• by Laurie Sullivan  @lauriesullivan, October 1, 2008

Consumers rank AT&T and Verizon among the top television service providers in a J.D. Power and Associates 2008 Residential Television Service Satisfaction Study released Wednesday.

The study measures customer satisfaction with cable, satellite and IPTV providers in North Central, East, West and South regions of the U.S. Performance and reliability, customer service, cost of service, billing, and offerings and promotions are key measurements to determine overall satisfaction. Scores are based on a 1,000-point scale.

Consumer satisfaction for picture clarity and programming exceeds expectations, the research found, and customer service has also been tops. For example, installing IPTV services can take four to six hours--yet these companies are holding subscribers' hands through the process, even explaining benefits long after the technology has been installed.

Says Frank Perazzini, director of telecommunications at J.D. Power and Associates: "These companies are doing it at a great price, too. If they maintain that through the service life of a customer, they will be in good shape."

Marketers should keep in mind that staying connected with subscribers reinforces the bond with the brand, Perazzini says; it's not just an installation and a bill. It is also communication about new services and products, as well as development of new communication channels, such as the Web.

AT&T U-verse scored the highest index--730--in the North Central region; 697, West; and 706, South. Verizon FiOS took the No. 1 spot in the East with a score of 677. The two telecom giants performed well in the category of "offerings and promotions" for bundled services, as well as "performance and reliability" as it pertains to reception clarity. This year marks the first that both AT&T U-verse and Verizon FiOS were included in the study.

While bundling services into one package may have hooked consumers into IPTV services, the question is--will they stick with one company once introductory offers end? If trends in the TV market follow those in the residential telephone market--where cable companies WOW and Cox have been successful in winning a significant share from AT&T and Verizon--consumers will likely stay with services after they have been installed, Perazzini says, if they are satisfied with services and prices.

For now, consumers are becoming hooked on AT&T and Verizon IPTV services that offer HDTV programming. In fact, the study finds the number of households that report viewing the high-def programs has nearly doubled since 2007, reaching 55% this year. The increase has helped drive HDTV set sales, and in turn, has been a catalyst in the adoption of video-on-demand services.

On average, households that receive HD programming view nearly twice as many hours of VOD or pay-per-view programming per month as non-HD households, Perazzini says.

The study also finds that 50% of cable customers bundle their video and Internet service, while 19% subscribe to "triple-play" services that include television, voice and Internet. This trend has helped to increase the penetration of DVRs. Today, 44% of customers say they use a DVR--up from 38% in 2007.

More subscribers are also opting to go green. Consumers who receive electronic bills ranks relatively high, compared with those who receive a paper bill. The overall satisfaction score averages 629 and 600, respectively.

Companies with "room for improvement" include Charter in the North Central region with 538, Charter and Comcast in the East tied with 566 points; Mediacom, 535 in the West; and Mediacom, 537 in the South.

"All these companies are dedicated at varying degrees to improve customer service," Perazzini says. "Comcast, for example, hired a new head of customer service in the past year who has been active in blogging and visiting customers in an attempt to reconnect and improve customer service."

The 2008 Residential Television Service Satisfaction Study, fielded in July, compiles responses from 18,938 U.S. households that evaluated their cable, satellite or IPTV provider.