America hates its Internet and TV service providers. But if the nation had to pick its poison, Verizon (NYSE: VZ) isn't as bad as the rest.
That's one key takeaway from the latest update of the American Customer Satisfaction Index. The Index ranks businesses on a scale from zero to 100 based on thousands of direct interviews with American consumers. The questionnaire is designed to account for service quality and value, as well as customer loyalty and the frequency of complaints.
Some industries score well every time. The average carmaker's ACSI score is a lofty 84, shoulder to shoulder with soft-drink vendors. But out of the 48 industries in the study, TV services and Internet service providers rank a lousy 45th and 46th, respectively, with ACSI scores in the mid-60s. The highest individual score in both categories goes to Verizon, whose FiOS service leads the TV service field with a score of 73 and tops the ISP market with 71 points.
Let's be clear: A score in the low 70s is a "C-" at best. There's plenty of room for improvement here. These industries encompass two Dow Jones (DJINDICES:^DJI) components, but membership in that elite club doesn't score any points in consumer satisfaction. AT&T's (NYSE: T) U-Verse service scores a dismal 65 in the Internet category and a somewhat more respectable 71 in the TV service field. The Dow's two telecoms would be laughed out of nearly any other industry, given these dismal ACSI scores.
The ACSI doesn't break down company scores into their component parts, but let's take a couple of wild guesses. American Internet services are generally overpriced and underpowered compared to the options available in, say, Southeast Asia and Western Europe. Google (NASDAQ:GOOGL) is trying to change all that by introducing low-cost gigabit fiber service in a handful of test markets. That business is far too small to earn a ranking in the ACSI studies, but it's putting pressure on rivals nationwide to do better. And consumers take notice, which might explain some of these dismal scores.
The situation is similar in the TV service area. If you want cable or satellite TV, you'd better be ready to pay top dollar for a full-service package deal. Take a look across the Atlantic, and you'll find tons of services willing to sell you one TV station at a time -- at a lower cost. Most American consumers have a simple choice between one hardwired service (or two, if you're lucky) and the two major satellite providers. In Sweden, you'll find 11 nationwide digital TV services, as well as a number of regional providers.
The ACSI bills itself as a "key macroeconomic indicator of the health of the nation's economy." If so, America is failing in these important consumer-facing industries. We should do better. Let's hope that Google's pressure and these embarrassing ratings inspire some stronger competition.
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