Big Cable's new nemesis: Big politicians
Democratic presidential candidate Bernie Sanders believes many Americans are getting a raw deal on any number of fronts -- from the cost of higher education right down to purchasing cable-TV and high-speed Internet services.
Earlier this year, Sanders and five other U.S. senators sent a letter to Federal Communications Commission Chairman Thomas Wheeler arguing that a lack of competition in the broadband Internet and cable-TV markets has left many Americans without "robust options" and has led to "some troubling and questionable customer service and payment practices" on the part of so-called Big Cable.
Last year, more than 30 percent of consumer complaints to the FCC about Internet service and nearly 40 percent of complaints about TV service were about billing, according to the letter, whose lead author is Sen. Ron Wyden, D-Oregon.
Wyden and the others who penned the letter to the FCC are especially troubled by reports of complaints by Comcast (CMCSA) customers involving equipment rental charges, which are among the "numerous and often obtuse fees" that such providers levy, according to the letter.
Some Comcast customers have complained about being charged modem-rental fees after having returned the equipment to the company, or being charged rental fees for modems they never leased. Contesting the charges has been a frustrating process for many customers, involving calls to the company over several billing cycles, according to the letter. Comcast did not return a phone call and email seeking comment.
"Nickeling and diming customers who have little to no choice over their cable provider is a slap in the face to every American, especially seniors and families walking an economic tightrope," said Wyden, who has asked the FCC to respond to various questions, including whether and how the agency regulates erroneous equipment fees.
Last week, President Obama also took up the issue of competition in the cable market -- or the supposed lack of it. He announced his support for opening the market for cable set-top boxes as part of a broad federal effort to increase competition in various industries.
Obama endorsed an FCC proposal that would allow subscribers to choose and buy the devices they use to watch TV, rather than lease set-top boxes from their cable companies at an average annual cost of $231.
Consumers spend billions of dollars each year to rent set-top boxes from cable companies, according to Obama. When it comes to Internet modems and routers, consumers are already allowed to buy their own, rather than lease the equipment from service providers.
It isn't lost on cable companies that they get a bad rap from many consumers. So, they've spent aggressively to try to improve their customer-satisfaction rating by investing more heavily in training for technicians and customer-service reps and rolling out programs like one-hour arrival windows, said Craig Moffett, a partner and senior analyst at telecommunications research firm MoffettNathanson Research.
When it comes to purchasing TV service, consumers have a greater amount of choice than when it comes to getting Internet service, he said. In any given market, cable companies compete with two satellite TV providers and phone companies that offer TV services as well, such as AT&T (T) and Verizon (VZ), explained Moffett. The pickings are slimmer in the broadband Internet market, where consumers generally must choose between a phone company or a cable company offering much-faster speeds.
The level of competition is heating up, albeit slowly, with the entry of players such as Amazon (AMZN), which offers free streaming video service for its eligible Prime customers, and Google (GOOG), which has rolled out its Fiber broadband Internet and cable-TV service in some parts of the country.
Cable companies "realize that longer-term the real competition isn't Direct TV or DISH Network: It's Google and Amazon," said Moffett, "and they have to be prepared to compete with companies that are extremely well-liked by consumers."