Thursday, April 23, 2015

5 Reasons Why Consumers Hate Comcast

     Comcast suffers from an unintended, but surely predictable consequence of its corporate strategies.  The company makes itself an easy target for scorn by taking every opportunity to maximize revenues.  Of course publicly traded companies have to maximize shareholder value.  But Comcast ignores the usual adjunct of trying to be a good citizen and not coming across as too clever and greedy.

     Set out below are 5 reasons while subscribers, in particular, personify and vilify the company.

1)         Deliberately skimping on customer service
 
     I simply cannot find one Comcast subscriber who lacks a story about shoddy treatment by the company.  It’s that simple: Comcast assumes that it does not have to invest in customer care.  For so many years, the company has been able to raise rates well in excess of statistical measures of price increases, even after normalizing for expanding numbers of channels.  Such assumed inelastic demand tilts the assumed negotiating leverage in favor of Comcast.
 
2)         Bait and Switch

     Like many companies, Comcast offers “promotional” short term inducements for new subscribers.  Unlike most companies, Comcast does not remind you when the “actual” rates kick in.  Subscribers who receive a 100% rate increase are not happy with the company, but Comcast knows that most won’t cut the cord. 

3)         Sneaky Ever Expanding Billing Line Items

     Comcast appears to have a strategy of raising subscribers’ out of pocket payments with new billing line items.  Perhaps Comcast wants subscribers to think the government is responsible for the new charges.  Perhaps the company thinks subscribers will ignore a higher out of pocket cost by discounting the new fees, or passively accepting them just as we do with car rental line items.
           
     Recently Comcast inserted a new charge ostensibly to help the company defray the cost of carrying local broadcast signals.  Why a new charge when the company already charges for basic tier service and has a lengthy history of having to pay for carriage rights?  Comcast wants to highlight how such retransmission consent payments have increased.  Of course the company wins on both sides of this outcome: its NBC stations receive the payments and Comcast can now secure a dedicated line item to help defray this expense.  Bear in mind that the company’s charge has no relationship to the number of local stations carried, or the rate of increase in retransmission costs.
 
     Additionally Comcast has executed a strategy that makes it difficult or impossible for subscribers to avoid having to rent devices such as cable cards, modems, converters and set top boxes.  The company earns over $1 billion annually in equipment rentals.  With such a large revenue stream, Comcast predictably takes ever effort to prevent subscribers from using their own devices.  The company does not cooperate with consumer electronics manufacturers and has made it near impossible for subscribers to use a non-Comcast set top box and Comcast supplied CableCard.  Extra points for requiring that a Comcast technician install the Card, only after a few or more calls to customer service.
 
     Subscribers can save $10 a month simply by installing their own cable modem.  Of course it will take some calls to Comcast to register the device and yet again poor customer service awaits.

 4)         Lackluster Compliance with Legislative and Regulatory Mandates

     The FCC has fined Comcast for failing to comply with requirements the company offered, or the FCC mandated when approving prior mergers and acquisitions.  Comcast deliberately failed to place the Bloomberg business news network on a channel near the company’s CNBC network, despite having agreed to do this.  Just slipped their mind.

     Similarly the company directed its customer service agents not to mention that subscribers have the option of buying broadband access only.  Extra points for charging more for broadband if a subscriber does not also pay for cable.

     The company also has a penchant for making lemonade out of regulatory lemons.  For example, Comcast wants everyone to know how much it has embraced network neutrality, going so far as to extend it to Time Warner properties.  Never mind that the company opposed the FCC at every step, litigated the issue and triggered the campaign for network neutrality by lying to the FCC about whether Comcast used tactics to block BitTorent traffic.

5)         Intracorporate Favoritism

     Comcast and its sponsored researchers want to convince Congress and the FCC how a vertically integrated company can operate more efficiently and presumably better serve consumers.  Sometimes this makes sense, but let us not forget that the largest reduction in shareholder value resulted when two companies sought such synergy through vertical integration.  The two companies: Time Warner and America Online.
 
     A cheeky example of Comcast family treatment lies in the place of the Golf Channel on the basic tier and the Tennis Channel on a more expensive and less viewed sports programming tier.  Was this decision the product of disciplined financial analysis, or did the company opt to showcase its owed networks while handicapping unaffiliated ones?

     The company adds insult to injury by sponsoring experts to “prove” that the company did, or could have done the necessary analysis that would show the comparatively greater popularity of golf over tennis.  An appellate court bought the analysis in large part, because the Tennis Channel could not readily prove how much more popular it would be had Comcast opted to place it on the basic tier.

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