I followed through and canceled my DirecTV service today. My MythTV / Boxee setup has been running great the last couple of weeks and I kept DirecTV through yesterday just as a backup as I hosted a Super Bowl party.

This all started due to extremely poor customer service from DirecTV. My high-def DVR was dying in November, specifically the hard drive, as I could hear it grinding from twelve feet away over the sound of my speakers and the buffering and audio / video playback was terrible.

I had to reboot my DVR every 2-3 days, and performance would be better, then degrade. Calling DirecTV, they made me jump through a number of hoops to diagnose it which resulted in it taking almost a month and three phone calls before they agreed to replace it. Now, I don’t own this HD-DVR receiver – I lease it from DirecTV. When I first signed up for DirecTV 11 years ago you had to buy your hardware, now you just lease it from them for $5 / month.

They finally agreed to replace it, but they were going to charge me a $20 shipping & handling fee. My wife runs a small business out of the house, and I know it doesn’t cost $20 to ship one of those, especially in bulk. To say I was livid that I had to pay to get a receiver repaired that they own is an understatement. Each time I called in, they also tried to “upgrade” me on the last receiver that I actually owned – so I’d have to pay them another lease fee. I always told I’d only upgrade if it was a DVR, not just a standard receiver, and they always declined. (I had been able to take advantage of this a couple years ago, so I know they can upgrade old receivers to a DVR).

I emailed and called their customer service to complain – and their response was: “Sorry, that’s our policy”.

So now they’ve lost a customer. I may have had their lowest tier of service, but I also bought the March Madness and NFL Sunday Ticket packages each year, so from a revenue per customer standpoint I was above average.

When I called to cancel, they offered me $20 per month off for the next twelve months and a free DVR upgrade. Too little, too late. When they asked why I was cancelling, I said poor customer service for my HD-DVR experience this past November. So the customer service rep processed my cancellation, and then let me know I’d be receiving a box with pre-paid shipping to send my HD-DVR back to them. Where exactly was this pre-paid box when I needed to get it repaired? (The state of Washington is suing DirecTV over hidden fees).

What gets me is the focus DirecTV, cable companies and cell phone companies have on customer acquisition rather than keeping existing customers happy. Even though I had already contacted them and complained they weren’t willing to do anything about it until I actually cancelled. In my opinion, they need to keep a balance between these two groups of customers. This wasn’t the first customer service incident I’ve had with them over the years, but enough was enough. Thanks to innovations like Boxee I can make up some (but not all) of the content I’ll be missing from going over-the-air only. A loyal customer will pay dividends – do you think I’ll be recommending DirecTV to friends in the future?

The Mutliplayblog today published the results of a survey measuring customer satisfaction levels in satellite, cable and telco TV subscriptions:

Low Perceived “Value for Money” among all Digital Pay TV customers

Virtually across the board—and irrespective of platform—respondents reported low satisfaction in the metric of `Value for Money.’ There was very little measurable difference by platform among respondents, and in all cases, fewer than 22% of respondents felt the service “exceeded” or “greatly exceeded” expectations of value for money.

This is among the most important findings of study, as it underlines the vulnerability of pay television in its current state. Indeed, in a report published in 2008, we found that over 50% of US digital pay television customers would be willing to scale back or completely drop their television service if household budgetary circumstances dictated.

I highly recommend reading the rest of the blog post, as these companies are at a tipping point. We’ve seen it in the music industry, the video industry is feeling it, and now pay TV services will be feeling the pressure as technological innovations will put their business models at risk. Will they embrace their customers and these new technologies or will they become extinct? First they need to look in the mirror and see if they’re keeping their existing customers happy before trying to sign up more. And I’ve already had a few people ask me about my setup and express interest in ditching pay TV…