumers wondering why they pay so much for such indifferent service. The highest download speed in the world, by the way, is in Singapore, where the average is 103.96 Mbps.

And the best scoring industries and products? The highest scoring industry is TV and video player makers, where the aggregate score is 86. ACSI does not score individual companies in this industry. The second highest scoring industry is credit unions, with a score of 85, almost 10 points higher than banks, which posted an average score of 76 (none of the big banks scored above the average).

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In the technology industry, Apple Inc. (NASDAQ: AAPL) tops the ACSI ranking with an index score of 84, and Samsung Electronics tops the cellular phone industry with a score of 81 to Apple’s 79.

ACSI scores are based on more than 70,000 annual interviews that are used as inputs to an econometric model developed at the University of Michigan’s Ross School of Business that benchmarks customer satisfaction at more than 230 companies in 43 industries and 10 economic sectors. The score for each company is based on a sample of 250 interviews.

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