JD Power Ratings Not All Sunshine for Telcos
So as my favorite ex-Cubs manager Lou Pinella once said, long ago, when things were going well early in the season for the Cubbies, "Let's not get too giggly here."
The J.D. Power research found that consumers are much less happy about how much they are paying for cable or satellite TV. Measured on its 1,000-point scale, customer satisfaction with the cost of TV service dropped 14 points, to 541, this year over last. Cable customers were particularly unhappy, as their customers were 22 percent less satisfied with the cost of cable than AT&T and Verizon customers, and 18 percent less than satellite TV customers.
But with cord-cutting already on the rise, and the economy not rebounding as fast as many had hoped, indications of consumer concern over pricing create a dilemma. The number of consumers taking just basic cable rose from 40 percent to 44 percent -- that growth can be attributed to the economy or to the fact that consumers now have many other options for their premium viewing, including streaming video downloads.
Frank Perazzini, director of telecommunications at J.D. Power and Associates, says it may be too early to tell whether that's where things are headed.
"Our study represents the fact that the impact of the economy is still being felt, people are pulling back to basic cable and exploring other avenues for content, especially the Internet," Perazzini says. "Longer term it remains to be seen what is going to happen -- will premium content be available via the Internet, directly or in some other fashion? If that's the case, we could see a lot of cord-cutting. But it is still a little too soon to tell."
Perazzini says AT&T "built on its lead" by figuring out the price-value equation, and by getting its back-office systems right.
"AT&T's cost of service and offers/promotions were attractive, and they are strong on billing," he says. "They are executing the administration of their service and providing folks with the price performance they are looking for."
For all its bells and whistles, IPTV is coming down to price performance. How old school.
But with content not getting cheaper, attempts to lower prices for video services can only cut into profits or, in the case of most telco video providers, increase the loss-leader status that video has in their service bundle.
That's going to put extra pressure on pay-TV providers -- cable, telco, and satellite -- to deliver more on the performance end, without expecting to bulk up the bill.
So if you are a cable executive, J.D. Power just delivered nothing but bad news. If you are a telco video provider, it's only a good-news/bad-news scenario.
— Carol Wilson, Chief Editor, Events, Light Reading