Disliking your Internet service provider is almost as American as barbecuing on the Fourth of July.
ISPs ranked lowest on the American Customer Satisfaction Index in its annual measure of communications industries, just edging out cable companies (which many ISPs also are) for the dubious honor. According to the latest ACSI results, ISPs dropped 3.1% to an ACSI score of 63 on a 100-point scale.
Based on that level of dissatisfaction it's somewhat shocking that a recent survey shows that ISPs are usually delivering the combined upload/download speeds they advertise.
The Federal Communications Commission conducts an annual nationwide performance study of residential broadband service. This year's report reveals that most broadband providers continue to improve service performance by delivering actual speeds that meet or exceed advertised speeds during the past year. But some providers showed significant room for improvement, particularly with respect to consistency of speeds.
This year's report shows that average speeds are close to advertised, but not always available. Cablevision (NYSE:CVC), for example, delivered 100% or better of advertised speed to 80% of the FCC panelists 80% of the time during peak periods. About half the ISPs delivered about 90% or better of advertised speed, and several ISPs delivered less than 60% or better of advertised speeds 80% of the time to 80% of the panelists. Basically the advertised speeds are possible but in some cases whether a specific customer gets them depends upon time of day, usage levels, and other factors.
"This is the first time we have included a metric designed to convey how likely any given consumer is to experience broadband speeds of a particular level or greater," the FCC wrote in a press release. "We expect ISPs to improve upon consistency over the course of the next year and we will focus on this issue in the future."
The FCC does not release specific results for each company surveyed.
Cable trade group calls it a win
Perhaps one of the reasons the public dislikes the ISPs is that they lack humility. Instead of responding to the part of the report that showed where improvement was necessary, The National Cable & Telecommunications Association (which represents the cable companies) released a statement with a blindingly positive spin on the news. The group said that the report "helps to refute the unsubstantiated allegations that cable operators routinely under-deliver and are solely responsible for any deficiencies in the performance experienced by consumers."
Never mind that the survey found that download speed performance varies by service tier with some ISPs delivering less than 80% of advertised speed or that providers using DSL technology generally failed to meet their advertised speeds, the NCTA chose to see the glass as not merely half full, but overflowing.
"Today, with the release of the fourth Measuring Broadband America report, the Commission demonstrates that consumers do, in fact, 'get what they pay for' when they purchase broadband Internet access service," said NCTA in a blog post. "The report's findings, which are based on over eight billion measurements, underscore that the U.S. enjoys a healthy, growing, and competitive broadband marketplace."
Most ISPs are still operating as either a monopoly or one of two choices in a market, so perhaps they don't need to care that being pretty good most of the time does not matter to a customer experiencing slow service at a given moment. Bragging about a survey that finds you mostly deliver on your advertised promise some of the time is unlikely to endear these disliked companies to consumers any time soon.
For most consumers there is little choice. But if Google (NASDAQ:GOOG) or another player ever managed to find a way to offer national broadband service then Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and the rest of the cable players could see customers flee. If a better-liked company can find a way to compete, ISPs could face the kind of mass subscriber loss that afflicted the phone companies once mobile phones made landlines optional.
IBISWorld's Internet Service Providers market research report, released in March, pegs the industry as being worth $55 billion annually. The report says that number is expected to grow but it does not rule out that if an option existed dissatisfied customers could flock to it.
There are some positives
The ISPs seem to operate as if they are beloved rather than realizing that they have a long way to go before customers trust them. The results of the survey were generally framed as positive by the FCC. The study noted that some ISPs had even upgraded their standard speeds without increasing prices (though which companies did that was not specified). The survey also said that other factors beyond the ISPs' control may factor into delivered speeds, which the FCC pledged to look into.
These are results for the ISPs and the NCTA to build on, not to brag about. If the cable and phone companies that provide most of the nation's Internet access think they have done a good job based on this survey, they are putting at least a portion of $55 billion in yearly revenue at risk.
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Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Google (C shares). The Motley Fool owns shares of Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.