Cable's Response To Surging Streaming Competition? More Price Hikes

from the unhealthy-markets dept

We’ve noted for years how when the cable and broadcast industry is faced with new challenges, its very first reaction is almost always to double down on dumb ideas. When consumers began complaining about the volume of ads during prime time, the industry’s first response was to try and edit down or speed up programs so they could shovel more ads into every viewing hour. When consumers began using new DVR ad-skipping tech, the industry’s first reaction was to sue companies offering such advancements.

In a healthy market, companies respond to the rise in new competition by competing on service quality and price. Not the cable industry. Despite a soaring variety of new, cheaper streaming options, every year the industry’s first impulse has been to raise cable TV prices, in turn driving more users than ever to “cut the cord” and embrace these streaming options instead. As a new year rolls in, its a phenomenon that’s once again repeating itself as Comcast, Dish, AT&T, and most other pay TV providers once again raise rates for 2019:

“Giants including Comcast, Dish, and DirecTV plan to raise rates again in the new year, a move that could boost revenue but risks alienating subscribers who have been ditching their traditional TV subscriptions in record numbers. Cable and satellite providers are hoping to squeeze more money from consumers who remain loyal to their packages with hundreds of channels, Philip Cusick, a JPMorgan Chase analyst, said in a note this week, even though “this strategy could accelerate video sub declines.”

While most cable operators will place the blame for these higher rates exclusively on the shoulders of broadcasters, that’s not really always true. Yes, much of the unsustainable rate hikes you’ll see in cable TV are due to programmers constantly wanting more money for the same content. That, however, ignores that most cable operators contribute to the rate-hike festivities by also socking consumers with a universe of higher rates for things like DVR and cable box rental, not to mention the universe of fees, many of which are completely made up with no tether to any real-world cost.

So why does a company like Comcast continue to raise rates on traditional cable TV, knowing this is just driving more users to cut the cord? For one, while streaming video is increasingly popular, most TV watchers (around 90 million Americans) still subscribe to traditional TV, making these rate hikes a quick, all-too-tempting source of up front cash they’ve grown used to. Many cable executives still believe that cord cutting is a temporary storm they’ll be able to weather without having to make too many concessions (like lowering rates or improving historically terrible customer support).

Companies like Comcast also have an ace in the hole when it comes to weathering this particular storm: their growing monopoly over broadband. While users may be able to quit Comcast cable TV, it’s statistically unlikely they’ll have the choice of another broadband provider, especially at speeds over 25 Mbps. As a result, Comcast leverages that monopoly by imposing all manner of unnecessary usage limits should you stream video from competitors, a lovely bit of leverage Comcast will only exploit more fully should net neutrality not be restored.

As a result, the normal response to more competition (actually trying harder) is replaced by a sort of stoic indifference by cable giants, who know their broadband monopolies (not to mention current control over FCC policy in the Trump era) will protect them from having to actually adapt anytime soon.

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Companies: comcast, directv, dish

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Comments on “Cable's Response To Surging Streaming Competition? More Price Hikes”

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Gary (profile) says:

Hike this

Unfortunately, Spectrum has hiked the price of Broadband Only to make up for it’s losses on the broadcast front. I’m not paying more for just broadband than I was for cable and broadband a few years ago.

Still saving money by not have a broadcast package – but paying much much more than I would if there was more than one way to get broadband in my area, eh?

And this isn’t simply a matter of “Too many regulations.” That’s bullshit. Fios just has zero interest in running new installs – big government isn’t preventing them.

Bamboo Harvester (profile) says:

Re: Speak of the devil...

…just got my Spectrum bill.

A couple of months back, they added a $9.95 Broadcast TV Charge. Obviously, that’s a sham, that cost is part of their business itself.

On today’s bill…

They’re setting the stage for another $10 “hike”.

My internet total hasn’t changed, but the line item for Internet is $10 more than the last bill, and it’s offset by a -$10.00 Promotional Discount.

How is this different from raising all prices in a store 20% and then claiming a Huge SALE! 20% OFF! ?

I’m not ON any Promos. That “discount” is sure to vanish when the “promo” expires. So they can field the hundreds of complaint calls with “That was a promotional price”.


Anonymous Anonymous Coward (profile) says:

Re: Re: If Musk...

