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Good news for security companies: Cable Guy’s customer service ratings fall to new lows

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Wednesday, May 21, 2014

Professional security companies proudly point to the good service they give consumers as an important differentiator between them and their giant cableco and telecom competitors. And a new consumer satisfaction survey suggests they don’t have to worry about losing that edge to the Cable Guy anytime soon—because it shows new dips for Time Warner Cable and Comcast, and AT&T and DIRECTV don’t fare too well, either.

The American Customer Satisfaction Index released its annual measure of the communications industries this week. The ACSI report measures consumer satisfaction in such categories as Internet service providers (ISPs), subscription TV service, fixed-line and wireless telephone service, computer software and cellphones, according to a news release. Ratings are done on a 100-point scale.

“Customer satisfaction is deteriorating for all of the largest pay TV providers. Viewers are much more dissatisfied with cable TV service than fiber optic and satellite service (60 vs. 68). Though both companies drop in customer satisfaction, DIRECTV (-4 percent) and AT&T (-3 percent) are tied for the lead with ACSI scores of 69. Verizon Communications FiOS (68) and DISH Network (67) follow.”

AT&T’s and DIRECTV’s dips in customer satisfaction are of particular note because I just wrote about how AT&T’s $48.5 billion plan to buy DIRECTV could impact Digital Life—AT&T home security/home automation offering—and the security industry.

Hmmm…a dip in customer satisfaction regarding any part of those companies’ businesses doesn’t seem like a positive—especially if they want to bundle services!

There’s also a $45 billion pending deal for Comcast to buy Time Warner Cable. Both of those companies have home security/home automation offerings but they’re not making customers very happy, at least when it comes to TV and Internet service, according to ACSI.

“Cable giants Comcast and Time Warner Cable have the most dissatisfied customers. Comcast falls 5 percent to 60, while Time Warner registers the biggest loss and plunges 7 percent to 56, its lowest score to date,” the news release said.

The release also has a prepared statement from David VanAmburg, ACSI director: “Comcast and Time Warner assert their proposed merger will not reduce competition because there is little overlap in their service territories. Still, it's a concern whenever two poor-performing service providers combine operations. ACSI data consistently show that mergers in service industries usually result in lower customer satisfaction, at least in the short term. It's hard to see how combining two negatives will be a positive for consumers.”

Customers also aren’t happy with their Internet service from such providers, according to ACSI.

“High prices, slow data transmission and unreliable service drag satisfaction to record lows, as customers have few alternatives beyond the largest Internet service providers. Customer satisfaction with ISPs drops 3.1 percent to 63, the lowest score in the Index, the release said.

“At an ACSI score of 71,Verizon's FiOS Internet service continues to lead the category, surpassing AT&T, CenturyLink and the aggregate of other smaller broadband providers, all at 65,” according to the release. “Cable-company-controlled ISPs languish at the bottom of the rankings again. Cox Communications is the best of these and stays above the industry average despite a 6 percent fall to 64. Customers rate Comcast (-8 percent to 57) and Time Warner Cable (-14 percent to 54) even lower for Internet service than for their TV service. In both industries, the two providers have the weakest customer satisfaction.”

However, customers are happy with their cellphones. That rating is “up for a second straight year, rising 2.6 percent to a new all-time high ACSI score of 78.”

The release said, “Steady growth in the use of smartphones, which have much higher levels of customer satisfaction, helps drive the overall industry gain. However, as data usage increases, costs to access overloaded networks are high, leaving customer satisfaction with wireless service providers stagnant at an ACSI score of 72.”

ACSI found that, “among wireless phone providers, Verizon Wireless separates from the pack after climbing 3 percent to 75. T-Mobile (69), Sprint (68) and AT&T Mobility (68) are tightly grouped behind. As smartphone adoption continues to grow, network demands increase along with costs to the consumer, each contributing to stagnant customer satisfaction.”

Also interesting were the ACSI POTS ratings. “Customer satisfaction with fixed-line telephone service dips 1.4 percent to an ACSI score of 73, but remains the most satisfying of all types of telecommunications. However, the score is due to shrinking landline usage. As more households abandon fixed-line service for cell phones, the customers that remain tend to be the most satisfied,” the release said.

