Aug. 27 (Bloomberg) -- New York Mayor Bill de Blasio has a beef about customer service from cable provider Comcast Corp. and its merger partner Time Warner Cable Inc. -- and unlike most people he’s got a chance to do something about it.
De Blasio asked U.S. regulators this week to demand a commitment for better customer service -- including additional staffing for call centers -- before blessing the $45.2 billion deal. Los Angeles Mayor Eric Garcetti also called for service assurances before No. 1 Comcast, a bottom dweller in consumer rankings, is allowed to absorb the second-largest cable provider.
Accepting requirements to improve service may be a price the companies are willing to pay for winning an agreement from regulators, according to Jan Dawson, an analyst with Jackdaw Research in Provo, Utah.
“They’ll do what it takes,” Dawson said. “It’s a little unusual, but Comcast’s customer service is worse than most companies seeking a merger approval.”
The issue was highlighted today by a nationwide Internet service outage for Time Warner Cable customers. The timing adds weight to mayoral pleas from the nation’s top two media markets to make customer service a factor for state and federal regulators who are reviewing the proposed merger.
Time Warner Cable has the highest rate of complaints among the four cable providers in New York City and regulators should require measurable improvement in customer service as a condition of the deal, de Blasio wrote in his FCC filing. New York state’s Public Service Commission, which needs to approve Time Warner Cable’s transfer of 2.5 million in-state subscribers, already has been advised by staff to require improvements in consumer surveys as a condition of the deal.
Sena Fitzmaurice, a spokeswoman for Philadelphia-based Comcast, said the company is “open to discussing reasonable conditions which don’t unduly burden our business.”
Time Warner Cable spokesman Bobby Amirshahi didn’t immediately respond to an e-mail today asking about possible conditions for merger approval.
The company said it had restored service within a few hours to most of the subscribers who lost Internet and on-demand video this morning.
Governor Andrew Cuomo directed the New York State Department of Public Service to investigate the outage as it review the merger.
“The mayor continues to remain concerned about ensuring all New Yorkers have reliable broadband access,” said Ishanee Parikh, a spokeswoman for de Blasio.
A history of poor customer service makes cable “an easy punching bag,” said Craig Moffett, an analyst at MoffettNathanson in New York.
“Ultimately, the thumbs up or thumbs down isn’t likely to hinge on customer service, but instead on more substantive structural issues,” Moffett said.
Kim Hart, a spokeswoman for the FCC, which is reviewing the deal along with the Justice Department, declined to comment on possible conditions regulators may seek.
The FCC has set an informal deadline of early January to complete its review. Last week the agency asked Comcast to supply documents about consumer satisfaction, and plans to address problems revealed by rankings and surveys.
The agency took comments from the public until Aug. 25, when de Blasio and Garcetti submitted remarks.
There’s “a real risk that this transaction will lead to worse customer service,” Garcetti said. He asked the agency to require a merged company to have enough workers to serve users.
Customer complaints have been a sore spot for Comcast, with Executive Vice President David Cohen telling Congress in April that “this is a place where we’re having issues.”
Since then a recording of a call-center employee refusing a request to disconnect service drew millions of Web views. Comcast posted a July 15 statement saying, “We are very embarrassed” by the encounter.
In March, Comcast and Time Warner showed up near the bottom of rankings by non-profit Consumer Reports, listed 15th and 16th out of 17 TV service providers.
In May, the companies ranked 7th and 8th, out of eight pay-TV providers, in the American Customer Satisfaction Index. Last year, Comcast and Time Warner Cable ranked last among seven TV-service providers in the eastern U.S., according to a survey by JD Power and Associates.
“The idea that two companies with the worst customer service combining is somehow going to lead to a company improving its service is, frankly, contrary to our experience as consumers at the mercy of large companies,” said Susan Lerner, executive of Common Cause New York, which opposes the merger.
Comcast is working to give customers more control of their service through set-top boxes and via Internet apps, said spokeswoman Jenni Moyer. The company’s scores in JD Power surveys have improved, she said.
“While we’ve made progress, we know we still have work to do,” Moyer said.
Comcast said in a filing yesterday that seven of the 12 necessary states have given approval.
In an Aug. 21 letter, 52 mayors, including Philadelphia’s Michael Nutter, told the FCC the deal should be approved because it will propel infrastructure investment. Consumers won’t lose choice because the companies don’t compete in any market, said the mayors.
Companies telling the FCC that the merger may give Comcast too much power over video programming and Internet lines include largest streaming video provider Netflix Inc., satellite-TV provider Dish Network Corp. and Cogent Communications Holdings Inc., which provides Internet service to businesses.
Policy groups Consumers Union and Common Cause have asked the FCC to reject the merger, saying the deal would give Comcast power to raise prices, limit choices and stifle competition.
Public Knowledge yesterday offered to pay a monthly Comcast bill for the best remix of online recordings of poor service from the company’s call centers.
“We’re just trying to draw attention to what others have put out,” said Gene Kimmelman, president of the Washington-based policy group, which opposes the merger. Poor consumer service corresponds to a lack of competition, he said.
“It raises a fundamental question of how competitive this environment really is, and whether there are enhanced dangers from combining the two largest cable companies,” he said.
In more than 2,700 comments to the New York Public Service Commission, “the vast majority” opposed the merger, saying “customer service will decrease” and prices will increase, according to agency staff comments.
De Blasio, in comments to state authorities, cited “Comcast’s performance in other markets.” He didn’t elaborate before saying insufficient staffing at Time Warner’s call centers leads to delays and frustration for consumers.
Manhattan Borough President Gale Brewer, in comments to the state commission, mentioned “the poor service records of both Time Warner Cable and Comcast.”
Brewer detailed frustration at traipsing through “multiple menu options” at Time Warner Cable. She reached a call agent who couldn’t say why Brewer wasn’t receiving a channel for which she had paid.
“I am still waiting for access to my channel,” Brewer wrote. “I don’t know how many other channels I am missing that I am paying for.”
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