Take a close look at your cable bill. It’s a confusing onslaught of charges, taxes, and add-on fees. With all of the fine print and opaque pricing, it’s hard not to feel like you’re getting ripped off. In the previous six years that the Consumer Reports National Research Center has conducted customer satisfaction surveys on in-home telecommunication services, providers have consistently rated below average among services we cover.
Cable TV service didn’t start off that way. The industry began in the late 1940s as “community antenna television,” or CATV—a way to capture over-the-air TV broadcasts where reception was good and distribute the signal to homes where reception was poor. Since then cable has evolved from a small, localized service into a gigantic industry offering not only hundreds of TV channels but also a telecommunications “triple play” of TV, telephone, and broadband Internet services.
Over the years, satellite providers and traditional telephone companies have gotten in on the game, but prices have continued to rise faster than the rate of inflation, despite the competition. According to a recent report by the Mintel Group, the average monthly cost of home communications services is $154. In the course of a year, that works out to $1,848—more than the average household spends on clothing, furniture, or electricity. (See how the cost of cable has outpaced inflation, and try these three ways to create your own Internet bundle for less.)
That’s a lot of money for services that consumers don’t seem too happy with. Our latest survey of 81,848 customers of home telecommunications services found almost universally low ratings for value across services—especially for TV and Internet. Those who bundled the three services together for a discount still seemed unimpressed with what they were getting for their money. Even WOW and Verizon FiOS, which got high marks for service satisfaction, rated middling or lower for value, and out of 14 providers, nine got the lowest possible value rating.
What is it about home telecommunications that leaves such a sour taste in customers’ mouths? When we asked Consumer Reports’ Facebook followers to tell us their telecom stories, the few happy anecdotes of attentive service technicians and reliable service were overwhelmed by a tidal wave of consumer woe involving high prices, complicated equipment, and terrible service.
“Customer service was so bad it made me really angry,” one poster said. “Slowest high-speed Internet on earth,” another said. “Cable television is a big waste of time and money,” another commented. “One of the best things my wife and I have done to enrich our marriage was to cancel cable.”
Find out how your TV, Internet, and phone company did in our newly updated telecom services Ratings.
Telecommunications services in America are in the midst of a major upheaval, and troubling signs are on the horizon for consumers. Customers increasingly prize broadband Internet as the most important information pipeline coming into their home. Yet the recent Verizon v. FCC federal court decision threw out the FCC’s Open Internet rules.
Those rules kept Internet service providers (ISPs) from blocking, slowing down, or charging more for Netflix, Skype, and other services that can use lots of bandwidth. The FCC must now attempt to revise its rules or choose to regulate ISPs, like telephone providers, as “common carriers.” Michael Powell, a former FCC chairman now heading the National Cable & Telecommunications Association, predicts “World War III” if the commission tries to do that. But if the FCC doesn’t act, broadband subscribers might see their access to streaming services controlled by their ISP. And consumers don't seem too happy about that prospect. A recent Consumer Reports nationally representative poll found that 71 percent of home Internet users would attempt to switch providers if their ISP were to try to block or slow down Internet service—that is, of course, assuming those customers had the option of switching to another provider.
The cable industry is also consolidating. In February, Comcast and Time Warner Cable announced their intention to merge, which would create an industry giant serving 32 percent of pay TV customers and 30 percent of broadband subscribers. Although the two don’t directly compete in any markets, such mega-mergers could indirectly harm consumers as fewer companies compete on price or invest in new technologies.
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One positive finding from our survey is that consumers of telecommunications services are becoming more savvy negotiators. Four out of 10 respondents attempted to bargain with their service providers. Among the hagglers, 46 percent said their provider dropped the price by as much as $50 per month, 31 percent got a new promotional rate, and 29 percent received additional premium channels. Even among those whose initial promotional rate had expired, 43 percent were able to negotiate a new discount.
But the high times for hagglers might be coming to an end. Cablevision CEO Jim Dolan has publicly stated that his company will stop offering repeat promotional discounts to subscribers. “The customer that has been bouncing from one company to another on promotional discounts has hit a dead end with us,” he said in an investor call last November.
Cablevision isn’t the only provider cracking down. In a recent attempt to negotiate with Verizon FiOS by phone, one of our staffers managed to get an activation fee waived but little else, despite being a new subscriber. The salesperson claimed that the company no longer aimed to compete on price. When reached for comment, a Verizon spokesman confirmed that the company strategy was not to compete on price but to offer higher-quality service. He claimed that it was not a change in policy and that sales representatives did have some latitude to offer incentives to customers on a case-by-case basis.
But even as cable companies and other telecom providers get tough, our advice is to bargain harder. When all else fails, take inspiration from the increasing number of cord cutters and cord shavers out there who have eliminated or reduced the service they buy from cable and telecom providers. Comb through your bill and pare down your channel package if you don’t watch many of the channels you’re paying for.
If you're paying for faster Internet service, consider scaling back to a lower speed. Think about eliminating the monthly charge for multiroom DVR service. When you've decided how much you can do without, call your provider with the proposed list of cuts and see who's willing to deal then. (Find out whether Google Fiber is all that it's cracked up to be.)
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Every year since 1993, the Federal Communications Commission has published data on the average price of expanded basic cable television packages in the U.S. (Expanded basic cable is a step up from the entry-level package offered by most providers.) We took the FCC’s pricing data from 1998 through 2012, then compared that with what cable would have cost if it had been pegged to the standard rate of inflation as defined by the Consumer Price Index. We found that over the course of those 15 years, the average American cable-watching household had forked over about $1,760 more than it would have if the price of cable had matched inflation. That’s enough to have purchased almost six iPad Minis for each household.
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This article also appeared in the May 2014 issue of Consumer Reports magazine.
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