AT&T to buy DIRECTV for $48.5b

Analysts: Deal could result in potential monitoring synergies, bundling opportunities
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05/19/2014

DALLAS, Texas and EL SEGUNDO, Calif.—AT&T plans to buy DIRECTV for $48.5 billion, the companies announced this week. The deal will allow AT&T to expand its broadband network to more than 70 million customer locations, the companies said.

AT&T earns CSAA Five Diamond certification

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06/26/2013

DALLAS—AT&T, which launched its Digital Life home security/home automation platform in April, has received Five Diamond certification from the Central Station Alarm Association, the company announced this week.

DIRECTV gets into security, acquires LifeShield

LifeShield, formerly InGrid, is a self-installed digital wireless system with monitoring by Protection 1
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06/05/2013

EL SEGUNDO, Calif.—Satellite TV provider DIRECTV is getting into home security with the purchase of LifeShield. Formerly known as InGrid, LifeShield is a self-installed, professionally monitored, wireless digital security system.

Kessler and DeMarco: Professional monitoring, strategy bode well for DIRECTV/Lifeshield deal

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Wednesday, June 5, 2013

I had a chance to speak to Jeff Kessler, research analyst for Imperial Capital, and ESX chairman George DeMarco about the satellite television giant DIRECTV getting into security with the purchase of LifeShield.

Below is a summary of those discussion:

This deal is different from the string of cable companies and telecoms that have jumped into the fray over the past couple of years, Kessler said, for a couple of reasons.

First, DIY is built into the DNA of both DIRECTV and LifeSheild, Kessler said. “They understand each others’ way of working,” and that will make the combination more successful.

Second, LifeSheild, and now, DIRECTV, is using CMS, Protection 1’s professional monitoring arm to monitor security customers.

With the exception of AT&T, which is building two monitoring centers, the other cable and telecom players are not using professional monitoring centers.

“This allows DIRECTV to show off its feathers in front of other cable and telecom players,” Kessler said. Those companies are using “generic customer service organizations to do their initial [monitoring] service, [but DIRECTV has a acquired a company] that uses the largest independent monitoring company in the country with five branches.”

He pointed out that CMS has extremely experienced people answering phones who know about intrusion and life safety, including carbon monoxide. The company also has a group of people who are specially trained in health care for calls related to personal emergency response.

All of this is important, he said, because it will improve the customer experience for DIRECTV’s security customers. Going with a professional monitoring company will help convince customers that they can trust DIRECTV as their security provider because customers believe that the “police will be there in five minutes, or a health specialist will stay on the phone for 35 minutes with a customer,” he said.

In general, the public’s perception about cable companies’ service is not good. This is a hurdle for cable companies who enter the security industry. By partnering with CMS that has “proficiency and experience dealing with customer emergencies, whether it’s security or health,[DIRECTV] is in a better position to succeed,” Kessler said.

Kessler said there will likely more deals like this where an outsider like a satellite or cable company will buy a home security provider. In addition, Kessler expect to see more “partnerships as telcos and cable operators realize the value in having a high-quality partner on the service end of the business.

George DeMarco, chairman of ESX, and former owner of Greater Alarm said DIRECTV’s strategy is pretty straightforward.

“DIRECTV has 20 million customers. If the current market penetration for electronic security systems is approximately 20-25 percent, then their customer database is a gold mine.”

DeMarco said it’s all about finding new, complementary, recurring revenue streams that “boost their ability to attract a greater share of the customer’s wallet. Offering security and home management systems with interactive service capabilities, especially video, gives DIRECTV an opportunity to overlay additional home services for customers, while growing top-line revenues and increasing bottom -line profits.  
 
“With the advancements in product technologies, cloud-based services, and mobile devices, Multiple System Operators (MSO) and telecoms have been eyeing the electronic security industry of late. That said, I believe DIRECTV and other MSOs are looking for ways to augment their current offerings.” 

DeMarco said the those industries’ subscribers are willing to “cut the cord” from content packages because of the impact of Hulu, Netflix, and Amazon’s Prime Service. “In other words, MSOs can increase new phone and broadband subscribers while losing paid TV subscribers. Consumers have more choices today for content and delivery of broadband services. As a result, MSOs are exploring other sources of revenue for growth opportunities and the electronic security industry seems to be the likely candidate.”