TV Service Provider Trends: Cable vs. Satellite vs. Fiber

By Andy Golub and Paul Carton
April 13, 2010

The battle between Cable, Satellite and Fiber-Optic providers rages on with more new offers, new technologies and exclusive HD content being offered in a never-ending drive to sign up home TV customers.

But the emerging alternative TV market is also having a huge impact on the industry – led by the growing popularity of Internet-enabled TV, Blu-Ray players, streamed content, and other options to traditional television.

During the weeks of February 1-9 and March 3-11, ChangeWave surveyed 5,388 U.S. and Canadian consumers on traditional and alternative TV trends, including the battle for market share, customer satisfaction, and brand loyalty among the major TV service providers.

Customer Satisfaction: Fiber-Optic TV Leads

By a wide margin, Fiber-Optic TV subscribers remain the most satisfied customers – with 44% reporting they are Very Satisfied with their television service provider. This compares to 27% for Satellite subscribers and just 14% for Cable subscribers.

At the individual company level, Verizon FiOS (49% Very Satisfied) continues to maintain its strong lead over the rest of the industry in customer satisfaction, with Bright House (37%) in second place and AT&T U-verse (34%) in third.

Fourth place DIRECTV (32%) still holds a substantial lead over its other major Satellite competitor, DISH Network (22%). Notably, no other provider had a Very Satisfied score above 13% and a string of Cable companies bring up the rear.

Customer Loyalty

We also asked respondents if they plan on switching providers in the next six months, and a total of 11% said they plan on making a change – 1-pt higher than our October 2009 survey.

Among those planning to switch, Price (58%) remains the number one reason. Moreover the percentage of respondents citing price has surged more than 50% in the past 18 months – in large part due to the recession – and there are still no signs of a reversal to this trend.

Bundling of Services (10%) and New Service Features (9%) remain second and third respectively, but each is of less relative significance than 18 months ago.

Importantly, when we break out the results by type of provider a clear trend emerges. Fiber-Optic customers exhibit the lowest churn rate (only 6% say they’ll switch), considerably better than their Satellite (10%) and Cable counterparts (12%).

The Battle Among Providers. In terms of the service providers, we again find Verizon with the lowest churn rate in the industry (only 4% of Verizon FiOS customers plan on switching). Cable companies Cox (8%) and Bright House (9%) are next, followed by the AT&T U-verse service (10%) and Satellite companies DISH Network (10%) and DIRECTV (11%).

Bringing up the rear are the rest of the Cable providers – including Comcast (12%), Cablevision (13%), Time Warner (14%) and Charter (18%).

Future Market Share

Which service providers are set to gain the most market share going forward?

Our survey shows DIRECTV (23%: up 3-pts) leading among the major providers in terms of future market share gains.

In a virtual tie for second are the two Fiber-Optic providers – Verizon FiOS (18%; down 4-pts) and AT&T U-verse (17%; down 5-pts) – although each has dipped somewhat since our October survey. Dish Network is further back at 11%, with the Cable companies again bringing up the rear.

Note that the percentage saying they don't know which provider they'll switch to is at its highest level in nearly 2 years.

A Closer Look at Fiber Optic Providers: Current vs. Future Share. The shift among consumers towards Fiber-Optic services becomes most apparent when you compare current vs. future market share trends.

These survey results clearly point to continued strong growth for both Verizon FiOS and AT&T U-verse. But the huge challenge that remains is whether these two companies can keep up with such fast growing demand and build out their networks at a fast enough pace.