Does IPTV need more technological miracles?
Or is customer service the answer?
Comment The New York Times ran an enchanting piece about a cable engineer this week, deserting a 20 year career in cable to go and work for AT&T's new IPTV U-Verse service. They asked him why he's switched and he served the reporter a lot of platitudes about how AT&T's proposition is going to work out.
"We're on the ground floor of something that's going to revolutionise the industry. We have the whole world looking at us," he quoted in the paper.
And he's right, of course. History will either tell the story of a foolish telco in its last throes of existence, throwing good money after bad, chasing down a high share price and a triple, nay quadruple play, that turned out to have been already grabbed by the cable companies. Or it will tell the story of how big telco money finally grasped the nettle and turned itself around to become the great future, all purpose, utility.
The answer of which outcome materialises may well lie with that engineer, and that great unsung hero, customer service. Put yourself in the cable guy's position. Better still, put yourself in the customer's position.
You've seen the adverts (though not on your cable TV), you like the sound of that U-Verse TV. You call the number on the advert, what is it 123 U-Verse or some such? and that's when you'll know.
You are now in the clutches of the AT&T Customer Care team. And that's the big question. Do they? Care, we mean?
Well, before that ex-cable guy comes to your home AT&T invites you downtown to its San Antonio HQ and you see three TV sets, one with U-Verse on it, one with cable and another with satellite. They all look good compared to the 26 inch monstrosity you've been forced to watch TV on at home for the past 15 years.
You can't help noticing the other giggling families, the children that want to play with the cool messaging features and the overheard comments such as: "No way could I use that, Mom could see my messages."
You take a sandwich, sip the coffee. Is the sandwich stale or the coffee an inferior brand? Are you strong armed into signing up afterwards or is it a gentle sell?
The customer care has started and you're not even a customer yet. But let's say you agree to become one, a customer that is.
The first thing you experience is going to be that wait for an engineer to install the system. Of course right now, in San Antonio, that wait isn't going to be very long. There are probably engineers all over the place waiting to practice their new skills, but because they are new skills, they’ll be on the phone back to the head office, asking, just to be sure, how to do an adjustment just one more time, to make sure they get it right.
That should be no problem, because they'll be calling a help desk that has more attendants than customers. But what kind of customer to caller ratio is there going to be in the future?
Well, if competitor Comcast is anything to go by, and a story that is running around the US national papers this weekend, the story of a Comcast engineer falling asleep on the job. The full story was shown on a video posted on YouTube, the new public internet service for sharing videos with the world. The video is only one-minute long but shows the Comcast engineer asleep at a customer's home after he had called his office and been placed on hold for an hour, just like a powerless customer.
This is perhaps a measure of how arrogant Comcast is about its position as the foremost cable operation in the US, if not the world, with 21.5m customers. Comcast has not increased that customer base by a single new home in the past four years, and now it is an open secret just why that is.
DirecTV and the EchoStar Dish network have amassed 26m customers between them and are still adding them at a rate of around one million each a year. Given that they are increasingly up against the formidable triple play of the various cable operators, how is it that they can sign so many new customers?
Well, customer care might be part of the answer.
The first thing that incoming DirecTV boss Rupert Murdoch insisted on was finding the reasons behind the huge churn that represented an anchor on new sales. While only partly achieving his aim, Murdoch's combination of driving down churn and attracting high numbers of new customers, has driven the operation into profit.
Certainly he was working with the working classes of America here. Those homes that were outside the reach of cable or who thought they could not afford it. And the company has steadfastly cut off customers with poor payment histories and replaced them with customers that pay all their bills more regularly.
But knowing Murdoch, at least by reputation, we're pretty certain that one of the things he did was to find out what customers were saying about the service. Was it responsive to requests for changes, house moves, upgrades? How long did it take to repair a fault, or to answer a complaint? Was there an internet site dedicated to customers that had bad experiences with the company, and what, if anything could he do about it either directly, or through working with his customer care teams?
Americans will already know who which help desk they prefer to call, the cable operator or the phone company. But only one of them has had a major motion picture, or a dedicated episode of Seinfeld, made about them, and that's cable.
The telcos may be hated in the US for overcharging for voice, but at least they answer the help desk phone when it is called. The poor service record of how cable has set about keeping its customers happy, or not, stands out like a badge of honour among cable operators all over the world.
In the UK, NTL has a dedicated website called NTHell.com which updates with remarkable regularity the stories of horror at what happens when your cable connections fails. The same company wants to tidy up its image and hide itself under the brand name of the mobile company it has just bought, Virgin Mobile. So when it is called Virgin TV, which will win out - the impeccably powerful brand image of Richard Branson’s Virgin or the tardy, "customers come last" service record of NTL?
