For the First Time, Reliability is More Important the Price (and Other Trends)

What You’ll Learn

Innovative System’s latest study into the habits of rural consumers found that local channels are increasingly important when it comes to video. But for the first time, reliability was a greater priority than price in regard to broadband service.

Recorded LIVE at NTCA’s RTIME.

Guest Speaker

Scott Meyer

Show Notes

If you would like a copy of the report discussed in this podcast episode, please email Scott Meyer at scottm@innovsys.com.

Transcripts have been lightly edited for clarity and readability.

Intro: A production of Pioneer Utility Resources. StoryConnect, helping communicators discover ideas to shape their stories and connect with their customers.

Andy Johns: What are the latest trends when it comes to video? That’s what we’ll be talking about on this episode of StoryConnect: The Podcast. My name is Andy Johns, your host with Pioneer, and I’m joined on this episode by Scott Meyer, who is the director of marketing with Innovative Systems. Scott, thanks for joining me again.

Scott Meyer: Oh, always a pleasure to be here with you, Andy. Thank you.

Andy Johns: Now, we are here at RTIME, which is the center of the rural broadband universe this week here in San Diego with NTCA. And I apologize that my, I think, there’s other stuff blooming out here in the West Coast because I may not have the quality dulcet voice tones that you’re used to hearing on this podcast, but we’re going to get through it. And Scott is always a good guest. And these are always, Scott, some of the most popular episodes that we have because I think there’s a real knowledge for people to understand some of the data that you guys have on what folks are doing with video.

Scott Meyer: Well, we put a lot of effort into this, Andy. We now do over 800 respondents to this study, and so it’s all rural zip codes. So anything that is from a metropolitan or urban area, they don’t count in this study. So we really think this is probably one of the most accurate studies given the size of the consumption behaviors of rural America with video and for broadband.

Andy Johns: When we say this study, we’re talking about the broadband video study that Innovative has put together. So let’s go ahead and jump in then Scott. What are some of the the big takeaways when it comes to video? Obviously, there’s a lot of folks talking about video. We’ve seen folks, some folks getting away from it, some folks still embracing it. But what does the data suggest?

Scott Meyer: Well, really, there’s a couple of really key points from our study this year, and it hasn’t changed over the years. The importance of local programing. And by local programing, I mean the alphabets, ABC, NBC, CBS, Fox, Public Television. And this year, and we use a 1 to 10 scale, one being least important, ten being the most important. This year we went to 8.6 level of importance. And even the younger demographics in rural America find it’s very important for them to be able to consume content from their local broadcast stations.

Andy Johns: So that’s on a 1 to 10 scale. They said it was 8.6 on the level of importance for those local channels. That’s interesting.

Scott Meyer: Yeah. And really why that’s so important is because the consumers in rural America have a challenge in accessing that over the air content with an antenna because way back when, when television went digital, it shrunk the coverage area. So you can put an antenna on top of a house and maybe get 1 or 2 channels. So what that means for the rural consumer, the importance means they are going to go someplace to get that content. They’re either going to pay for it from a local video provider, or they’re going to go over the top with a YouTubeTV or Hulu Live.

Andy Johns: So let’s talk before we – and I like that takeaway – before we go any further, let’s talk a little bit about the methodology or just kind of what you guys do to to gather this data. Because I do think, like you said, it is pretty unique to have this kind of data that’s exclusively to rural. So let’s talk a little bit about where it comes from and how you guys do this work.

Scott Meyer: Excellent. Great question. And one of the things that I challenged our research firm to do last year was we wanted a demographic that closely matched the Rural Census Bureau on the demographic percentage breakdowns of, you know, 1834, you know, 65+. So we are within one percentage point of what rural America has for demographics, according to the US Census Bureau, across all demographics. So that for us eliminates any skews of, let’s say that you had, you know, a whole bunch of people in that 18 to 34 category. Well, we stop at like 16%. So we match those percentages with the data. And that sometimes requires us getting more respondents, but it does create a fair measure of those 800 people that we surveyed for the study.

Andy Johns: That’s smart. I like that. So jumping back into the results and the data, what else on the video side? So we know that the alphabet channels and local networks. Those are important. What were some of the other takeaways on the video side that the survey or the study revealed?

Scott Meyer: Well, one of the things I thought was really interesting is we had an 8% jump in the appreciation of being able to record TV programs. And I know that may seem kind of out there, but I mean, 71% of rural America find it’s very important now to be able to record their programs. Time shifted viewing and –

Andy Johns: That’s an 8% jump from last year to this year?

Scott Meyer: Correct.

Andy Johns: Interesting.

Scott Meyer: Yeah, it really is. So we think that there’s a couple of factors in play now. Some people are, you know, some of the YouTubeTVs and Hulu Lives allow you to record. But our customers in rural America, the local video providers, who you guys serve as well, they’ve had that DVR capability for a long, long period of time. So we just think that that’s probably enhanced people’s perception and use of time shifted viewing.

Andy Johns: Interesting. I was trying to figure that out. Maybe the last couple of years they’ve been home all the time, so they didn’t have to record TV. But now that they’re going back out in the world, maybe now it’s more important. I don’t know. But.

Scott Meyer: And it just reminded me. There’s one other thing I thought was really interesting is we had a first time question this year of whether or not – because I don’t know if you’re familiar. Well, a lot of people starting are familiar with fast free ad supported television. And it’s an over-the-top product that’s free with commercials. So we asked people about that. And nearly three quarters said they would prefer having the ability to fast forward through commercials rather than watching free ad supported TV with no ability to fast forward through the commercials.

