Tuesday, December 10, 2013
By Ray Routhier email@example.com
David Hedrick recently got a big price break on his Time Warner Cable bill.
Tim Ryan of Lisbon sits in front of his television with Dish Network service last month. Ryan canceled his Time Warner TV service in favor of the DISH network after eight years as a Time Warner customer. He said price increases and rigid customer service representatives – who shut his service off after he missed his bill deadline by a day – convinced him to drop the cable provider.
Carl D. Walsh/Staff Photographer
But rather than being pleased, he’s upset. And he’s not the only one.
Despite growing competition from Internet streaming services, satellite TV, tablets and other technology, Time Warner gets failing grades from many customers and on customer service rating reports. The company has consistently scored lower than competitors in several recent national consumer surveys.
Time Warner’s reputation for poor customer relations is so widespread that it was the butt of a joke on “The Daily Show With Jon Stewart” on Comedy Central last week. Stewart called Congress “the Time Warner Cable of democracy.”
While Time Warner is not technically a monopoly, its actions in Maine and nationally over some two decades make customers, consumer advocates and industry experts say the communications giant behaves like one. If you want cable television in most Maine markets, you have no choice but to use Time Warner.
After years of watching his rates go up, and recently being told he has to pay $5.99 a month for an Internet modem he had been using for free for about 14 years, Hedrick finally decided to go to a Time Warner office and complain.
When he couldn’t get a clear answer on some of the charges on his bill, Hedrick threatened to switch to a satellite TV service. The Time Warner representative responded by offering Hedrick about $35 off his monthly bill for one year – $94.11 monthly, as opposed to $129.
He took it, but he doesn’t like the idea behind it.
“I have a concern that this essentially unregulated monopoly, which so many of us depend on as much or more than we do electricity, water or telephone service, can charge whatever it can get away with, and on what appears to be a sliding scale based on customer discontent,” said Hedrick, 71, of Waterville, a retired Army officer and former hospital administrator.
Lots of other customers seem to agree with Hedrick. Time Warner came in 15th among 17 pay-TV services in a Consumer Reports survey in May, and ranked last or second to last for TV, phone and Internet services in the American Customer Service Index, or ACSI, that same month.
The latter survey ranked the nation’s largest communications companies – eight for TV and seven for phone and Internet. For the last seven years, Time Warner been rated in the bottom half of cable TV companies ranked in the ACSI.
The mention of Time Warner on “The Daily Show” last week came in a segment on the government shutdown by correspondent John Oliver.
“Congress already has a 90 percent incumbency rate that goes along with a 10 percent approval rating. The only previous instance of that level of disapproval combined with that level of market-retention is Time Warner Cable,” Oliver said. This prompted Stewart to counter, “If I’m hearing you correctly, you’re saying that Congress is the Time Warner Cable of democracy.”
With almost 400,000 customers in Maine and New Hampshire, Time Warner is the largest combined cable TV, Internet and phone provider in the state. Over a period of about 20 years, it has captured a virtual monopoly on cable TV in the Maine communities where it operates.
Time Warner has about 15 percent of the U.S. cable market, but it saw its TV subscriptions decline by about 4.5 percent over the past year or so, as more people turn to online video services such as Netflix, according to Seeking Alpha, a stock market analysis website.
At the same time, industry experts expect Time Warner’s Internet service to grow by about 3.2 percent this year, the website said. Again, Netflix and other low-cost online video services were named as causes.
While the company has recently implemented or announced new initiatives to improve its image among customers, some experts wonder if it’s too little, too late.
COMPLAINTS AND RESPONSES
History, deregulation and cost have effectively prevented head-to-head cable TV competition in Maine, even though it is allowed under federal law. (See accompanying story on cable history).
The company’s image as a corporate giant with little regard for customers has been enhanced recently by a couple of widely reported events.
In August, Time Warner raised its modem rental fees from $3.95 to $5.99 a month, just one year after the company had stopped a long-standing policy of providing the modems for free. Also in August, Time Warner engaged in a contract dispute with CBS, resulting in the blackout of CBS-owned cable channels, including Showtime, to Time Warner customers for about a month.
Such blackouts on Time Warner and other cable systems are a sore spot with customers who don’t like the fact they’re being deprived of something they contracted to buy.
“With any unregulated business, you do get a lot of complaints because the company is under very few obligations to customers,” said Wayne Jortner, senior counsel in the state’s Public Advocate’s Office. “It seems the (cable) customers who do best are the ones who drop the service and then come back for a better price.”
But Time Warner says it does care about its customers, and has “millions of satisfied customers” to counter the reports of complaints and dissatisfaction, said Joli Plucknette-Farmen, Time Warner’s public relations manager for the Northeast.
Plucknette-Farmen said that in the past year or so, Time Warner has made improvements to products and service. Specifically, she said the company has expanded the way people can reach it to include social media channels, and this year in Maine, it has started offering one-hour appointment windows instead of telling customers a service person would come between 8 a.m. and noon, for instance.
The company is also offering self-installation kits for tech-savvy customers who would rather install equipment themselves than wait for a company technician. Earlier in September, the company was getting ready to add 30 customer service representatives in its Portland office.
Those additions may have come too late for Ann Colbourn of Cape Elizabeth. She said she recently spent about 90 minutes on hold over two nights while trying to cancel service at her home while it’s being renovated. She finally gave up and decided to go to the office in person, but she wasn’t happy about it.