What are the needs for low latency outside of gaming or VOIP? Would satellite connectivity be a big issue for VOIP? I think a bigger issue for current broadband providers is that if enough users jump to satellite connections it would impact them enough to, maybe, change their behavior. Real competition could have the impact we want, in the long run. Of course if current broadband providers change their behavior, it would hurt the satellite connections.

I doubt we get to the point where terrestrial broadband has the gamer’s and VOIP users and the satellite gets everyone else, but having that competition could be really good.

Anonymous Coward says:

Re: Re: Re:2 If Musk...

You get around that by using LEO(Low Earth Orbit between ~500km to ~2000km) orbital pathing. Instead of geosynchronous orbit satellites which are expensive, have a limited number of slots due to physical limits, and do suffer from higher latency because of distance from the earth stations (35,768km), what you have instead are multiple satellites passing over head with always a certain number in line of sight in the intended service range. This has the benefit of lowering latency to a manageable condition -yes even with many games-, lowers the upfront costs -cheaper to lift many smaller satellites to LEO than GSO-, you gain redundancy thanks to several satellites in the sky at once, and you can service remote areas that would be cost prohibitive to service otherwise.

Good rule of thumb: to estimate minimum latency based soley on the speed of light use 300,000 km/sec. At 36,000 km that’s roughly 12% of the distance traveled by light in a second. 1 second = 1000 milliseconds which is the time unit used in computers to measure “ping” or network latency. So the minimum latency from a geosynchronous satellite two way communication is around 240ms. That’s actually not terrible and perfectly adequate for MOST activities on the Internet, assuming only speed of light being the limiting factor and ignoring any packet loss due to weak signal, RFI, and other factors. Many protocols we depend on can handle 1-2 second latency fairly well, even VOIP could manage it (and regularly do).

In contrast, let’s take an arbitrary 1000km for SpaceX’s system. That’s 30x closer so it’s roughly 0.3% of the distance light travels in a second. That’s just over 6 milliseconds round trip. Assuming light speed is the limiting factor, any activities on the Internet are supportable, including competitive gaming. I’m ignoring a slew of other factors that would affect the real world performance, simply to point out that neither option is undesirable from a casual Internet user’s point of view based soley on light speed issues.

The reality is that even with an all fiber network to the home, the best most people are going to see is around 35ms round trip to most servers, anyway. Regularly it’s even higher at around 50ms to 120ms if everything is inside the US. It gets even worse if your ISP is one of the ones guilty of severe “buffer bloat” such as Comcast where packet loss can also become a problem.

James Burkhardt (profile) says:

Re: Re: Re:2 If Musk...

I see no direct links to bandwidth, but in a city of 1,000,000+, even a thousand satellites are going to have issues. And the network wont be fully operable for more than 6 years (They have asked the 6-year deployment rule to be waived).

None of this even addresses the mass blackouts that will happen during sunspot activity that is significantly reduced in fixed line broadband.

Anonymous Coward says:

Re: Re: Re:2 If Musk...

The satellites can use a beam area to give the a small, city to state size, moving footprint on the ground, increasing the reuse of frequencies by satellite. This reduces the number visible to ground antenna, but all of those visible to an antenna will be using different parts of the available band.

The next step up would be steerable narrow beam antennas on the ground, with two or three beams to accommodate handover between satellites. But that would require a sizable antenna, and complex SHF electronics, (assuming electronic steering), and that will be expensive.

For anybody outside of areas served by cable or fiber, the satellite system will give them broad band, because the number of people using a satellite will remain reasonably low. In urban areas, the system slows down because of too many users, and now way to do what the mobile phone companies do, and that is divide a cell up into smaller cells with less coverage area. Hint, the %g proposals are looking at cell sizes of 200M (or yards), with the ‘tower’ being hidden under a manhole cover..

Aaron Walkhouse (profile) says:

Re: Re: Re:3 If Musk...

The flat-plate phased array antennas they intend to use on
the ground and on each satellite will maintain multiple
connections at all times, all at 5G rates. ‌ The whole idea
is to be competitive with cable and fiber, using much newer
and more powerful technology than you assume all satellites
are hobbled by.

Read the Wikipedia page. ‌ Follow the links to the Ku and Ka
bands and the hardware too.

Anonymous Coward says:

Re: Re: Re:4 If Musk...

