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Customers' pique may decide cable, phone firms' battle
From a technical viewpoint, it is way easier for a cable TV system to add phone service to its system than it is for a telecom carrier to add video, which gives cable operators an edge in their drive to win residential customers away from phone companies.
But a history of cable operators failing to satisfy customers could give phone companies a leg up in the long term, a new survey from the Ann Arbor, Mich.-based consultancy CFI Group suggests. When looking for service bundles that include Internet, video, voice and wireless, more consumers think favorably of their phone carrier than their cable operator, the survey found.
"For many customers it's a choice between the lesser of two evils," said Phil Doriot, CFI's program director, "but our research suggests that telecom has an opportunity to take advantage of its relatively superior customer satisfaction. That's not to say that cable companies are out of the game. They're just not accustomed to this kind of competition. They have a lot of work to do if they want to keep customers from defecting."
The survey of more than 1,200 households found that when it comes to bundled services, 54 percent said they prefer a phone company, while 44 percent preferred cable. The survey also found that among households that don't buy bundled services, one in five said they were likely to do so within the next year.
Typically, service bundles are sold for lower rates than are charged for the services when ordered individually.
Upgrades to phone networks so they can carry video have been slow, but phone firms have partnered with satellite operators to provide video in their bundles, and the satellite companies have higher consumer-satisfaction ratings than cable operators, the CFI study said.
To provide wireless service in their bundles, the cable operators have partnered with Sprint Nextel, which has lower customer-satisfaction ratings than Verizon Wireless and AT&T Mobility, the two largest wireless carriers, , the study found.
"People spend a lot more time watching TV than they do on the phone," said Doriot.
"So a bad customer experience is going to have a greater impact on customer satisfaction for the video consumer," he said.
NO MORE FOR NOTEBAERT: Richard Notebaert won't try to go beyond his career hat trick, serving as chief executive at three different companies.
Notebaert recently said that he will step down as CEO at Denver-based Qwest Communications International Inc. once his replacement is found and will be moving back to his Chicago home.
Notebaert, 60, who had served as chief at Ameritech before he sold it to SBC Communications Inc. and later as head of Naperville-based Tellabs Inc., said he plans to continue serving on a few corporate boards and to devote his energies to his post as chairman of trustees at the University of Notre Dame. He doesn't plan to take another top executive post.
"When anyone calls [to talk about another job]," Notebaert said, "I just tell them I don't want to talk."
INNOVATION ELUSIVE: Buying innovation isn't easy or cheap, and many executives find that frustrating, according to a Boston Consulting Group survey.
The survey of nearly 2,500 executives found 46 percent said they are satisfied with the returns on what they spend on innovation.
"Most companies consider innovation important, often critical, to their business," said James P. Andrew, Boston Consulting senior partner. "Yet, they're increasingly frustrated. They feel they should be getting more from their innovation efforts."
The survey suggests that executives believe that innovation is getting more difficult, Andrew said. "That's not the case," he said. "Innovation has always been hard."
For the third year in a row, executives cited Apple as the most innovative firm, followed by Google, Toyota, General Electric, Microsoft and Procter & Gamble.