Why Is ISP Customer Service So Awful?

This is a inescapable for anyone using the internet. It is a mantra of successful businesses that good service is a proven method to keep customers loyal and to win new customers. Yet ISPs, particularly the large ones, often provide dreadful customer service. The poor ratings and tales of customer woes from US and Canadian subscribers are legion on the pages of DSL Reports and elsewhere.

Some time back I dropped my first broadband ISP, Rogers, after a series of infuriating encounters with their customer service. Interestingly, not long afterward I was at an industry event where a Rogers executive was speaking. He found himself having to answer a question about their poor customer service. The audience was friendly, mostly telecom industry management, so he dealt with the question with honesty and a sense of humour. All he could do was roll his eyes, agree that there was room for improvement, and that it was outside his division's scope of control.

I have to imagine what it must be like when Rogers' top management meets in its boardroom in Toronto (I've been there - it's very nice) and the topic of customer service comes up. Despite having to defend the company in public I suspect they are quite blunt among themselves because they typically don't enjoy having unhappy customers. But consider the corporate perspective. The executive in charge of customer service strives to keep the cost of it low and thus contributes to maximizing corporate profitability. Should he or she get negative feedback from executives responsible for Rogers' various products, including broadband, the head of customer service might well ask them if they are losing customers and revenue, or if their churn rate is higher than the industry average. If the numbers show that Rogers is not doing so badly, the customer service head could counter that there is no reason to increase customer service expenditures. The CEO is likely to support this position.

Similar discussions on customer service quite likely occur within other large ISPs and providers of other telecom services like mobile. Since there is a large and vibrant ISP industry in Canada, at least thanks to DSL wholesale, the competitive threat to the majors is modest; most people are content to subscribe to bundles since the internet is primarily for casual usage and they get a price break on the bundle, and they may have become accustomed to the poor customer service they get.

Considering the effective oligopoly in the ISP business an argument can be made that the CRTC should take a heavier hand at regulating customer service here as they do for basic telephony and cable. This is where the majors can point to all those small broadband ISPs and can say there are many competitive alternatives, and if customers really feel their service is so bad they would switch providers, yet they choose to stay. This is not the first time a dominant telecom player has ceded a fraction of the market to a large number of small companies to avoid significant government intervention. AT&T chose this path back in the 1920s, among other tactics, to avoid the threat of nationalization by the US federal government. They had in part become large by acquiring large numbers of these small companies over a couple of decades, then stopping at about 80% of the market. They kept this fraction of the market until they were broken up in 1984.

Despite their need to tolerate the many small ISPs, it is no surprise that Bell Canada also is willing to constrain their ability to compete too effectively. Throttling (and capping) wholesale DSL may very well play into the same strategy.

Poor customer service from the major ISPs has deep roots.