How many down links to connect to the Internet backbone will each satellite have? That is the limiting factor on data throughput, regardless of how any end user links are handled. Also, all those satellites will cover the whole globe, and >50% will be serving the oceans at any one time. Also, they intend limiting the angle, so only satellites at high angle serve any area. How many will be visible over any major city at any one time? Note that that is about the same number as will be visible from a small town or an isolated homestead.

Also, a tight beam from a satellite will cover at least a small city, if not a larger area, so does not help to multiple up links in urban areas, but is more in scale with serving Washington and Baltimore on separate beams.

Aaron Walkhouse (profile) says:

Re: Re: Re:5 If Musk...

Are you still assuming each customer will connect to one
satellite at a time, or that each city will be served by only a
handful of satellites at a time? ‌ SpaceX is already on the
record stating to the FCC that they will perform well enough
to compete with fiber and outpace cable. ‌ They’re not in
the habit of lying like the terrestrial ISPs. ‌ Best acquaint
yourself with the available information, or are you
confessing to being an ISP publicist? ‌ ‌ ; ]

Also, don’t forget that those satellites not otherwise occupied
will still be relaying the backhaul at unprecedented speeds
and at the full speed of light, unlike fiber which tops out
at about 0.66c, no matter how much data is moving.

Anonymous Coward says:

Re: Re: Re:6 If Musk...

A retired RF engineer, and also I know the difference between the designed channel bandwidth, and how many channels with that bandwidth can be supported from a single node.

The question as always is not what data rate can you give a single user, but rather how many users can you service at the advertised data rates. Also, it is not how many satellites can a user see, and possible divide traffic to, but rather how many users can each satellite support. With low orbit satellite systems, the ground station need to be tracking at least two, and preferably three or four satellites, so that it can handle the hand off between satellites as they come into radio view, and leave it again.

Also note, when I last looked up the proposed system, the idea was that every satellite relayed directly to a ground station for the back haul. That makes sense for several reason, not least of which is is that in low earth orbit communication direct to other satellites cannot be done with the ground facing aerial arrays, and requires its own steerable arrays because the satellites will be in different orbits and at different inclinations to get full ground coverage. (Only the two other satellites, one ahead and one behind, in the same orbit make for easy communications targets.)

The speed of light has nothing to do with data capacity, and only impacts latency. A single satellite to ground link will have capacity that a single fiber. and while each satellite will need to see several ground station for continuity of service, three of four fibers worth of data capacity is not all that much.

The name of the game is frequency re-use, which is how mobile phones work. Note also that in cities cell sizes have shrunk to below 1Km (1/2 mile), and for 5G they are looking at around 200M or yards. Also, that is looking like a technology that will only be provided in urban areas, with older technologies with better distance properties serving rural areas and roads.

Satellite will be useful to provide broadband to areas where it is not economic to supply cable, but it will not even replace existing mobile in cities, where there are already more cells in a single city than the total number of satellites proposed.

Anonymous Coward says:

Re: Re: Re: If Musk...

Latency is a problem for satellite communication no matter what the orbit is there is noticeable delay, there is no getting around it. They can make all the marketing claims they like but it changes nothing.

btw, Iridium has lots of satellites in LEO – what’s their service like?

Anonymous Coward says:

Re: Re: If Musk...

This version of satellite internet will mitigate many of the problems with traditional satellite internet by using a constellation of low orbit satellites instead of a smaller number of geosync satellite. In marketing this will reduce latency from ~500 ms round trip to ~35 ms.

Mason Wheeler (profile) says:

In a healthy market, companies respond to the rise in new competition by competing on service quality and price. Not the cable industry. Despite a soaring variety of new, cheaper streaming options, every year the industry’s first impulse has been to raise cable TV prices, in turn driving more users than ever to "cut the cord" and embrace these streaming options instead.

Suicide by cannibalism.

Sharur says:

Re: Judges (also, a pet peeve of mine)

Not to nitpick but do you have a source for Judges ruling about a single provider being competitive?

I know the FCC has declared that to be so, but not a court; for example, here:

In the linked article, the court didn’t say that the FCC was correct, only that the FCC had the legal right to make that determination (which it did and has, and that is the correct decision).

