cable telephony

Cable Creams Telco on Telephone Customer Satisfaction

Bernie — Thu, 11 Sep 2008 01:49:31 -0400

Using the latest J.D. Power ratings for customer satisfaction on phone service as a barometer, cable companies are not only beating telephone companies at their own game, they are crushing them. There has to be some sense of embarrassment on the telco side. Five factors are examined in determining overall satisfaction with the J.D. Power survey. In order of importance, they are: customer service, performance and reliability, cost of service, billing, and offerings and promotions. Cable voice providers rated higher than telcos in every region of the country. TDS Telecom was the highest rated telco, placing second behind Wide Open West, in the North Central Region. Telcos didn’t place any higher than third in the remaining four regions. The two largest telcos, AT&T and Verizon, ranked below the region average in several regions. Other interesting findings of the survey include:

Satisfaction levels among customers who use Web channels for service inquiries are higher than satisfaction levels among customers who use a telephone to call a service center. On average, satisfaction averages 641 on a 1,000-point scale among Web users, compared with 626 for telephone users
Overall satisfaction is higher among customers who bundle two or more services with one provider, compared with customers subscribing to phone service alone
Satisfaction among "triple-play customers" -- those subscribing to telephone, cable and Internet service -- is 23 index points higher than among those customers subscribing to just phone service

I can hear the spin masters now explaining why cable is winning this satisfaction battle. Arguments will be made that cable is on a “honeymoon” with customers because they’re relatively new to the scene and are aggressively competing on price. There is some truth to that, but if there were ever a wakeup call to telcos, this should be it. Cable is beating telco at their own game – handily. We’ve known for some time that it’s easier for cable companies to add voice than for phone companies to add video, perhaps giving them a tangible advantage. It looks like cable is leveraging that advantage to the fullest. I have to admit that I was amazed at how easy it was to switch my phone service to Comcast last year. The technician came in (on time even), and within 30 minutes, had completely siphoned my $90 monthly ARPU contribution to Verizon, and handed an even better monthly ARPU of $140 on a silver platter to Comcast. I was floored by how uneventful the process was and how quickly the switch was made. Give cable their due. They have taken on the challenge of voice service quite competently, and appear to be having great success with it. These J.D. Power results only add to the evidence.

Is U-Verse Worth it?

Bernie — Wed, 23 Jul 2008 19:33:14 -0400

AT&T released their latest quarterly numbers, revealing the progress of U-Verse and their other business lines. Depending on your point of view, U-Verse is either progressing nicely or is woefully inadequate. AT&T’s PR spin indicates the former, but the real view is only available to AT&T insiders, analysts, and the “flies on the boardroom wall.” If you place U-Verse’s video subscriber additions (170K net adds for 2Q08) in the context of its cable competitors progress in taking voice lines (Comcast has averaged 646K net phone adds the past three quarters), you walk away very underwhelmed. Even if AT&T hits its target of 1 million video subs by the end of the year, it still pales in comparison to the momentum of cable taking voice subscribers. But if you subscribe to the opinion that voice lines are becoming less and less important in today’s world of wireless and broadband, than any video progress for AT&T could conceivably be considered “gravy.” That opinion suggests that massive numbers of wireline customers are going to give up traditional voice service anyway, so if I can continue to replace that fleeting revenue with a triple play of broadband, video, and wireless, maybe I’m all the better for the future.

Time will tell whether the billions of dollars of U-Verse investment will ultimately be worth it. The reality for AT&T is they didn’t really have a choice. Their traditional cash cow, local access lines, is dying on the vine because of wireless substitution and IP voice competition. They are executing quite well on their wireless strategy (at least from a quarterly financials point of view), which is the ultimate equalizer for declining access line counts. Consider that in 2Q08, AT&T added 1.3 million net new wireless subscribers and lost 1.5 million switched access lines, and you can begin to accept the “writing is on the wall” cliché. U-Verse will play an ever increasing role in AT&T’s evolving future, ensuring those local access loops still have a reason to exist and still generate a healthy revenue stream. But before they get too ahead of themselves with glorious quarterly reports that toot more horns than a steam locomotive, they would do well to prepare for a more level future competitive playing field. A more intense competitive picture will emerge when and if their cable competitors gain a wireless opportunity of their own. Who ultimately wins in that scenario?

