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Cities hold sway on cable

Mayors try to influence service, upgrades amid merger

New York Mayor Bill de Blasio has a beef about customer service from cable provider Comcast Corp. and its merger partner Time Warner Cable Inc. – and unlike most people, he's got a chance to do something about it.

De Blasio asked U.S. regulators last week to demand a commitment for better customer service – including additional staffing for call centers – before blessing the $45.2 billion deal. Los Angeles Mayor Eric Garcetti also called for service assurances before No. 1 Comcast, a bottom dweller in consumer rankings, is allowed to adsorb the second largest cable provider.

Accepting requirements to improve service may be a price the companies are willing to pay for winning an agreement from regulators, according to Jan Dawson, an analyst with Jackdaw Research in Provo, Utah.

“They'll do what it takes,” Dawson said. “It's a little unusual, but Comcast's customer service is worse than most companies seeking a merger approval.”

The issue was highlighted last week by a nationwide Internet service outage for Time Warner Cable customers. The timing adds weight to mayoral pleas from the nation's top two media markets to make customer service a factor for state and federal regulators who are reviewing the proposed merger.

Time Warner Cable has the highest rate of complaints among cable providers in New York City, and regulators should require measurable improvement in customer service as a condition of the deal, de Blasio wrote in his FCC filing.

New York state's Public Service Commission, which needs to approve Time Warner Cable's transfer of 2.5 million in-state subscribers, already has been advised by staff to require improvements in consumer surveys as a condition of the deal.

Sena Fitzmaurice, a spokeswoman for Philadelphia-based Comcast, said the company is “open to discussing reasonable conditions which don't unduly burden our business.”

The company said it had restored service within a few hours to most of the subscribers who lost Internet and on-demand video Wednesday morning.

Gov. Andrew Cuomo directed the New York State Department of Public Service to investigate the outage as part of its review of Comcast's proposed acquisition of Time Warner Cable.

A history of poor customer service makes cable “an easy punching bag,” said Craig Moffett, an analyst at MoffettNathanson in New York. “Ultimately, the thumbs-up or thumbs-down isn't likely to hinge on customer service, but instead on more substantive structural issues,” Moffett said.

The FCC has set an informal deadline of early January to complete its review.

There's “a real risk that this transaction will lead to worse customer service,” Garcetti said. He asked the agency to require a merged company to have enough workers to serve users.

Customer complaints have been a sore spot for Comcast, with Executive Vice President David Cohen telling Congress in April that “this is a place where we're having issues.”

Since then, a recording of a call-center employee refusing a request to disconnect service drew millions of Web views. Comcast said in a statement it was “very embarrassed” by the encounter.

In March, Comcast and Time Warner showed up near the bottom of rankings by nonprofit Consumer Reports, listed 15th and 16th out of 17 TV service providers. In May, the companies ranked 7th and 8th, out of eight pay-TV providers, in the American Customer Satisfaction Index.

Last year, Comcast and Time Warner Cable ranked last among seven TV service providers in the easternUnited States, according to a survey by JD Power and Associates.

In an Aug. 21 letter, 52 mayors including Philadelphia's Michael Nutter told the FCC the deal should be approved because it will propel infrastructure investment. Consumers won't lose choice because the companies don't compete in any market, said the mayors.

But in more than 2,700 comments to the New York Public Service Commission, “the vast majority” opposed the merger, saying “customer service will decrease” and prices will increase, according to agency staff comments.