“When I’ve been on the phone with them, I get completely conflicting information from different people. I got disconnected twice, and then someone put me into an automated line,” said Colbourn, 49. “When I spend this kind of money ($150 a month) and they treat me like this, it’s very frustrating.”
Plucknette-Farmen said Time Warner is trying to give customers their money’s worth by adding HD channels and new networks, and by offering packages with fewer TV channels. It’s a common complaint from cable viewers that they pay for a lot of channels they never watch, since they can only buy channels in packages, not a la carte.
Plucknette-Farmen said the company now offers a lower-priced 20-channel package with local channels and some popular cable channels. But when asked how much the package costs, Plucknette-Farmen would not answer, saying that the prices vary based on whether a customer is getting a promotional price or a the “retail price.”
She said people can find the promotional price by going on the Time Warner Cable website and typing in their ZIP code (it’s $19.99 per month for 12 months in South Portland right now). But she would not give the “retail” price, explaining that “the majority” of Time Warner customers have promotional prices at any given time, and those prices vary depending on a range of factors.
“It depends on when they added a service, whether they have other promotions rolled in,” said Plucknette-Farmen.
When asked if it might seem unfair to give promotional pricing to folks willing to take time to switch from cable to satellite and back again regularly, or who complain about it or threaten to switch, Plucknette-Farmen said “we treat our customers on an individual basis.”
If Time Warner and other cable companies don’t change and become more responsive to customers, it’s very likely customers will find new technologies that will lead to new TV or Internet habits. And those habits may lead them away from traditional cable/Internet providers like Time Warner.
Mike Dugay, 66, of Portland gave up his Time Warner TV service recently after feeling fed up with price increases and the sense that he was paying for much more than he was getting. He said “young people” told him how to find what he wanted to watch on his computer, so now he watches his favorite shows – news and network series – on MSNBC.com or Hulu.com.
“I don’t watch as much TV as I used to, but I find I don’t really miss it,” said Dugay.
COMPETITION AND CHANGE
Most cable and satellite companies use a raft of promotions and discounts to lure or retain customers. But that may be part of the reason Time Warner and other major cable companies are distrusted and viewed as acting like monopolies, said Bruce Temkin of the Temkin Group, a Boston-based market research firm specializing in customer service.
In the 2013 edition of his company’s Temkin Customer Service Ratings, nine of the 10 worst-rated companies were TV or Internet providers, out of a total of 235 companies listed on the survey of 10,000 people. Time Warner was rated 234th of 235 on the list for customer service.
The top-rated companies for customer service included the insurance carrier and banking service provider USAA and retailers Ace Hardware, Costco and Dollar Tree.
“Think of some of the ridiculous price models (cable companies) use, allowing new customers to get good pricing but not offering the same to their existing customers,” said Temkin. “When they negotiate like that with individual customers, it creates a structural mistrust that’s hard to overcome. When you behave like that, there’s no way anyone can trust you.”
Tim Ryan of Lisbon wanted Time Warner to trust him to pay his bill one day late, something he had done before when he was a customer of Adelphia, before Adelphia was purchased by Time Warner around 2006.
But Time Warner did not let Ryan, an education tech at Freeport High School who gets paid every other week, pay his $150 bill a day late. He said he asked Time Warner if he could pay his bill a day or so late, as he had done with Adelphia, but was told he could not.
So over a period of about five years, he had his Time Warner service shut off four or five times, each time for being about a day or so late, Ryan said. He said because of his pay schedule, especially in the summer, he couldn’t avoid being a little late sometimes.
“When I had Adelphia, I’d tell them I have to pay a day late, on my payday, and they’d make a note of it,” said Ryan, 48. “With Adelphia, you could go in the office and they’d know you. With Time Warner, I just got sick of paying the high prices, getting 200 channels I didn’t use, and then having to deal with their customer service.”
Enhancing the idea of cable companies as monopolies has been the long-standing practice of selling channel packages, when most customers find they never use all the channels. It’s a practice that some have compared to being forced to buy 100 grocery items at the supermarket, even though you only want to use 20 of them.
Plucknette-Farmen said that if Time Warner didn’t sell channels in packages, some channels wouldn’t survive. Experts say TV content producers, including the channels and their owners, and the TV service providers would make less money if they allowed channels to be purchased a la carte, or one at time.
Sen. John McCain of Arizona sponsored a bill in the U.S. Senate earlier this year proposing a law to force a la carte channel options. Cable and satellite providers, as well as content producers, are likely to fight it.
Experts say that the attitude of Time Warner and other cable companies toward customer desires is likely to change as people’s consumption of technology continues to change and competition increases. In the past decade, cable companies like Time Warner have seen more competition from satellite TV companies and programming on the Internet.
Temkin, the Boston-based market researcher, said that if Time Warner and other cable companies don’t want more customers to learn to live without them, they might follow the lead of banks, who have seen their customer service ratings go way up recently.
Banks had been regional monopolies for a long time, but were deregulated, and now compete nationally against each other and with new companies fueled by technologies.
“Banks finally realized they needed to treat customers better, and they’re doing it,” said Temkin. “When you don’t have a lot of competition, the reality is you don’t have to focus on customer service. But (cable companies) are putting their businesses at risk if they don’t become more customer-centric.”
Ray Routhier can be contacted at 791-6454 or at: