2016 Telecom Year in Review
Jay Carnes | February 23, 2017
A note from our Telecom Expert-in-Residence, Jay Carnes:
Whether you welcomed 2017 with open arms or a bit of reservation, let’s look back at 2016 and identify major highlights among telecom service providers. This telecom year in review will lend some perspective to the telecommunications service industry, how it is evolving, and how you can be a savvy customer in the year ahead.
Among the major telecom service categories (Fiber, TV, and Wireless phone) multiple stories shaped business operations and impacted customers during the year. Verizon faced numerous hurdles due to a massive employee strike in the middle of the year. While the strike focused on employment arrangements, Verizon customers were impacted nationwide as the strike caused significant delays in customer service response.
Comcast, a perennial worst-performer in customer service ratings, experienced legal consequences resulting from some of their business practices. Customers complained about recurring charges that were not part of their service or equipment orders. After receiving more than 1,000 customer complaints and conducting a two-year investigation, Comcast was fined $2.3 million by the FCC. In addition to rectifying the issue with customers, Comcast has put into place new protocols mandating customer communication whenever new charges occur on a bill.
As the telecom industry evolves and reshapes how customers consume media, companies are exploring ways to control hardware technology and the content distribution across those platforms. The biggest example in 2016 was AT&T’s purchase of Time Warner for $85 billion. This is not the first big telecom merger; it follows Comcast’s acquisition of NBC, and other companies are likely to explore similar partnerships in the future. It should be noted that there was some confusion with the merger, and AT&T had to clarify that it was not purchasing Time Warner Cable. The media and cable companies are separate, though similarly named. Customers may be further confused as Time Warner Cable was acquired by Charter earlier in 2016, and services were subsequently rebranded as Spectrum.
While AT&T completed its acquisition of DirecTV in 2015, it wasn’t until 2016 that customers began to see the direct intersection. Now, AT&T promotes unlimited data for customers who also have DirecTV service. Additionally, AT&T has created other promotions involving both wireless and TV service that drive customers to consider switching phone carriers or TV providers to streamline their service under one umbrella. BillFixers has consistently advocated for clients to evaluate their wireless data consumption and scrutinize unlimited data plans to determine if these structures met their needs or create excessive costs. Furthermore, as mergers continue the conglomerates will be the beneficiaries of increased control and customer base. However, it is yet to be seen how customers will feel the total impact. Questions are regularly raised about reduction in competition as the number of industry providers narrows.
Looking at the telecom industry over 2016, competition is becoming ever fiercer among wireless phone providers. Advertising resources are divided between highlighting new or improved services and comparing to the competition. While much of Verizon attention focused on the mid-year strike, Sprint directed attention toward drawing customers away from the other major providers by offering 50% off the same type service plan after switching. The initial short-term promotion was extended and continued throughout 2016. However, customer service representatives initially did not give clear answers as to how long the 50% rate reduction would continue for clients. This deal has now been clarified as guaranteed until 2018.
In 2016 AT&T Wireless focused significant attention on their relationship with DirecTV. In addition to the cross promotion of each brand with special deals to expand customer base, late in 2016 AT&T launched DirecTV Now. This service allows wireless customers who subscribe to one of the new channel lineups to stream the content on their device without usage counting against their wireless plan data. This service offering aligns with T-Mobile’s Binge On offering. Since it’s rollout in late 2015, Binge On has evolved through multiple iterations and increased the content providers that mobile users on qualified plans can access and stream without counting against their data limits. These service-content overlaps will continue to influence how wireless customers consume media and entertainment going forward.
Internet connectivity advancement continues to be defined by factors of availability, speed, and price. In many areas, consumers have limited choice among Internet Service Providers (ISPs), which limits price competition. Google Fiber became a more prominent player on the scene in 2016, rolling out service projects in cities across the US. However, Google’s effort stalled at the end of 2016, stemming from legal challenges from existing major ISPs in some of those cities (including Nashville), lack of consumer demand for such high bandwidth, and potential investor pressure on parent company Alphabet. Consumers hoping for Google to disrupt major ISP pricing and service models may be disappointed, but more companies are advancing the technology to offer ever faster speeds.
Another noteworthy update in internet service is the introduction of caps on customer data use. While data caps have been a prominent feature of wireless phone service plans, customers are now taking notice with home broadband service. As more people explore cutting the cord and shift to streaming content for home entertainment, data usage is skyrocketing, and ISPs are taking notice. Major providers are gradually implementing and adjusting these data caps. High volume consumers that use their connection for gaming and streaming entertainment are the ones most likely to experience any impact, but as customers explore service options, data speed is no longer the only factor to consider when choosing a monthly service plan.
Proliferation of streaming content, smart TVs, and plug-in devices that allow streaming has focused attention on the growing trend of cable-cutters. More customers are dropping cable services in favor of streaming options and cable providers are taking note. Companies continue to offer promotional pricing by bundling internet and cable services in order to retain these customers. But the momentum continues to gradually shift toward consumer behavior influencing how cable companies operate. A key example is Comcast announcing a partnership with Netflix. This move is just the beginning and will motivate customers to maintain their relationship with major service providers.
Furthermore, customers are challenging the current model of paying for channels they do not watch. As subscribers end relationships in favor of “cutting the cord,” companies are having to respond to remain relevant. Dish is early on the scene, introducing a new plan that allows customers a smaller, less expensive channel bundle, with the option to add other topic-related bundles as desired. Increasingly, companies will be challenged to evolve with customer demand to stem cord-cutter losses.
With a new year emerges new opportunity to become a savvier telecom customer. Major providers of cable TV, wireless phone service, and internet connectivity are here to stay. Continue to watch how they evolve and increasingly intersect. These mergers and partnerships can provide benefit to customers, but also require consumers to become more informed about how their needs and demands are met and who provides the most tailored service at the best price. At BillFixers we recognize this information can be a lot to digest. We provide guidance and services to advance customer savings. Visit this blog often to stay abreast of major industry changes and for advice on future money-saving topics. You can visit BillFixers online any time to upload a bill so we can negotiate savings on your behalf.
BillFixers helps save you money.
We provide guidance and services to advance customer savings. Visit this blog often for advice on future money-saving topics. You can visit BillFixers online any time to upload a bill so we can negotiate savings on your behalf.