The Cable Industry Thinks Mindlessly Raising Rates Is A Good Idea In The Face Of Fleeing Subscribers

from the that'll-work dept

Wed, Nov 12th 2014 6:10am — Karl Bode

While cord cutting has been a small but important phenomenon for some time now, there are indications that the trend may be poised to accelerate in 2015 when a bevy of new live Internet video streaming options from HBO, Showtime, Sony, Dish and Verizon emerge. Cord cutting continued at a slow drip last quarter, with traditional pay TV operators losing a net 179,000 customers. Satellite companies Dish and DirecTV, which used to be immune to these defections, are no longer so; DirecTV lost 28,000 customers last quarter -- the first time they lost customers during Q3 in the history of the company.

Even industry analysts, who historically have ridiculed cord cutting as a hallucinated phenomenon reserved only for poor nobodies, have changed their tune. With the cord cutting trend clearly established and cable customers getting annoyed by often bi-annual rate hikes, how are many cable companies responding? Why, the one-two punch of denial and raising rates, of course!

New York's Cablevision is a prime example. At one time a cutting edge company that offered some of the fastest speeds at the best prices in the industry, over the last few years the company has resorted to winking and nodding at regional competitor Verizon every time it's time to raise rates on TV and broadband services. Company chief James Dolan recently declared that offering promotional rates and trying to compete on price was a "dead end" for the company, and as a result, a recent SNL Kagan study showed how Cablevision customers paid some of the highest prices for cable anywhere.

The result? Cablevision lost 56,000 video, 23,000 broadband and 33,000 Internet voice subscribers last quarter, but saw a 3.7% jump in net revenue. So stock jocks are temporarily happy, but that's not really a sustainable way to function long term -- unless of course your long-term goal is to sell your company to Comcast. James Dolan told analysts last last week he sees the cord cutting trend but isn't really worried about it:

"I don't know that it's necessarily disruptive to us yet as a multichannel provider, but we're keeping our eye on it. Ultimately, cord-cutting and going to over-the-top is something that we do believe is going to happen, and we're preparing ourselves for it. But I think that's all I can say about it at the moment."

Why aren't cable execs like Dolan worried about Internet video disruption? Because they know that because they see even less competition on the broadband side than they do on the TV side, they can continue raising rates there (inevitably in the form of technically unnecessary usage caps) relentlessly for the foreseeable future. In other words, cable companies are going to ride the pay TV cash cow right into the ground (while providing some of the worst customer support in any industry), then when Internet video takes off, shift their focus to new and creative ways to jack up prices thanks to the lack of competition in the field.

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Filed Under: arpu, cable, cord cutting, increasing rates, rates
Companies: cablevision

27 Comments

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Ninja (profile), 12 Nov 2014 @ 5:47am

Cablevision lost 56,000 video, 23,000 broadband and 33,000 Internet voice subscribers last quarter, but saw a 3.7% jump in net revenue.

This is sane in the Wallstreetland where only short term profits matter. Why wait 10 years to get a billion dollars when you can cash in 10 million right now?

With rock hard heads like that I can only say one thing to the cable industry: good riddance.
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Anonymous Coward, 12 Nov 2014 @ 6:20am

Dolan's logic
And the Knicks are sucking horribly this year, so probably a good time to raise those MSG ticket and beer prices, too.
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That Anonymous Coward (profile), 12 Nov 2014 @ 6:21am

One can only hope they will end themselves in a quiet & orderly fashion.
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Geno0wl (profile), 12 Nov 2014 @ 6:43am

Let them merge
I say let Comcast and TWC merge….then force them to split into a cable company and an internet company. If you can force the internet providers to compete AGAINST the cable companies then you could see increased competition in the space.
It would force Cable to get smarter. Drop channels nobody cares about, increase its technology(like on demanded and DVR) and get more competitive with the nature of the internet.
And it would have the ISPs try to get “better” to get people to use their service over cable TV. Maybe offer high speed bundles, have special deals where if you get the 50MB package you get Netflix for free for a year or Amazon prime for half off.
Right now TWC/Comcast/AT&T….they are stagnant with their cable and internet because they CAN be. Force them not to be and it will be a better place.

