Big telecom mergers just don't fly these days, but it took Comcast (News - Alert) 14 months and at least $237 million spent in 2014 to figure it out it couldn't buy Time Warner Cable. In retrospect, this was a no brainer. If the Federal Communications Commission (FCC) wasn't going to sign off on an AT&T (News - Alert) and T-Mobile merger back in 2011 and a Sprint/T-Mobile merger in 2014, what sane individual believed that Comcast could pull off a merger with so many negatives hanging over its head?
Skeptics will argue that wireless mergers are different from cable mergers, but it's all about broadband access and keeping competition alive in an increasingly complex world. On a good day—and we'll talk about bad in a moment—the combined Comcast/Time Warner (News - Alert) would have controlled up to 57 percent of the nation's broadband market and a bit less than 30 percent of pay television services. It was a combination that could have made life miserable for Netflix and numerous other content and streaming services.
Comcast threw out a lot of promises on Net Neutrality and offering low-cost Internet access to the economically disadvantaged, but at the end of the day all of its promised goodwill actions could not drown out issues with both the freebie broadband program and its larger customer service disasters.
Internet Essentials, the broadband program, first saw life during the Comcast-NBC merger. Offering $10 broadband to select low-income families, a number of public policy advocates said the program was difficult to apply for and perhaps served only 13 percent of those eligible after three years of operation. Comcast offered to extend the program upon the Time Warner Cable merger, but that didn't gain them a lot of points, especially after non-profit advocates started staging protests pointing out the low take rate and obstacles in the company's home city of Philadelphia.
Comcast's big PR moves also attracted investigations to what some have called the worst customer service in the industry. Even the cable company says it needs to work on addressing "some very real pain points" to improve its call center experience, but public embarrassment has taken place with recordings of Comcast call center employees taking hours to resolve simple problems and refusing to cancel accounts. Customer billing account names have been changed to profanities.
With the merger now gone, some of the attention on Comcast's customer service is likely to fade, but it isn't going away. And yet I'm doubtful that a new emphasis on social media and offering speeds up to 2 gigabits per second will sooth agitated customers with long memories. Comcast has to retool customer service procedures and rebuild morale among its employees or it will continue to lose ground in the PR and public perception worlds.
Regaining and building public trust is not an abstract concept. Every time Comcast goes up to renew a city franchise license, it is going to have to spend time and money to refute or apologize for poor service and offer additional concessions/incentives to win favor with the local government. All those bills add up, as do all the lobbying efforts it burns money on.
Comcast and other members of the telecom community face similar challenges in trying to fight Net Neutrality. It's hard to win public support for less intrusive regulation when your business is doing a poor job providing a good customer experience. The telecom community essentially has to fight against the lack of goodwill in its own customer base. If you can't get your own customers to support you, you are going to have bigger problems than tighter regulation in the long run.