Comcast (NASDAQ:CMCSA) has the same relationship with its customers that most cable companies and Internet service providers have -- a sort of uncomfortable, mutual tolerance.
In many ways, it's like a bad marriage where both partners want out, but neither sees another option so they stay together because it's not worth the hassle and paperwork required to break up.
People want pay-TV and Internet service, and the various providers of those are seemingly necessary evils that are required to make that happen. On the company side, Comcast, Cox, Cablevision (NYSE: CVC), Time Warner Cable (NYSE:TWC), AT&T (NYSE: T), Verizon (NYSE: VZ), and many smaller players seem to view customers as entries on a balance sheet -- a means to make money, not actual people worthy of good service.
This has been the relationship between pay-TV providers/ISPs and their subscribers since cable first became a thing in the early 1980s. From those days until the national launch of satellite television in the early 1990s, most people only had one choice of cable provider. Having a monopoly meant the providers did not have to take good care of people in order for them to remain customers. Cable companies needed to offer neither value nor service because their subscribers had three choices:
- Pay whatever it costs and accept whatever treatment was offered.
- Choose to not have cable.
That changed when DirecTV (NASDAQ:DTV) and Dish Network (NASDAQ:DISH) became an option for some, but fear of weather-related service interruptions and a lack of willingness or ability to have a physical satellite dish installed made those companies secondary players.
It's a little better now. Between cable and phone companies, most people have at least two options for cable and Internet, yet that small amount of competition has not been enough to change ingrained industry behavior. This was clear earlier this month in the viral Comcast customer service call, where a company "retention specialist" belittled and berated a customer who was trying to cancel service.
In the wake of that call, which was posted on a website and spread quickly, Comcast COO Dave Watson admitted fault and acknowledged a need for change in a memo to employees, which was published by Consumerist.
"The agent on this call did a lot of what we trained him and paid him -- and thousands of other Retention agents -- to do," Watson wrote. "He tried to save a customer, and that's important, but the act of saving a customer must always be handled with the utmost respect."
That sounds nice, and it's a significant admission in an industry infamous for four-hour appointment windows and customer-service phone lines that repeatedly tell you to go online to look for answers when you are calling to say that your Internet is down. But it remains to be seen whether the admission leads to any real change.
What happened on the call?
Earlier this month, former Engadget editor Ryan Block attempted to cancel his service with Comcast and was transferred to the aforementioned retention specialist. About 10 minutes into the call, he began recording it.
The Comcast employee did everything in his power to get Block to either reconsider canceling or become so frustrated with the process that he hung up without having his service disconnected. During the call, the rep became aggressive, repeatedly questioning Block as to why he was canceling. "Why is it that you're not wanting to have the No. 1-rated Internet service, the No. 1-rated TV service?" the rep asked many times. "What about those savings, those services, are you not wanting?"
In addition to being guilty of awkward syntax, it could be said that the rep was being hostile to a customer. Given what Comcast expects of its retention personnel and how it rewards them, it's fair to say the rep was being overzealous -- but in most ways, he was doing his job.
A post on Reddit from someone claiming to be a former Comcast employee detailed how retention specialists get sizable bonuses if they keep enough customers from canceling service. That may not give the rep permission to be as aggressive as the one in the call, but it does create a culture that promotes going above and beyond reasonable efforts to find a solvable problem and avoid the cancellation.
Watson acknowledged in his memo that the company had training problems and that the pay structure for retention agents created problems.
"We will review our training programs, we will refresh our managers on coaching for quality, and we will take a look at our incentives to ensure we are rewarding employees for the right behaviors," Watson said.
That's at least an admission of fault and an offer -- if not a promise -- to try to change things. It may not be a solution, but it's certainly better than the initial statement the company issued, which acted like the employee was some crazy rogue.
Can Comcast change?
Public embarrassment can go a long way toward shaming a business into acting better. Block's recording probably has the company instructing its employees to modify their behavior.
Watson seemed genuinely ashamed of his company's culture, and his memo sounds sincere. That may be in part because Comcast is attempting a $45 billion merger with Time Warner Cable, which requires approval from federal regulators. The Federal Communications Commission has not exactly been a friend to the general public, but it at least has to pay lip service when companies that treat people horribly attempt to grow much bigger.
Comcast and the rest of the cable/Internet providers should change their ways, because the clock on their semi-monopoly is ticking. There are many options for people who choose to not have cable service -- and many more being planned. Internet is a little trickier, but with companies like Google working on the problem, it's only a matter of time before people have real choice.
Given options, almost nobody would choose the current cable and Internet providers. They must make massive changes to repair their customer relationships, or they risk losing their subscribers as soon as they have someplace else to go.
Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.
Daniel Kline has no position in any stocks mentioned. He is begrudgingly a Cox subscriber. The Motley Fool has no position in any of the stocks mentioned. 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.