When it comes to making customers feel good about its brand, Comcast (NASDAQ:CMCSA) repeatedly shoots itself in the foot.
The company has come under fire recently for a number of customer service issues including a phone call where a well-known technology writer recorded his exasperating attempt to cancel his service in mid-July. In the call Ryan Block, the former editor of Engadget, was berated by a "customer retention" specialist when he attempted to politely end his relationship with Comcast.
That led to an apology from a top Comcast executive, who admitted that its customer service people were trained to try to talk customers out of leaving. It also brought promises of change, which if it occurs, will not happen quickly, since about a month later another embarrassing customer service call was posted online. In this one Comcast customer Tim Davis was only able to get an improper charge reversed when he played a recording for the customer service rep handling his complaint of a previous Comcast employee telling him there would be no charge.
Those are just the two most high-profile examples of Comcast's clumsy way of dealing with its customers -- practices which appear to still be rooted in the days when cable companies had local monopolies which essentially allowed them to treat subscribers however they wanted. They are not the only examples, and now, Comcast, which should be treading lightly and trying to rebuild its reputation with the general public as it tries to win federal approval for its merger with Time Warner Cable (UNKNOWN:TWC.DL)is doing something else that could upset the public.
What is Comcast doing?
The cable company and Internet service provider is inserting ads for its properties on websites where they normally do not appear for customers using its "free" Xfinity public Wi-Fi hotspots, according to ARS Technica.
A Comcast spokesman did not see it that way. As Ars Technica reported:
One facet of it is designed to alert consumers that they are connected to Comcast's Xfinity service. Other ads remind Web surfers to download Xfinity apps, Comcast spokesman Charlie Douglas told Ars in telephone interviews. "We think it's a courtesy, and it helps address some concerns that people might not be absolutely sure they're on a hotspot from Comcast," Douglas said.
That's sort of like saying, "I broke into your house but left you a nice note telling you not to worry about it." Comcast is using legal tactics to force its ads on people, which is not likely to enhance its reputation with the general public.
How much does the public dislike cable companies and ISPs?
The American Customer Satisfaction Index found that subscription TV and Internet service providers rank at the bottom of all industries in its annual index. According to the latest ACSI results released in May, ISPs dropped 3.1% to an ACSI score of 63 on a 100-point scale, while subscription TV fell 4.4% to 65. These industries, which include many of the same companies, are the worst-performing among 43 tracked by the ACSI.
Why should Comcast care?
Comcast has more incentive than it ever has had in the past to attempt to win the affection of the general public. For the first time in its history, the company, and the cable industry in general, face a real threat of customers leaving. Cable subscriptions fell for the first time ever on an annual basis in 2013, according to research from SNL Kagan. Simply not having cable is a viable option due to the growth of alternate video services including Netflix and Hulu, which is bad news for Comcast.
Because of that, a potential customer who gets irked by Comcast sneaking ads where they don't belong through its free hotspot service might just see that as another negative for a company he or she is already inclined to not like. It's not a major factor, but it could be a tipping point for a brand which has basically been begging customers to stay away because for much of its history that was not an option.
Comcast also needs the public to support, or at least stay quiet about, its proposed merger with Time Warner Cable. The Federal Communications Commission, which has generally been very pro cable company, has solicited public comment on the merger and at least appears to be taking it into consideration.
Like a kid with a bad reputation in school, Comcast should be on its best behavior, because everyone is watching. Customers want a reason to leave or not sign up and the FCC might impose harsher conditions on the merger if public outrage is high enough. The semi-sleazy ad insertions aren't that big a deal on their own, but when added to the overall reputation Comcast has, it's a third strike the company cannot currently afford.
Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix. 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.