Consumers have a new whipping boy, an industry that garners even less satisfaction than cable-TV and other subscription-TV businesses.
Internet service providers are now the most unloved corporations among American consumers. They gave the industry the lowest rating among the more than 40 sectors tracked by the American Customer Satisfaction Index, which surveyed more than 12,000 customers in the first quarter. ISPs earned a bottom-of-the-barrel score of 64 points, giving them a lower rating than cable-TV and other subscription-TV services (65) and municipal utilities (68).
Cable-TV and other subscription-TV businesses aren't doing much better than ISPs, and in many cases the same companies provide both services to households. Given that more Americans are cutting the cord and relying on ISPs to provide high-speed connections to stream Netflix (NFLX) and Amazon (AMZN), issues with speed and unreliability are taking their toll on consumers' perceptions.
On top of that, data caps -- when ISPs rely on "usage-based pricing," or tacking on extra fees for those who stream a lot of data -- are adding up to disgruntled consumers.
"Data caps are one issue," ACSI Director David VanAmburg said. "Expectations are another. We become spoiled, especially those of us who work at companies with high-speed Internet. We expect the same at home, but in most cases it's not the same. That tends to create a significant amount of dissatisfaction. Add in how much it costs, and that also drags down satisfaction."
However, consumers don't view all ISPs equally. The top-rated service is Verizon's (VZ) FiOS, which earned an ACSI score of 73. The worst-rated ISP was Frontier Communications (FTR), which received a score of 56.
Cable- and subscription-TV services were only one point ahead of ISPs in customer satisfaction, however. Last year, ISPs and subscription-TV services were tied at the bottom of the ACSI rankings.
Subscription-TV services improved slightly from last year, earning a score of 65 points in the 2016 survey, a two-point gain from 2015. But as with ISPs, consumers have a wide difference in perception when it comes to which TV services are performing well.
Verizon FiOS again ranked at the top, with a score of 70, while Mediacom came in at the bottom, at 54.
Given the merger of Charter (CHTR), Time Warner Cable and Bright House, which was completed in May, it's possible that those companies may sink lower in consumers' estimation. Combining customer accounts and operations can be tricky in any industry, and the ACSI has found that mergers tend to lead to lower customer satisfaction.
"It's particularly problematic in industries where the customer relationship with a company is an account-type relationship," VanAmburg said. "It's a big challenge to merge portfolios of customers and not have something fall through the cracks."
Charter will drop the Time Warner Cable name in favor of using Charter Communications in its branding. While that makes sense given that Charter is the acquiring company, the cable company may have had another incentive: losing a corporate brand disliked by many consumers.
Time Warner Cable ranked as the ACSI's lowest-rated company in 2015. Still, it's performing slightly better in 2016, climbing to 59 from 51 a year earlier, a 16 percent improvement.
"It probably makes sense from the standpoint of a company that has a rather lackluster reputation now for many years," VanAmburg said. He added, referring to Comast's (CMCSA) 15 percent jump to 62, "Both Comcast and Time Warner really lifted themselves up. They went from very low to merely low."