The Cable Industry's Response To A Banner Year For Cord Cutting? Massive Across The Board Price Increases For 2016
from the pouring-gasoline-on-a-house-fire dept
2015 was the year cord cutting stopped being written off as fringe behavior and truly went mainstream. 23% of consumers engaged in “cord trimming” in 2014 (reducing their overall package where they could), while 16% said they had unsubscribed from pay-TV services in the past year. Billions in stock value evaporated in a flash as Wall Street realized cord cutting wasn’t a fad. in 2015, 4.9 million consumers called themselves former cable customers, a tally that’s expected to jump 12.5% in 2016. Consumers are finally tired of paying an arm and a leg for bloated channel bundles, when they only watch, on average, about 17 of them.
Facing an unprecedented shake up in their industries and a dire need for evolution, cable and broadband companies are ringing in the new year the only way they know how: rampant tone deafness and major across the board price hikes starting in January. AT&T, Verizon, Dish, DirecTV, Comcast and Time Warner Cable are pummeling customers with $2 to $10 rate hikes for cable TV service in the new year. Not only are base channel bundles seeing a hike, but all providers are jacking up regional sports fees and so-called “Broadcast TV” fees:
“Comcast, the nation’s largest cable provider, announced earlier this month that subscribers nationwide will see prices go up an average of 3.9 percent, and increases already have taken effect in some markets. The company will also hike its “broadcast TV fee” by 66 percent from $3 a month to $5. This relatively new fee covers the cost of retransmission fees that over-the-air broadcast TV networks like CBS, NBC, ABC and FOX charge cable companies for redistributing their networks on pay-TV systems.”
Those retransmission fees are simply the cost of doing business (read: the cost of programming). But cable operators have started breaking a portion of these costs out below the line in order to misleadingly keep their advertised rates low. In other words, fees like this are why your already absurdly expensive cable rate is usually significantly higher once you actually get your bill.
As all cable operators are quick to do, they cry to the media, stating they too are simply victims of the soaring cost of TV programming nobody seems able to do anything about:
“Cable and satellite companies say the higher prices cover some but not all of the higher programming costs. The amount that Time Warner Cable pays local broadcast channels has risen 85 percent in the past two years, while its costs for carrying sports networks have increased 116 percent since 2008, according to spokesman Bobby Amirshahi.”
While it’s true many cable operators (especially smaller ones) are finding TV profit margins tightening, there’s a few problems with cable operators’ faultless narrative. One, many companies like Comcast/NBC Universal are also broadcasters and — like Time Warner Cable — own the regional sports networks contributing to higher costs. More importantly, it’s worth noticing that many of these cable operators — the same ones breathlessly pretending to be consumers’ friends on the issue of soaring programming rates and retransmission disputes — are busy raising rates on most of their non-TV-related services as well.
For example, Time Warner Cable’s going to be ringing in 2016 by jacking up the cost of cable modem rentals from $8 to $10 a month (if you’re still renting a modem, do yourself a favor and buy your own). DirecTV’s jacking up the cost of the company’s “TV fee,” which the provider’s website (seriously) claims is a monthly equipment fee that “allows us to keep our monthly fees low.” Most providers are also jacking up the rental costs of set top boxes, and even the fees charged to pay your bills in person or over the phone. That’s before you even get to the relentless pursuit of usage caps and overage fees.
And to tie these new year rate hikes off with a bow, most providers insist on insulting their customers’ intelligence by claiming these increases are about improving the customer “experience,” ignoring most of these companies rank lower in customer service and satisfaction than any other U.S. industry or company. In other words, the cable and broadband industry plans to respond to a banner year for cord cutting by pouring gasoline on a house fire, highlighting why they’re absolutely begging for a disruptive ass kicking in the new year.