I still think allowing the FCC backbone ISPs to not allow purposeful degrading traffic is a good thing. But splitting apart TWC/Comcast/ect into separate Cable and Internet companies would do much better for competition across the spectrum long term.
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Anonymous Coward, 12 Nov 2014 @ 6:44am

Re:
Yeah, I think almost everyone who doesn't invest in Wall Street sees just how overvalued the stock prices are there.

Worse yet is how bots and computer programs do most of the trading at Wall Street now at Nanosecond speed, far faster then any human could possibly react to things.
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Anonymous Coward, 12 Nov 2014 @ 6:50am

Re: Let them merge
The problem with that splitting idea is that the infrastructure is common to cable and broadband, so whoever ends up owning the infrastructure can dictate terms to the other service.
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the threat to peace is the USA, 12 Nov 2014 @ 7:01am

no worries its all working
this is all part of the plan to make tv and internet too expensive for regular people so you cant be educated and thus are stupid fuckwit retarded dum shits that will go to work and do as your fucking told.
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Anonymous Coward, 12 Nov 2014 @ 7:16am

Re: no worries its all working
T.V. educational??? The decent programs are rare and infrequent. Most programs are good for vegging out only.
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Anonymous Coward, 12 Nov 2014 @ 7:17am

I just got a call from Comcast this morning threatening to raise my internet bill if I didn't agree to subscribing to a new package...I told them to cancel my contract at the end of what they're calling 'the promotional period' and promptly hung up.

I'll probably get a few more calls with threats of higher rates and better packages. But I'll keep threatening to leave until they cave in and offer to keep my bill at the same rate for another year.
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Anonymous Anonymous Coward, 12 Nov 2014 @ 7:22am

Re:
But...But...But...isn't suicide illegal?
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Anonymous Coward, 12 Nov 2014 @ 7:26am

perhaps the cable companies themselves have become 'unplugged' and 'switched off' to why customers are leaving?
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Anonymous Coward, 12 Nov 2014 @ 7:30am

Re:
They even had the audacity to offer me HBOGO as an incentive to switch to one of their newer packages. But everyone who is a fan of HBO knows (referring to my brother here) that they'll soon be going the route of Netflix. Which leads me to believe that they're desperately trying to keep their failing TV customer base afloat.
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Anonymous Coward, 12 Nov 2014 @ 7:32am

Re:
They were never connected to begin with...
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Anonymous Coward, 12 Nov 2014 @ 8:09am

Re:
Modern content providers (cable cos./telcos/ISPs) are acting much like the resource extraction industries of old - mining, logging, oil, etc. When government regulations inevitably loomed to rein in their excesses, these industries ramped up their practices to insane levels before the regulations took effect (think hydraulic mining, clear-cut logging, oil extraction regardless of land subsidence).

Content providers are not run by complete muppets; they can see their unregulated days are coming to an end. Their customers - us - are the resource, and we will be harvested as harshly and as heavily as possible short of outright criminality.

Title II regulation, as inadequate as it is, is the knife held to these reincarnated robber baron's throats. Let's hope that our government can be as hardnosed towards corporations as it has shown itself to be against its citizens.
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Anonymous Coward, 12 Nov 2014 @ 8:24am

Re: Let them merge
So, do a three-way (or four-way) split: one company only maintains the plant, one handles television, one handles internet, and one handles phone services.

(Oh, and the company that owns the plant can't be owned by any of the others, and is regulated as a monopoly.)
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Anonymous Anonymous Coward, 12 Nov 2014 @ 9:15am

How much pain will customers accept a case study.
It will be interesting to see what unique forms of 'self immolation' these companies will go through as they try to learn to deal with their own denial of inevitable reality.
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jupiterkansas (profile), 12 Nov 2014 @ 9:21am

Re: Re: Let them merge
that's fine as long as they give the infrastructure to broadband. Broadband is a necessity while cable is a luxury.
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JEDIDIAH, 12 Nov 2014 @ 10:39am

Re: no worries its all working
There's plenty of educational TV if you just bother to look.