Comcast: Two-Thirds of New Broadband Customers Churn From DSL

Bernie — Fri, 02 May 2008 00:00:00 -0400

Comcast reports that two-thirds of the new 492K broadband subscribers signed up during the first quarter of 2008 churned from telecom DSL offers. Other interesting metrics for their cable modem high speed Internet product include:

Added 492,000 high-speed Internet subscribers, reaching 28% penetration or 14.1 million customers
High-speed Internet revenue increased 12% to $1.8 billion
High speed Internet evenue growth of 13% from the previous year
2% decline in average monthly revenue per subscriber to $42.18 for high speed Internet

The decline in Comcast's HSI ARPU is primarily attributable to an uptake in their Economy Internet service, which offers 768Kbps service for approximately $25/month.

Comcast continues to see impressive gains in voice service as well. It’s quite clear that broadband and voice services are Comcast’s growth engine. Voice revenues increased 65% and HSI revenues increased by 13%, while video revenues increased by only 5% "It's the diversification of revenue streams that is the strength of our business," said Comcast Chief Executive Brian Roberts, as reported in the Wall Street Journal. For voice service, interesting metrics include:

Added 639,000 Comcast Digital Voice (CDV) customers during the first quarter
Voice penetration reached 12% or 5.1 million customers
Phone revenue increased 65% to $587 million in the first quarter of 2008 from $356 million in 2007

Cable Industry Turns to Blogging for Latest PR Campaign

Bernie — Wed, 09 Apr 2008 09:26:05 -0400

The cable industry has embraced blogging for its latest public relations campaign. The campaign basically tries to refute cable’s negative reputation of continually raising prices and offering poor customer service, by positioning the cable industry as the main driver of dismantling the century old telephone monopoly in the U.S. IP Democracy reveals the strategy in this recent post.

The National Cable and Telecommunications Association (NCTA) is leading the charge through a $1 million dollar online ad campaign, which buys ads on leading blog sites. Those ads link back to a NCTA operated blog, CableTechTalk, which offers commentary about cable’s role in competiton. It’s an interesting strategy for such a traditional industry. It will be interesting to see if and/or how the telecom industry responds.

Cablevision Smackdown of FiOS

Bernie — Fri, 29 Feb 2008 08:29:42 -0500

Most cable companies these days are blaming Verizon FiOS and other telecom and DBS competitors for lackluster video subscriber additions. Yet Cablevision, who probably is most exposed to competition from Verizon FiOS in the metropolitan New York market is bucking the trend. Their most recent quarterly report shows actual growth in all video subscriber units, including basic cable. In fact Cablevision leads all cable companies in terms of penetration for desirable services, despite the competition from Verizon. The numbers are impressive:

Digital Cable penetration – 84%
High Speed Internet penetration - 49%
Voice Telephony penetration – 34%
HD penetration of Digital Subscribers – 40%

The good news pushed their stock price up more than 7% in one day. It all begs the question, what’s their secret? How have they been able to stand straight up to Verizon, where others are failing? Perhaps their push of value add services like deploying free Wi-Fi hotspots for their broadband customers throughout their footprint, or caller-ID on the television is helping. Cablevision also extended it's triple play bundle promotions to all of it's subscribers, not just new ones. Maybe that strategy is paying real dividends now. Whatever the case, the real test will be whether they can sustain these efforts. Verizon certainly will be taking notice, and will respond. Can Cablevision continue to brush off Verizon’s challenge? Stay tuned.

Charter Surpasses One Million Phone Subs

Bernie — Thu, 28 Feb 2008 05:30:00 -0500

The march continues, with Charter being the latest cable company to break the one million subscriber mark for home telephone service. Charter now reports a 10.6% penetration for residential telephony, and plans to have telephone service available to 85% of its footprint by the end of 2008. Charter announced the new telephone milestones during their fourth quarter 2007 report, which reported somewhat mixed success results. Other metrics of note include a 47% penetration of Charter subscribers who bundle at least two services. Charter also announced their intention to begin testing DOCSIS 3.0 this year, with a goal of deploying it in 2009. DOCSIS 3.0 promises to bring dramatic increases in broadband performance for cable modem technology.

