Comcast’s customer service jeopardizing $45B deal

Robert Channick
Chicago Tribune

Chicago — Last week’s notorious billing incident, the latest in a string of customer service horror stories for Comcast, could cost the cable giant a lot more than one unhappy subscriber.

The company’s proposed $45 billion merger with Time Warner Cable, which is facing increased scrutiny from federal regulators, may hang in the balance.

“The customer service nightmares of the past 12 months certainly aren’t going to help,” said Craig Moffett, a senior analyst at MoffettNathanson. “It’s unclear how much politics matter in these things, but they have to matter at least a little bit.”

Mary Bauer, who lives in a Chicago suburb and received the insulting invoice after repeatedly complaining about her service, has been offered two years of free cable by the company. And the rogue customer service employee who bestowed upon Bauer an unflattering appellation has been identified and fired, Comcast said.

While Comcast’s situation with Bauer is ostensibly resolved, its merger with Time Warner Cable is stalled, and odds of its approval are decreasing, according to Moffett and other analysts.

Comcast agreed to acquire Time Warner Cable a year ago in a stock transaction that would make the nation’s largest video and high-speed Internet provider even larger.

The deal, which must be approved by the Justice Department and the Federal Communications Commission, has stalled in recent months because of regulatory changes and, perhaps, mounting concerns over the size of the resulting cable and broadband behemoth.

The combined company would control 30 percent of the cable market and about a third of all broadband connections. Comcast has agreed to divest of 3 million cable subscribers as part of the deal to keep its market share at the 30 percent threshold, formerly a statutory limit imposed by the FCC. While no longer mandated, the divestiture is seen as a goodwill gesture by Comcast to help push the merger through, Moffett said.

While there is no limit for high-speed Internet market share, it could prove even more problematic for Comcast in the current regulatory and political environment. The FCC voted last month to redefine broadband Internet standards, raising the minimum speeds and boosting the combined company’s share of the high-speed market to about 55 percent, Moffett said.

“That increases Comcast’s apparent market share, making it easier for the Justice Department to block the transaction,” Moffett said. “But it is also emblematic of a relatively hostile environment in Washington for cable operators right now.”

Public hostility toward Comcast and the proposed merger is becoming more palpable on social media as more customer service horror stories come to light.

Comcast has taken steps to improve customer service.

Last month, the company elevated Wendy Liu to the newly created position of vice president of customer experience for the Chicago market, with other regions expected to follow. Liu is tasked with making sure customers have a “great experience,” an ambitious goal that may have become a higher priority in light of growing backlash and the pending merger.

“We’re looking at every single process and every single interaction to determine ways to make our service even better,” spokesman Jack Segal said Wednesday.

By his estimations, Moffett said the FCC’s decision to redefine high-speed Internet reduced the odds of the merger being approved from 80 percent to 70 percent. He declined to handicap the harm from the Bauer incident and other customer service issues, but he didn’t discount it either.