Is Comcast the Second-Most-Hated Company in America?

Comcast’s franchise renegotiation with the city gives customers a chance to vent about its service

By Ari Cetron December 19, 2014

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This article originally appeared in the January 2015 issue of Seattle magazine.

It’s not just you. Pretty much everyone hates Comcast. The super-scientific method of confirming this—checking Yelp reviews—turns up a cascade of comments like these: “If I could, I would rate Comcast below negative,” and “Literally the worst company I’ve ever had to work with,” and “If there were any other option, I’d take it.”

You could call Comcast the second-most-hated company in America. The American Customer Satisfaction Index ranked it second from the bottom—only Time Warner Cable scored lower—across all industries.

You would think that this would give the city some leverage in the renewal negotiation of its 10-year franchise agreement with Comcast, Seattle’s dominant cable (TV and Internet) provider. Think again.

Here’s how it works: Cable companies throughout the country use public assets, such as telephone poles or publicly owned land, so they have a place to string the wires that carry their information. Companies typically pay cities for the privilege of using these public assets under terms laid out by a franchise agreement.

In Seattle, Comcast serves about 200,000 households (roughly 94 percent of residents who have cable; Kirkland-based Wave Broadband serves about 13,000 customers, in neighborhoods that don’t overlap with the big dog’s domain). Comcast’s arrangement includes grants to community organizations worth about $1.6 million per year. In addition, the company provides as many as 16 cable channels for city use, reduced rates for low-income residents and $12 million worth of free cable service to 450 city buildings, schools, community centers and nonprofits around town.

The agreement that governs all of this expires on January 20, 2016. As the two sides contemplate a new agreement, it’s surprising how little the city can change about the stuff that makes customers unhappy—stuff the city has asked its citizens to let them know about.

During a comment period between last February and October, the city’s Office of Cable Communications collected nearly 6,500 public comments. Many residents were generally unhappy with Comcast, says Megan Coppersmith, spokeswoman for the city’s Department of Information Technology, the agency that reviews the comments and has oversight of the cable industry within the city. People said they saw prices going up without a corresponding increase in services, and that they wanted better customer service.

Meanwhile, Steve Kipp, vice president of communications for Comcast’s Washington Region, says the company is working to improve its service. He points to the 1,000 or so customer service reps working at three call centers in the region, and the expanding roster of online help services.

Service, however, isn’t the only issue that drew comments. Many spoke of frustration over the lack of cable options in the city, Coppersmith says. There’s no easy solution to that complaint. As federal law requires, the existing franchise agreement with Comcast is nonexclusive. Any company that wants to lay new wire and offer a cable service can do so. But having such direct competition has been rare. There are high costs involved in installing those wires, and no certainty that a newcomer to the market would attract enough customers to make it profitable.

Also, kicking Comcast out would be difficult. “It’s a very high bar for discontinuing an arrangement with a cable service,” says Tony Perez, director of Seattle’s Office of Cable Communications. Federal law governs the circumstances under which a cable operator can be forced to leave. Essentially, the company has to stop providing service, or the city has to show that the company is not able to do so.

But all of this wrangling over cable television is a little old school; other forces are at work including changing television habits and new forms of competition.

The future belongs to the Internet. Even now, the cable wires that carry TV shows are also used for broadband Internet access and landline telephones. Broadband is where the game is changing. Most existing wires, whether Comcast’s or someone else’s, are copper. Their original use was for phone conversations, not for streaming episodes of Game of Thrones, and they’re reaching their data-carrying limits. At this point, streaming video on Netflix alone accounts for about one-third of Internet traffic in North America. As more people stream more video, the network that carries it will be more severely taxed.

That’s where fiber-optic lines come in. The physical limits of fiber-optic cables haven’t yet been approached. Fiber-optic networks can carry exponentially more information, up to 1 gigabit per second, at speeds that put copper wires to shame.

Expanding the fiber-optic network is a priority for Mayor Ed Murray’s administration. “The mayor has been quite vocal that we need to have more broadband in the city,” says Michael Mattmiller, chief technology officer for Seattle. “That gig capacity is going to become critical.”

As it stands now, streaming a movie or TV show can be frustrating when action comes to a halt because of downloading buffers. Installing gigabit service should allow residents a smoother experience at home, and allow businesses, particularly those with a large Internet footprint, to thrive. “What gigabit really means is that the network is not going to be a barrier to innovation,” Perez says.

No one, including the city, can require Comcast to install fiber-optic cable for its network. Market forces, however, can.
CenturyLink, the third-largest telecommunications company in the U.S., is installing fiber-optic lines across Seattle. CenturyLink doesn’t need a franchise agreement since those lines won’t carry television signals. But that doesn’t mean there won’t be TV shows streaming through the lines.

“We find that there is a lot of streaming digital videos,” says Sue Anderson, vice president of operations for CenturyLink–Washington. Those Netflix customers are part of a trend noted by cable-industry watchers: More people are turning to Internet services such as Netflix, Amazon Prime and Hulu for their TV shows. Late last year, HBO and CBS both announced they would also be getting into the game, offering Internet-based monthly subscriptions and bypassing cable companies.

CenturyLink started installing its fiber-optic lines last August in Ballard, Beacon Hill, West Seattle and the Central District, and it wants to expand to the rest of the city, Anderson says.

Meanwhile, Comcast has made some announcements that are music to some customers’ ears. In December, the company said it would double Internet speeds at no extra cost to customers. It also plans to increase its existing 510 miles of fiber-optic cable around the city, Kipp says. “We’re going to continue to add fiber to our network, and continue to push that deeper and deeper into the neighborhoods.”

Meanwhile, the city is kicking around the idea of its own fiber-optic network—installing cable and treating it like any other city utility. The city already has about 550 miles of fiber-optic cable, connecting facilities such as libraries, police and fire stations, and many schools and community centers.

“We’re having conversations, internally, about how to evolve this network,” Perez says.

The big obstacle is cost—between $440 million and $800 million to build out the city depending on how many homes and businesses sign up for the service. Perez estimates it would come in toward the lower end, assuming a 40 percent market penetration. Even at the low end, that much money would likely require a voter-approved tax levy. If it provided the choices that so many residents want, that just might be the kind of levy voters would support.

 

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