Nowhere to Go But Up

Why Charter Communications ranked last in our annual customer service survey—and what the cable provider is doing to improve its reputation

by Paula Lehman

It all started with a bad storm that hit the St. Louis area in July, 2006, knocking out Melanie Hubert's cable and disabling all the devices in her house, including Internet service. When the storm finally cleared, the cable still didn't work. Three weeks and many phone calls later, a repairman from Charter Communications (CHTR), her cable provider, showed up. Frustrated, Hubert canceled her subscription in December and decided to switch to SBC, now AT&T (T).

Her headaches with Charter, though, didn't end there. When Hubert returned her equipment to the cable company, she was told she had a $2 outstanding balance, for which she would be billed. But when the bill arrived, it was for a full month of service. A customer service representative told Hubert it was a mistake, that the bill would be canceled and to ignore it. She did. The next month a collection agency started hounding Hubert for the full month's bill. After filling formal complaints with the Better Business Bureau and the Missouri Attorney General's office, the issue was finally resolved the following February.

"It could have been one phone call. If that person would have done their job and taken care of the back balance that we owed, that would have made us happy," says Hubert. "I'm not the kind of person that would normally like to write to the Attorney General and file a complaint. When we got the letter from the collection agency is when I had enough."

Declining Subscriber Base

Hubert's experience isn't an isolated one: Charter, the nation's third-largest cable provider, came in dead last in BusinessWeek's customer service ranking of almost 200 brands this year. The ranking is compiled using data from customer satisfaction research firm J.D. Power & Associates. (J.D. Power, like BusinessWeek, is owned by The McGraw-Hill Companies [MHP].) The service index score in our ranking for the St. Louis-based cable provider is 549.64, almost half the index score of the top-rated brand, financial-services company USAA, which scores 1030.66. (For more on how we arrived at that score, "read about our methodology".)

"We are not where we need to be or where we want to be in terms of our customer service, but we've made substantial progress," says Joe Stackhouse, senior vice-president for customer operations at Charter. "Customer service is one of the things we want to drive improvement across the board."

The numbers suggest that customers may not agree with Stackhouse. In the last 18 months, the company's subscriber rolls have dropped by 3.5%, to 5.5 million. And Charter's basic cable subscriber base has dropped in six of the last eight quarters. That's not helping the profits of the company, which reported a net loss of $1.6 billion for the full year. In the past year, the stock price has plummeted 67%, to an anemic $1.04.

'They're Totally Unresposive'

Karolyn Friday, 56, says the only reason she stays with Charter is she doesn't want to deal with the phone calls and technician visits it will take to cancel her subscription. Besides, there are no other cable options in her area of Kennewick, Wash. Friday went through one ordeal with her friend Ida, 86, who switched from Charter to Verizon (VZ) but couldn't receive calls from Charter customers after the switch. Although the issue was on Verizon's side, trying to get a responsive representative from Charter to assist was next to impossible.

"The frustrating part was dealing with the lack of customer service," says Friday. "When you do identify a problem and take it to them, they're totally unresponsive.