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Cable Companies: a Competitive Edge Over Telephone Providers
added: 2007-07-15

Cable companies, which lead the customer satisfaction rankings for telephone service in all six U.S. regions for the first time, are proving to be tough competition for traditional telephone providers, as the impact of bundled service packages steadily reshapes the telecommunications market, according to the J.D. Power and Associates 2007 Residential Regional Telephone Customer Satisfaction Study.

The study measures customer satisfaction with both local and long distance telephone service in six regions across the United States. Six factors are examined in determining overall satisfaction. In order of importance, they are: performance and reliability, customer service, billing, image, cost of service, and offerings and promotions.

The study finds that 86 percent of cable-based voice subscribers also subscribe to data services from the same provider - up from 71 percent in 2006. Conversely, 36 percent of telecommunications-based voice subscribers also use their provider to fulfill their data needs, which is an increase of 7 percentage points over 2006. The impact of bundling is further evidenced by the boost in importance weight of the offerings and promotions factor, which has increased by 3 percent since the 2006 study.

"Customers increasingly want multiple services and products bundled into one convenient package under a single provider, and cable companies are doing a great job of achieving this with their voice, data and video packages," said Steve Kirkeby, executive director of telecommunications and technology research at J.D. Power and Associates. "Even still, local and long-distance phone services remain the most widely accepted services to bundle, with data and video steadily closing the gap over the past three years. While rolling out their video service offerings, telephone companies can improve their near-term competitiveness by either lowering prices on their core products or perhaps even adding wireless service to their bundle options, as some have already done."

The study also finds that 43 percent of customers report that they are loyal to their voice provider - an increase from 41 percent in 2006. However, among the 12 percent of subscribers who "definitely" or "probably" intend to switch providers, the most frequently cited reasons for doing so include competitive/discounted pricing, convenience and receiving a single bill.

"It seems as though most subscribers are becoming more loyal, with 36 percent of those who currently bundle reporting they would add even more products or services from their current provider, making the next several years crucial for both telephone and cable companies," said Kirkeby. "Increased loyalty and the relatively stable switching intentions observed over the past few years will make it increasingly difficult to gain market share through product offerings alone."

The study examines wired telephone service provider performance in six geographic regions. The study results by region are:

Northeast Region: Cox Communications ranks highest in the region for a second consecutive year, receiving the highest ratings from customers in performance and reliability, billing, image and customer service.

Mid-Atlantic Region: Included in the study for the first time in 2007, Cablevision ranks highest, performing particularly well in all six factors of overall satisfaction.

Southeast Region: Bright House Networks ranks highest in the region for a second consecutive year, performing particularly well in customer service, billing, image, cost of service, and offerings and promotions.

North Central Region: Included in the study for the first time in 2007, WideOpenWest (WOW!) leads the region, receiving highest ratings from customers in all six factors of overall satisfaction.

Southwest Region: Cox Communications ranks highest for a second consecutive year, receiving particularly high ratings in all factors of overall satisfaction.

West Region: For a fifth consecutive year, Cox Communications ranks highest in the region, performing particularly well in billing, image, and performance and reliability.


Source: PR Newswire

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