Andy Johns: Interesting. Say that one again just in case folks are driving or doing something else. So, I think that’s cool. Say that again.

Scott Meyer: Okay. So basically what’s, you know there’s – well, for example. Probably make it a better understanding. Netflix launched ad supported. It’s not going well, and this really meshes with how people feel, especially in rural America, is if they’re going to watch content, they really don’t want the commercials. But with live alphabet networks, as we talked about, it is very important to rural America. They have the ability to fast forward through those if they’re using time shifted viewing, which there’s an increase of that as well. But with free ad supported television, you have to watch the commercials. So we think that that really does play well for our customers, our traditional video customers, because they have those capabilities to be able to record, fast forward through most of the programmers allow recorded DVR programing to be able to fast forward through it. But the new wave of FAST, you can’t do it.

Andy Johns: I want us to come back to video in a minute, but there are some really interesting satisfaction things that you found out on the broadband side, or I would guess, the satisfaction applies both ways to video and to the broadband. But I did want to jump into those, and then we’ll come back to video later. But I thought some of the findings on the customer satisfaction, particularly on the price for broadband, that was interesting. That kind of catches a snapshot of where we are right now.

Scott Meyer: It is. One of the questions we’ve always asked in the seven years that we’ve done this study is for those who are the least satisfied with their video or their Internet, what is the biggest pain point for their dissatisfaction? And it’s always been for both video and broadband price. This is the first time ever where the broadband respondents were least satisfied did not have price as their biggest complaint. It was poor, inconsistent Internet speeds. So that was really surprising showing us, if you read between the lines, that our customers out there in rural America, they really are desiring a better quality Internet speed.

Andy Johns: Yeah. And I think that’s really an important finding because that speaks to where broadband and reliable connection has gone from a “nice to have” to a “must have” and a “have to have.” And I think it’s a good sign for the folks that you all work with, our members, everybody, that folks are willing to pay a little more to – or at least not be as price sensitive – if they know that the service is going to work and be a good connection for them.

Scott Meyer: Absolutely. And keep in mind that these are the customers that are the least satisfied. And if they’re dissatisfied with speed, then that is a very important piece of data. In fact, one third of all respondents in our study said that they would prefer a much faster speed and would be willing to pay for it.

Andy Johns: That should be music to a lot of folks’ ears there. But that’s interesting because that’s something that you kind of heard in some demographics over the years. But it sounds like it’s going more and more mainstream. What are some of the other takeaways, whether on satisfaction or anything else on the broadband side?

Scott Meyer: Well, one of the things, and to kind of tie together broadband and video, is 63% of rural Americans actually bundle Internet and TV service, and that’s across all demographics. So why is that important to the people that are primarily listening to this podcast is there’s some of the providers are going into – a lot of the providers – are going into other markets with a broadband only play. And that’s fine. There’s nothing wrong with that. But where do they run into a problem is if there’s a competitor in that market that offers both video and broadband, it’s a tough sell to get somebody from cable company A to drop their broadband, keep their TV with cable company A, and then go to rural telco B to just get broadband. It’s just too much work, and they’ve got two bills now.

Andy Johns: Well, and the cable company usually does their best to make sure that it’s just not economically feasible to do that, because usually what we’ve seen with folks is it may be $120 for your TV service, your cable service and Internet. But if you drop the Internet, it’s still $100. So there’s you know, they do that on purpose. They’re making it where it’s hard to drop, and we’ve had to work with a lot of people to help them do an education campaign or really help folks understand how to do the over the top. Like you said, if they’re not doing a TV play just to help folks move over, because when you’re used to just flipping channels like that for 20 or 30 years, you know, it’s a different mindset to have to learn a new platform.

Scott Meyer: Absolutely. So our advice to companies, if that’s the way they’re going to go, they need to lower their take rate expectations. They absolutely have to, because they’re not going to get that bundled up TV and broadband customer to just drop, and it just isn’t going to work.

Andy Johns: Well, Scott, as we’re wrapping up here. Before everybody comes in here to the expo where we are recording here at NTCA’s RTIME Conference, any other takeaways or anything else you wanted to be sure to add before we get going?

Scott Meyer: No, I think that’s probably the biggest thing, is that you really need to do your research when you’re expanding your product lines. And don’t be afraid to, you know, do focus groups. I know your company does focus groups. I think they need to reach out to you guys and do those focus groups and find out what your customers want, because that’s really important. And then we would like to make this study available to people, and I’m sure you will arrange for that through the podcast. We can give them an email address. We can offer the full study.

Andy Johns: Yeah, we can put that down in the show notes, and we can make sure that that’s accessible. So we’ll put that there. Great. Well, Scott, last thing, I guess. If you have folks who are thinking about video or trying to decide what to do, what advice would you have for them, whether they’re in it, or whether they’re thinking about it as we’re trying to navigate the world of how things are looking going forward. What advice do you have for folks if they’re thinking about video or just kind of looking down the road?

Scott Meyer: I really think like I mentioned earlier, they need to talk to their customers. Find out what’s important to them before making any decisions. And if you do that, you’re going to have the confidence to be able to do the right thing and keep your customers satisfied.

Andy Johns: He is Scott Meyer, the director of marketing with Innovative Systems. I’m your host, Andy Johns with Pioneer. And until we talk again, keep telling your story.

Outro: StoryConnect is produced by Pioneer Utility Resources, a communications cooperative that is built to share your story. StoryConnect is engineered by Lucas Smith of Lucky Sound Studio.