The answer is simple. If it doesn't change the service operation, enliven it, increase staffing and retrain everyone in the Virgin ethic, then any day we'll be seeing a new website (how about VirginTerritory.com) which its customers will dedicate to slagging off all things Virgin, and the brand will gradually become tarnished with the service image, not the other way around.
It is a chance for a fresh start for that organisation and billionaire and largest shareholder Branson is likely to have a few words to say about his rapidly tarnishing image if customer care doesn't get a face lift.
By comparison, UK IPTV operation HomeChoice, currently seeking a new owner, has a fantastic service operation. One customer said to us: "Their set top may not be the most reliable, but I don't mind because they always come and fix it straight away." Which is perhaps how you build a brand in the first place.
But there is something of an alarm bell going if the engineers that have built up the work ethic (or lack of it) in cable, turn out to be the self same people that failed to come and fix a US homeowner's new IPTV system.
We would hate to hear conversations like, "Hey aren't you the guy I waited in for, for about a week, then you turned up and left straight away and said you needed a part, and I never saw you for another two weeks and so I missed the Olympics?" "Yeah I work at AT&T now."
That's not going to inspire confidence. And are the cable teams going to let their best guys get poached, or instead let go those on lower salaries that are more of a liability?
This is the kind of scrutiny that AT&T is under day to day from here on in. We said a week or so ago that we would finally find out what kind of service AT&T will produce, because once real live customers begin to take it, they will show it to the competition and the press and the picture will instantly form.
But one thing that is certainly to change the "pass the buck culture" of US TV installation engineers is sure to be using the internet as a means of complaint.
AOL was also this week cited as being involved in a customer care nightmare. AOL has been losing oceans of the paying dial up customers that it has held onto so tightly since year dot, but has been unable to convert to broadband. Its customer service help desk has now taken to arguing with customers who ask to cancel their subscriptions, placing impossible barriers between them and cancellation. First there are the constant layers of menus, and then the belittling comments from the customer service rep.
AOL began life as a proprietary content hierarchy, which was a paid for dial up service. AOL customers, like Chinese internet users today, complained that the internet was slow compared to AOL. And it had a lot in common in those early days with China's internet today. Contact with the open international internet was discouraged by closing the bandwidth pipe narrower and narrower. It only took an AOL customer back then (or a Chinese internet user now) one experience with the open internet on another connection, to realise that they are (were) being duped and their praise for their supplier turns to suspicion.
But now that AOL is losing customers, that same self serving deception that's become part of its service culture, is the basis for disdain for customers, who in the AOL culture need to be led and manipulated, and not given what they want.
So the blog of Vincent Ferrari that was reported in this week's newspapers comes as little surprise to us. He begged for almost 30 minutes to cancel his AOL subscription and was bullied in return. He was pretty sure what was coming so he taped the entire thing and has left it out there on the internet for hundreds of thousands of people to see.
If you were running AOL, which would you prefer, one customer lost painlessly, with a chance of getting him back at some future point, or 500,000 people sniggering at your approach to customer care? No, that's a rhetorical question don't answer it, and this story should immediately affect the share price of AOL, largely understood to be for sale in Europe.
Perhaps suitors would like to take a long hard look at those customer service recordings and draw their own due diligence charts on how rapidly the number of paying customers are falling.
All the talk of success or failure in the US press regarding AT&T has ignored all of these lessons however, as has the entire concept behind the creation of the U-Verse service over the past year or so. Pundits have talked about creating "better TV", in order to take customers away from cable.
When satellite, that is usually considered "slightly worse TV" is what's cooking cable's goose right now. But it's doing it on the back of better systems and fiercer marketing, despite no promise, as yet, by the satellite companies of a full triple play. Pundits have called for high definition in IPTV before it will stand up to the challenge of cable.
Cable is known to be individually hunting down IPTV customers in San Antonio for specialist discounts and free high definition, but they will desert in droves due to service issues, and anyway, at some point in the next year HD will come to AT&T's service.
What was really needed instead of picture in picture, rapid channel change, or a mosaic interface, was maybe a far simpler promise. Same old TV, at roughly the same price, but "we'll send an engineer within two hours of when you call and we'll answer the phone on the third ring or that month's rental will be returned".
Instead, we are waiting for the technological miracle of the internet age and when it arrives in numbers, a number of people will find parts of it don't work and they will pick up the telephone. What happens at that point will only be spread all over the internet if it's bad news, and that's the most important thing for AT&T, and every other IPTV service on the planet, to avoid.
Copyright © 2006, Faultline
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