Hate your cable company? Economics explains why

[Commentary] Americans really dislike their pay-television and broadband Internet providers, according to a new report from the American Customer Satisfaction Index.

And the biggest companies, like Comcast, have the least-happy customers. Overall, pay television and Internet companies rank last in satisfaction out of forty industries. And it's no coincidence.

Market competition has its problems, but it is a relentless driver of customer satisfaction. Yet ISPs and cable companies operate in industries where market competition doesn't really work. That means profit-maximizing strategies don't require satisfied customers and it leaves policymakers with really tough problems. What happens to markets with weak competition? Three things:

• High prices
• Price discrimination
• Bad customer service

Prices are high in uncompetitive markets because they are constrained by your willingness to pay rather than by your ability to get a better deal from another provider. Because prices are driven by willingness to pay, sellers in uncompetitiveness markets try to charge different amounts to different people through complicated and non-transparent pricing schemes -- this is economically efficient but annoying and violates people's sense of fair play. Last but by no means least in an uncompetitive market there is little reason to invest in customer service. If you're calling to schedule an appointment with the cable guy, you by definition want cable so delivering it to you quickly and efficiently isn't a priority.