2/20/15

Comcast and Time Warner just can't control themselves

Comcast and Time Warner are awaiting regulatory responses to their application to merge and become the dominant player in cable television provision in the U.S. If permitted, the combined firm will control about 2/3rd of the broadband cable market and about 40% of the entire broadband market in the U.S. (which is used for both cable and the Internet).

Independently, the two firms both have reputations for poor installation and repair services, poor billing and collection practices, high prices, and price increases above inflation levels. No one seriously believes their claims that the merger will be pro competitive, lead to more consumer choice, better service and lower prices.

The companies have not been helping their case by appearing to be operations out of control when it comes to their customers.
 
In recent months customers seeking services have been kept on the phone for hours and forced to undergo forms of psychological abuse while they tried to get the changes they wished. 

Customers who have complained about billing practices and service have had their first names on their accounts changed to names such as “asshole,” “cunt”, “whore,” “dummy”, and “super bitch” and subsequent mailings were sent to their homes with those names on the official company correspondence.

If they can’t manage the firms now, imagine what it will be like if the larger combined firm is permitted and has even less incentive for better behavior.

The internal cultures of the companies apparently do not make treating customers badly risky for employees and the cultures may even provoke it through the high pressure placed on customer service representatives to retain customers and processes designed make it difficult for customers to switch services. The fact that there is a continuing litany of poor behavior indicates the their managers are unwilling or unable to control their employees and that they can't even structure their information systems to stop such things from occurring.

The companies' long histories of treating customers poorly obviously rubs off on their workers. It reminds one of comedian Lilly Tomlin’s character Ernestine, a telephone operator, who reacted to customer complaints saying "We don't care. We don't have to. We're the Phone Company."

The fundamental root of the Comcast and Time Warner problems is that there is essentially no discipline in the market for cable services.  Because  both companies tend to have local monopolies in the locations in which they operate, and face limited competition from satellite TV, the market itself is not correcting for bad behavior. This problem is compounded because there is essentially no regulatory oversight for cable services and customer service either. The cable companies have the best of both worlds: no market pressure and no regulatory pressure.

None of that will change if the merger of the two companies is permitted. It will only get worse.

Customers are valuable to companies and the two companies continue to mistreat them at their peril. A significant number of customers are already stopping cable services in favor of video downloads and streams from the Internet. In time, this may increase to the point it forces the companies to treat their customers better. But it will probably be too late.

In the meantime, the only hope is that regulators will try to keep things from getting worse by refusing to allow the two firms to merge.

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