Cable and satellite operators got a trip to the woodshed Thursday over customer service issues and billing practices at a hearing in the Senate Permanent Subcommittee on Investigations.
In concert with the hearing, the subcommittee issued a joint report concluding that Charter and Time Warner Cable had failed to reimburse customers for overcharges related primarily to extra set-top box fees to the tune of millions of dollars but also that, in response to the investigation of over six years’ worth of MVPD data provided to the subcommittee, they have made efforts to address the problem.
Sen. Claire McCaskill (D-Mo.) also issued a minority report focusing on billing, fees and customer service.
The key takeaways from that report:
•"On fees, customers were being charged a host of fees that were not prominently displayed in advertised pricing, some of which were for programming [regional sports network or retrans fees] that was previously included in a customer’s video package. Some fees charged by providers, like HD and DVR service fees, were not a true reflection of the cost to the company of the service, but rather were based on the revenue goals of the company and the price a customer was willing to stomach."
•”On customer service practices, customers calling for help on their accounts faced agents whose job it was not just to solve the customer’s problems, but to sell them additional services—and customers calling to cancel or downgrade service were required to speak to retention agents who were specifically trained and financially incentivized to prevent the customers from canceling and downgrading."
• “On refunds, Time Warner Cable and Charter made no effort to trace equipment overcharges to their origin or provide notice or refunds to customers. "
The hearing featured executives from both Charter and Time Warner Cable (a former exec in the case of the latter), as well as Comcast, Dish and DirecTV. All but Dish agreed their customer service had fallen short, while Dish signaled it had been doing well but was trying to get even better.
At the witness table were Tom Karinshak, senior VP for customer service at Comcast; John Keib, former executive VP and COO for residential services, Time Warner Cable; Kathleen Mayo, executive VP for customer operations at Charter; Rasesh Patel, senior VP for product management at AT&T Entertainment Group (DirecTV); and Kathleen Schneider, senior VP for operations at Dish.
Comcast and Charter also talked about concrete steps they had taken, including Charter's auditing system to square equipment charges with the actual equipment.
The hearing was led by chairman Rob Portman (R-Ohio) and ranking member McCaskill, and both had major problems with customer service and billing practices.
There were only a handful of questioners and the grilling could have actually been tougher, one MVPD exec following the proceedings agreed, but there were plenty of sparks, particularly from McCaskill.
“This morning, for the first time, representatives of our nation’s largest cable and satellite companies are testifying together before the U.S. Congress about their customer service and billing practices," said McCaskill.
"They are here because this Subcommittee has broad jurisdiction to investigate issues which affect the American people. And few other industries touch as many Americans as the companies that provide them with television,” McCaskill said. “We found that customers are being charged a host of fees that are not included in advertised pricing, some of which are for programming that used to be included in a customer’s video package. We also found that, just as many customers have long believed, some of these fees, like the HD and DVR service fees, aren’t a true reflection of the cost to the company of the service, but rather are based on the revenue goals of the company, and the price a customer is willing to stomach.”
Portman conceded it was inevitable that mistakes would happen and overcharges would be made, but said the key was how companies owned up to those mistakes and make things right. He said that "some companies have better ways of doing that than others."
Comcast's Karinshak was the first to testify, setting the general tone of contrition combined with pledges to do better and explanations of how that was already happening.
"Comcast and industry have not always made customer service the priority it should have been. I am sorry for that," he said. But he outlined the steps and investments Comcast had made and would make to improve the experience.
He said the company was 1) investing in added training for all employees; 2) rolled out a cloud-based platform so customers don’t have to keep repeating information; 3) reassessing policies and fees; and 4) in response to committee concerns, had reaffirmed in writing with its retention specialists that they are expected to "promptly facilitate a disconnect for a customer who isn't interested in answering questions."
Charter said, it too was investing in customer service and in fixing the overcharge issue. It will give affected customers a 12-month credit, and legacy TWC customers a month credit since TWC says it is now monitoring and correcting overcharges every month.
Portman said that rather than the 12-month credit, Charter and TWC should be tracking down just how long the overcharges had lasted and making customers whole, saying they had made "no efforts" to do so, instead making it a practice to "pocket the overcharges."
The legislators recognized MVPD efforts to improve their customer service, with Portman tying those efforts to the prodding of the committee investigation, but they still had plenty of issues, including upselling, difficulty in identifying and removing fees, and hidden price breaks offered as last-ditch efforts to retain customers.
McCaskill and Portman both took issue with the placement of regional sports network and retrans fees as separate line items, leaving the impression that they were among the government taxes and fees rather than program costs.
Sen. Rand Paul (R-Ky.) suggested the subcommittee had other things to focus on, like the Pentagon or the Federal Reserve (which has never been audited), and that given Congress' low approval rating—lower than cable service—maybe it should focus on fixing its own house rather than targeting an industry that brought jobs and dollars to the economies of their states, a $4.7 billion impact on his home state of Kentucky, for instance.
"We are pointed to low customer satisfaction surveys. Well, one thing's very clear: Television providers' customer satisfaction still exceeds that of Congress. I'm not sure really if there is enough wisdom in Congress that we can impart to people who actually have a higher approval rating than we do."
Rand even talked about the trouble deciphering Congress' bills. "Congress uses bills that are hundreds, if not thousands, of pages long, filled with wonky technical jargon, that is unapproachable to the average reader. Congress uses high-pressure situations to get people to accept bills they don't like. Few members actually read the bills before they agree to them. Unfortunately, when you are not happy with your government, you can't change your legislative provider."
McCaskill countered—and Portman concurred—though after Paul had exited the hearing—that the subcommittee had done muscular oversight on a range of issues, now including cable service and billing, and that if Congress were not going to investigate those who had higher approval ratings, the subcommittee could just hang a "gone fishing" sign over the door.