"Value" a Problem for ISPs and Linear Video Providers

March 26, 2014
By: Gary Kim

“Value” appears to be a growing source of pain for subscribers to linear video entertainment packages, and “prices” would seem to be part of the reason for the dissatisfaction.

If the average monthly cost of a triple-play bundle is $154, then the annual cost is $1,848, more than the average household spends on clothing, furniture, or electricity, according to Consumer Reports.

The latest Consumer Reports survey of 81,848 customers of fixed network services found almost universally low ratings for value, including linear video, as you would expect, but also for high speed access services, which rank dead last in the industry rankings studies by the American Consumer Satisfaction Index.

Linear video entertainment, as an industry, ranks third from last, and that tends to be the case, year after year, in the ACSI rankings.

Given that “value” is a big issue, bundles that save money should help. They do, but even buyers of bundles seem “unimpressed with what they were getting for their money,” Consumer Reports says.

“Even WOW and Verizon FiOS (News - Alert), 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,” says Consumer Reports.

To be sure, some industries just have a harder time in the “customer satisfaction” area. Airlines and fixed line communications and video entertainment providers traditionally do not score high in consumer satisfaction surveys. The fact that both those industries are susceptible to service interruptions might explain the ratings.

The danger is obvious. If consumers consistently are dissatisfied with linear video services and even high speed access, and if the fixed network business is built on those two services, then the danger of new competitors entering the market is high.

Almost nothing is more attractive for a would-be entrepreneur than large markets with high gross revenues, served by competitors who are disliked to a great extent by their customers.

Google (News - Alert) Fiber represents the realization of the threat in the high speed access business, while steaming video represents the danger to the linear video business.




Edited by Cassandra Tucker