October 12, 2016
Despite overhauling its customer service operations in an effort that goes back at least two and a half years, Comcast is still facing major challenges to its image as one of America's most hated companies.
In the latest blow to Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s brand, the Federal Communications Commission (FCC) announced this week that it's assessing the company a $2.3 million fine for wrongfully charging customers for products and services they never requested. The FCC calls the practice "negative option billing," and says that Comcast repeatedly engaged in the activity by invoicing customers for premium channels, digital video recorders and other unwanted features. The FCC also says the fine is the "largest civil penalty assessed from a cable operator by the FCC."
Unsurprisingly, Comcast takes issue with the FCC ruling. The company says that not only does it not think the penalty is fair, but that it's also been "laser-focused" on improving customer service and has made significant progress in that effort over the last couple of years.
From the official statement: "We do not agree with the Bureau's legal theory here, and in our view, after two years, it is telling that it found no problematic policy or intentional wrongdoing, but just isolated errors or customer confusion. We agree those issues should be fixed and are pleased to put this behind us and proceed with these customer service-enhancing changes."
Here's the problem for Comcast: First, $2.3 million is a lot of money, but it's a drop in the bucket compared to the amount the cable company is spending to try to improve customer service. In 2014, Comcast set aside a budget of $300 million for its new Executive Vice President of Customer Experience Charlie Herrin, and there's limited evidence so far of an impact on customer perceptions. (See Comcast on Service: Why It's Different Now.)
In this year's American Customer Satisfaction Index, Comcast's score as a pay-TV company jumped to 62 out of 100 from 54 a year ago, but that number is still low, and also just below Comcast's 2013 score of 63. Likewise, Comcast's score as an Internet company jumped to 59 from 56 in 2015, but that's still below its 2013 score of 62.
Second, negative impressions of Comcast based on its customer service last a long time. Customers that feel gypped by Comcast today will remember the experience years from now and so will the people that hear their stories.
Want to know more about video and TV market trends? Check out our dedicated video services content channel here on Light Reading. As a case in point, let me share a brief anecdote of my own. I moved to the Philadelphia area in September of 2001 and signed up for Comcast service. The broadband connection was spectacular, but the TV service quickly turned into a nightmare. Comcast offered me HBO for free for 30 days, and because I was unemployed (new to town and facing the worst economy in my living memory), I accepted the offer figuring I'd be able to track when the trial was coming to an end. At around day 28 or 29, I did cancel HBO, but that's when things when horribly wrong. First, Comcast kept HBO in my lineup and charged me for it even after the cancellation. Then after hours on the phone, the company finally cut HBO... along with my entire cable TV service. After more hours on the phone, Comcast reinstated service, but with HBO still included, and the company continued to bill me for the premium channel. For months. After many more hours on the phone -- time I probably couldn't have spent if I'd been employed -- I finally got Comcast to cut off HBO and reimburse me for the unfair charges. But the process was time-consuming and infuriating. So much so that I can still feel my blood pressure start to rise when I think about it 15 years later. Ironically, Comcast is doing a lot of really good things today. PCMag rated it the fastest "major" ISP in the nation in August, and just today, the company announced new feature updates to its X1 sports app that solidly differentiate the video platform from other offerings on the market. (Note: the good news was somewhat undermined this morning by other reports of a Comcast Internet outage overnight.) Unfortunately, all the positive improvements to Comcast service can't erase the negative feelings that many customers will continue to nurse for years. And that's a far greater penalty for the cable company to endure than a paltry $2.3 million fine from the FCC. — Mari Silbey, Senior Editor, Cable/Video, Light Reading
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