Comcast-Time Warner Cable Deal’s Collapse Leaves Frustrated Customers Out in the Cold

Hilary Stout

In the vast realm of unhappy cable customers, Time Warner Cable subscribers stand out as an especially miserable bunch.

The company, which has near monopolies in some of the country's largest markets, including parts of New York City, scores dead last on consumer satisfaction surveys, not only for cable but for all industries.

Now, with Time Warner Cable back in play after Comcast abandoned its $45 billion takeover last week, many of the company's more than 15 million subscribers are resigned to frustration, stuck for now with the company they love to hate and wondering if any future deal could be any better.

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It is an apprehensive time for cable customers in general. Despite regulators' objections to the huge Comcast deal, analysts say they expect continued consolidation in an industry where single carriers already dominate most regions.

The headquarters for Charter Communications Inc., in St. Louis, Mo., is shown.
James A. Finley | AP Photo

No sooner had the door shut on the Comcast deal last Thursday than reports emerged that Charter Communications, the regional cable operator controlled by the billionaire John C. Malone, was exploring a new bid for Time Warner Cable, its second in less than two years.

Some predict consumers will lose no matter who buys whom.

"If you're selling consumers something they can't live without, and you're subject to neither oversight nor competition, consumers aren't going to be happy," said Susan P. Crawford, co-director of the Berkman Center for Internet and Society at Harvard.

The plight of Time Warner Cable customers showcases the frustration. It is why despite the overpowering opposition to the Comcast deal from consumer and corporate groups, lawmakers and regulators, there were also disappointed sighs from people like Candice Kilpatrick of Brooklyn after the proposed merger collapsed.

Read MoreHow the Comcast/Time Warner Cable deal fell apart

Ms. Kilpatrick said her neighborhood had no cable and broadband service provider other than Time Warner Cable and that its service was "so terrible" that she downgraded her package to just Internet, which she needed for her job and which she still found slow and expensive. (The quality of her Internet service was even an issue in a relationship, she said. "A guy I was dating never wanted to come over because he couldn't stream.")

Comcast is no model of customer service either, scoring just above Time Warner Cable on those customer service surveys, but Ms. Kilpatrick said she had hoped the combined company would somehow provide more "juice."

"I had some hope that the Comcast merger would have an increase in quality of service," she said, "but I guess I'm just going to keep living in the 1990s of Internet and cable service with TWC."

Some of the frustration with big, expensive cable television packages has helped to fuel the trend of cord-cutting and increasing competition from different services, with newcomers like Apple TV, Hulu and Amazon, and single-channel offerings like HBO Go. Still, users need strong Wi-Fi and Internet access, pressuring Time Warner Cable, Verizon and others to improve the delivery of streaming services.

Analysts say that the ill-fated Comcast deal could lay the groundwork for significant improvements in customer service and satisfaction at Time Warner Cable.

The company spent the last year preparing its network to be turned over to Comcast in the best shape possible. Today, said Richard Greenfield, a media and technology analyst at BTIG: "Broadband speeds are higher. Customer service has improved. I think they've gone out of their way to invest in their consumer experience to position for if the deal didn't happen they could simply move forward."

Read MoreComcast's Roberts: TWC deal off, 'no looking back'

In an interview, Robert D. Marcus, the chief executive of Time Warner Cable, listed improvements to customer service he said the company began in the last year. They include introducing TWC Maxx — which has significantly faster Internet speeds (up to six times faster in some cases), "enhanced DVR" with more storage and more on-demand video choices — to roughly 10 markets, including New York and Los Angeles, which he called a "tremendous improvement of customer service across the board."

What's next for Comcast?

Mr. Marcus said that the company was focused on increasing broadband speeds to industry-leading levels, and that Time Warner Cable's standard tier of service was faster than Comcast's standard tier. He also said the company was committed to making "meaningful" improvements to its video product, with more video on demand and digital offerings. And he said the company had enhanced its phone product recently, with free calls to more foreign countries, including Mexico, Canada, China and India.

"We are firing on all cylinders," Mr. Marcus said. "Customer service is getting way better as well."

Whether Charter will have more success than Comcast in acquiring Time Warner Cable is not at all clear. Time Warner Cable rejected a cash-and-stock offer from Charter of $132.50 a share in January 2014 but as back-and-forth continued between the companies, Comcast swooped in with its offer.

This time, everyone agrees Charter will have to do better. Since the first offer, as it prepared for the merger, Time Warner Cable's balance sheet improved, and its stock climbed. On Friday it closed at $155.26 a share, a jump of 4.37 percent.

But if the companies do combine, Amy Yong, an analyst at Macquarie Capital, said Charter held promise for Time Warner Cable subscribers.

"I don't think Time Warner Cable will remain stand-alone for too long," Ms. Yong said. "I think Charter is still very interested and very motivated to do that deal."

"And from a consumer standpoint, there's a lot of potential," she added, citing areas where she said Charter did better — interface, search and discover, speed.

Read MoreWhy Comcast walked away from deal: Brian Roberts

But Ms. Crawford warned of a cost-cutting culture. "John Malone was famous when he was running TCI for squeezing out costs wherever he can. And customer service is a cost center," she said. "I don't think anybody should expect any other cable industry suitor would make customer service any better."

Mr. Greenfield said Time Warner Cable was now positioned well to be a strong, independent company. "I don't think they are at all in a situation where they are desperate for a suitor," he said.

In fact, he added: "I think Time Warner Cable could be an acquirer going forward. They control some of the most important markets in the country and have a strong balance sheet."

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None of this is particularly encouraging to customers like Jane Santucci of Terre Haute, Ind. "I live in a town where we only have one option now, unless you want Dish," she said. "If you want Internet you are stuck with TWC and their horrible service. It is dangerous for our country to have so few choices."

Ms. Santucci said that for a few years her Time Warner Cable service would go out every time it rained and she would have to call a technician to fix it.

Service has been better recently, she said. But she said she still paid a lot, nearly $200 a month for cable television, Internet and DVR. "I'm definitely relieved that merger did not go through," she said. "It just would have made them stronger: 'Ha-ha! We can do what we want.' "

But, she added, "It still doesn't leave us with any more options."