Cable Makes Moves on Small Business Telephony Market

Bernie — Thu, 15 Nov 2007 09:52:38 -0500

Both Cox and Comcast made major announcements this week outlining new products targeting the small business sector. Cable companies see the lucrative small business market, estimated to be worth somewhere in the neighborhood of $130 - $150 billion (including voice, video, and data services), as their next big growth frontier. Residential triple play is a nice business as well, but large cable companies have anxious stakeholder and shareholder expectations to meet, that residential triple play may not meet alone. Competition for residential triple play is accelerating as well, and its impact is beginning to affect the stock price of publicly traded cable MSO's. Comcast recently hit a 52 week low on their stock price, due in large part to concerns that Verizon and AT&T are beginning to erode Comcast's growth. The small business sector is the next frontier for which we will see pitched battles between cable and telecom. Telecom carriers are not about to concede this lucrative business and will compete aggressively.

Cox's latest salvo is branded Cox Business Voice Manager. It offers a "telephony platform that integrates the desktop phone, PC and wireless devices." The platform appears to offer a rich suite of features including elements of fixed mobile convergence and unified messaging. The platform is built on Cox's IP enabled telephony network. In Comcast's case, they have decided to partner with Microsoft to deliver a hosted version of Microsoft's Communication Server platform. The service provides corporate-class e-mail, calendaring and document sharing, and 24/7 tech support. Comcast will make the service available free of charge to their business broadband accounts. Both of these announcements demonstrate that cable views the small business market with great anticipation. These moves are but a few of many to come, and they will challenge the incumbent telcos who currently own this space to respond.

Comcast Thinks Voice Self Installs Offers Advantage

Bernie — Wed, 05 Sep 2007 10:11:54 -0400

Comcast is testing self installation of phone service in San Francisco, and aims to expand it across major markets in 2008. Truck rolls have always been a double edged sword. On the one hand, they provide a valuable customer touch point. On the other, they are quite expensive. Bloomberg News reports about Comcast’s self installation tests, and reveals that the strategy may save them $200 - $300 per installation. There may be more benefit. “It not only reduces costs to Comcast, but it helps accelerate the rollout,'' said Thomas Eagan, a New York-based analyst with Oppenheimer & Co. Comcast projects to grow from their current voice subscriber base of 3 million to 11 million by 2010.

Contrast this with Verizon’s estimated costs of $800 - $1,000 for a FiOS installation. Verizon does not have the luxury of self installs because of their need to install a fiber drop to each home. Cable companies have a clear advantage, at least initially. They are able to leverage their coax connection to the home and conceivably limit expensive truck rolls. Verizon would counter and say that advantage will be short lived. Once a subscriber has fiber to the home, Verizon will be able to add and remove services quite easily. However short lived, the advantage is present today. And it does offer cable advantages, both in accelerating and/or easing triple play adoption, while also positively impacting cash flow and earnings.

Read this Bloomberg News article for more analysis.

Suddenlink Grows With Telephony

Bernie — Wed, 29 Aug 2007 09:21:35 -0400

Suddenlink Communications, a Missouri based MSO, announced availability of voice service to 75% of its footprint. Multichannel news reports that Suddenlink now has over 50K telephone subscribers. Suddenlink began its telephony endeavors in West Texas, but has now expanded voice services to communities in Oklahoma, Arkansas, Louisiana, West Virginia, North Carolina, and California. Suddenlink typically offers an unlimited local and long distance voice package for $39.95 when bundled with video and broadband.

This Suddenlink announcement demonstrates that cable companies of all sizes are venturing into voice. We often hear about the success of Cox, Comcast, or larger MSOs, but the Suddenlink’s of the cable world are just as motivated about the prospects of offering voice. Smaller independent cable companies will soon join the voice parade as well, bringing competition to many parts of the country that have yet to see it.

Comcast Has Three Million Phone Subs

Bernie — Mon, 27 Aug 2007 08:24:41 -0400

With the announcement of Colorado Springs, CO being their latest digital voice market, Comcast now claims just over 3 million voice customers. Windstream, the sixth largest phone company (3.4 million access lines) in the U.S. is now within sight of Comcast. They have already surpassed both CenturyTel and Citizens Communications, and would rank as the seventh largest phone company in the U.S. (by access line count).

Some would argue this is proof positive that bundling works. After all, who would have predicted five years ago that Comcast could overcome poor customer service perceptions and convince millions of subscribers to abandon their local phone company for their local cable company? Not many. You could draw a conclusion that effective bundling works - even overcoming poor service provider perceptions. Consumers seem willing to give companies with a “checkered” past (from a customer service point of view) a try, provided the perceived value is there.