Megamergers Can't Help Charter Spectrum As Cord Cutting Exodus Continues
from the bigger-isn't-better dept
You might recall that in 2016 Charter merged with Time Warner Cable and Bright House Networks, promising that the new, combined company would offer a revolution in customer service, broadband speeds, and TV. Instead, what the company’s customers got was a steady parade of rate hikes, and a company that has found itself under fire for repeatedly trying to kill or tap dance around merger obligations (like the one stating it can’t cap broadband usage for six years). New York State deemed the company’s service and behavior so atrocious, it seriously contemplated kicking the company out of the state.
Not too surprisingly, raising rates and offering terrible customer service continue to take a toll on the company. The company lost another 145,000 cable TV customers in the first quarter, as users (annoyed by price hikes) continue to flock to cheaper, more flexible TV options:
“The company posted net video subscriber losses totaling 145,000, compared to a net loss of 111,000 one year ago. The company lost 152,000 residential video subscribers this quarter, a 24% increase over the 121,000 residential subscribers it lost in the year-ago quarter.”
Charter also lost 99,000 digital voice customers, as users who’ve gone wireless only also try to trim back their bloated monthly cable bill. It’s odd in that these companies are facing intense new competition in the streaming space, and their first reaction is to double down on video price hikes. Part of that is an effort to recoup the massive debt load incurred by the mergers themselves, a problem AT&T is also struggling with. AT&T spent more than $150 billion on megamergers in recent years, only to face record subscriber defections thanks to endless rate hikes.
Granted cable giants like Charter Spectrum and Comcast have an ace in the hole: the lack of competition in broadband. As many US telcos retreat from upgrading their DSL lines, cable giants are enjoying a greater monopoly than ever. They’re taking advantage of this lack of competition by jacking up the price of broadband. In Comcast’s case that has included arbitrary, confusing, and punitive broadband usage caps, which not only act as a glorified price hike, but can help these cable giants simultaneously cash in on, and deter the use of, streaming video alternatives.
Charter may have lost video and phone subscribers last quarter, but it managed to add 428,000 residential and business broadband customers in the quarter. Given most of these users don’t see an competition for faster speeds, Charter can hike prices at its leisure. And while the previous FCC banned Charter from imposing usage caps for six years, by 2022 those restrictions will be lifted. Between that and the death of net neutrality rules (assuming they’re not restored by the ongoing lawsuit against the FCC), it’s not hard to see how America’s cable monopolies plan to impose all manner of creative nickel-and-dime restrictions on these captive customers.
Who’s going to stop them? The current FCC is arguably beholden to the sector, meaning there’s neither regulatory nor healthy competitive pressure capable of keeping these lumbering giants in line. The best hope is trying to shovel forth policies that actually bring more competition to underserved markets (including via community broadband or public/private partnerships), something Charter and Comcast’s lobbying and policy folks work tirelessly to avoid.