This is probably just my pet peeve; but it it really annoys when people complain that one portion of a system doesn’t break the rules to fix the mistake of a different portion of the system. The judiciary isn’t a panacea (just look at the swarms of horrific US Supreme Court rulings over the centuries for a brief glimpse); its role is to main the rules as they are written, and clarify when they are unclear.

We should put the blame where it belongs: On the FCC(all of them; Pai may be saying stupidity, but I don’t hear O’Reilly, Rosenworcel, Starks, or Carr saying anything in opposition), for selling the people out, on the Presidents (Multiple; Pai, for example, was appointed by both Obama and Trump)for appointing the idiots, the Senate for approving them, and the Legislature as a whole for writing the law the way it did in the first place.


Thad (profile) says:

And of course they’re raising prices on Internet service, too.

Cox just hiked my rates by $5. And last year they introduced bandwidth caps.

I got soaked an extra $50 a couple of months back for exceeding my bandwidth allotment. (My brother was visiting and I downloaded a bunch of games I wanted to play with him.)

Ironically, knowing that I have a bandwidth cap and could get spanked for exceeding it has probably increased my overall bandwidth use — ever since getting hit with those fees, I’ve waited until the end of the month, looked at how much bandwidth I’ve got left, and downloaded a bunch of games just in case I want to play them later. (Like a lot of guys my age, I’ve bought a lot of games I’ve never gotten around to downloading or playing. And there’s always another sale or bundle right around the corner…)

Cox’s bandwidth caps have turned me into a hoarder. Now instead of using extra bandwidth when I need it to download things when I want them, I find myself using a bunch more bandwidth than I need, to download things I may never even get around to using.

I wonder how many other people are doing the same? I’d love it if, in the aggregate, Cox’s bandwidth caps are actually encouraging people to use more bandwidth.

Anonymous Coward says:

Re: Re:

My local provider just raised rates again and continues with added restrictions to drive more profit. This month I disconnected from them as there is another competing service that has come into the area that isn’t so loaded down with restrictions.

Felt good to say ‘terminate this account’.

Anonymous Coward says:

I can remember a time that if you wanted something you first went to Sears and Roebuck.

Then came a time when both Mr. Sears and Mr. Roebuck passed on.

The kids tried to operate the business by adding insurance, banking, Sears Tower, and others to a business whose customer base is now Walmart’s.

The up-scale who the kids were focused on turned their noes up at a lower class store and the lower class whom store previously focused on were either priced out or did not find the products they sought.

The kids got out. Soled the stores to a conglomerate whose interest was short term profits from an up-scale market.

That worked for a while but corporations want immediate results. So Sears as it is now know borrowed money. Then the corporate raiders entered the picture and borrowed more money. Borrowed money paid nice dividends and allowed for lots of financial manipulation while the core business of supplying a great product to the lower class completely disappeared. The up-scale never took off. They just did not fit in with the Macy’s or Brooks Brothers crowd.

Sears reportedly seeks to liquidate after rejecting investor’s last-ditch takeover bid

It might be a good time to sell your cable stock.

Thad (profile) says:

Re: Re:

Except that the cable companies are also the ISPs and, in most cases, provide that service as local monopolies.

Cable TV is in trouble, but the difference between a cable company and Sears is that if you don’t like your ISP, you can’t just buy Internet service from Walmart instead. Even when people quit subscribing to cable packages from Comcast or Charter or AT&T or Cox or whoever their local provider happens to be, they’re still on the hook for Internet service. "Just go get your Internet from somebody else" isn’t an option for most people; "just don’t use the Internet" even less so.

Grey says:

Today, I’m sitting at home, wife is bringing me delicious Colorado beef from a restaurant across town we found by using the money from the $200 or so in savings from completely canceling a decades old, nearly $300 monthly Comcast account because they refused to stop charging us for ESPN. (We gave them more TVchances to save the account than they deserved!)

Don’t play games with bundles, I have no interest in a land line whatever discount you attach to it. I have no interest in broadcast TV. Don’t tout subscriber numbers based on forced subscriptions. I’ll go without, before I support such a system again.

Centurylink in Portland isn’t the end all be all, (and I know how lucky I am to have ANY “competition” at all) but I’m paying about $85 a month for symmetrical gig (950 down, 900 up, still not bad!) and whatever one or two streaming services we actually feel like paying for.

How much can one actually watch before you stop doing anything yourself?

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