However, that requires effort and doing something other than passively consuming what someone else shoves at you.
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Gumnos (profile), 12 Nov 2014 @ 11:41am

SNL?
Am I the only one for whom "SNL Kagan" had me trying to unpack what Saturday Night Live had to do with anything?
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JBDragon (profile), 12 Nov 2014 @ 1:13pm

I don't miss Comcast!
When I left Comcast a couple years ago, I was paying $170 a month for Mid speed Internet and HD TV service with a Duel HD tuner Cable box. That's it. It was only me living at my place. I got sick of it and the bill shooting up 10 times faster then my pay check and for what? I can't possibly watch enough TV and use the Internet enough to justify that price. $170 a month is $2,040 per year and it's only going up!!! In 10 years time, that's $20,400. 10 years is not very long and people sign up and pretty much on it for years and years and years. I had Comcast for 18 years myself. Of course I didn't start out with Internet at the time because they didn't offer that service way back then.

To me $2,040 is a lot of money!!! A lot of money and for what? I have Internet only from AT&T U-Verse, on second year now, and pay $35 a month. It's not as fast, but fast enough to stream HD content and do everything I need to do!!! That's $420 per year. So I'm saving $1,620 per year. That's money staying in my pocket and not going to Comcast or anyone else for that matter. What would you do with that much savings per year? Take a vacation. Put a little away for retirement, etc. I guess if you were rich with money to burn then $1,620 isn't that much!!!

My brother finally got his wife on board. His kids pretty much watch Netflix Kids stuff only. I get ABC, CBS, NBC, Fox, CW, PBS and others in HD and 5.1 surround for FREE Legally with a Antenna. I also have a better picture then I ever did with Comcast and it's even better yet then Satellite.

Using my Windows 7 PC, I record onto it using Media Center and a couple HD Duel Hometune tuners that plug into your Ethernet Network. I can record up to 4 shows at once while watching something else. I have full DVR controls. I can watch on one of my 3 HDTV's all of that recorded content using Xbox 360's (Which these days is pretty cheap NEW at $199) Or buy a used one and save. Don't need a Kinect or a hard Drive for that matter. You don't even need a Gold Live subscription and you can set up so that they boot up directly into Media Center Extender. I have Full DVR controls. I use Harmony 900 remotes. I can start watching in the family room, and continue on in the bedroom. You can hook 4-5 extenders to a single Media Center PC if they're wired for HD. There's not enough wireless bandwidth but for 1 extender for HD content. I wired my house with Gigabit Ethernet!!!

There's also a few other options. Tivo for one, but it's expensive with a $15 a month subscription and Lifetime price is crazy high!!! There's some others like Tablo, that have a 2 or 4 tuner box, you add a external HDD of your choice in size, Bigger is better of course, and you can place it anywhere with a antenna connection and Ethernet. Hide it if you like. You control with like a iOS device and play onto a ROKU or a Chromecast device. So there's some extra costs in that way with the HDD and the Media streaming device. But monthly service is $4.99, a year is $49.99 and lifetime is $149.99. There's a lot to like about it.

https://www.tablotv.com/tablo-products/

There's also Simple.TV and they have a 2 tuner box. It's a little differnt in features, so read the FAQ for both of them. It also has the same price plans as Tablo. The features are a little different. These boxes didn't exist a couple years ago or maybe I would have gone with Tablo.

https://us.simple.tv/

I get enough live sports on the broadcast channels. I can live without Monday Night Football on ESPN. There's always a BAR or friends house to watch once in a while. If you're someplace that you can't get anything form a Antenna, then you're stuck with Satellite. When I look around where I live and don't see a single antenna anywhere, I laugh and think SUCKERS!!!!

With the Internet these days, there's Legal and not so legal ways to watch pretty much any cable show you want anyway. I love The Walking Dead on AMC. You can get a Season pass on Amazon, I get the SD version which is more then good enough, you can watch the new Episodes on Monday after it airs Sunday night. Commercial free!!! All that money you're saving, buying a few season passes is a drop in the bucket.

Why pay HBO $15 a month? How much content do you watch. One or 2 shows or is that on all the time? If all you have on is HBO, great it might be worth it, but you're paying for all the other channels that you're not watching to get it. $15 a month is $180 per year. Why not just buy a Season when it comes out on DVD? Watch at your own pace. Maybe part of your Netflix DVD plan, you can watch your HBO shows that way. It's another way to save some money. If/When you can buy HBO and stream on the Internet only, then maybe that will work for those that mainly just watch a lot of HBO.

For my home phone, I moved to VOIP, my OOMA Box and use my existing Internet service. When I lived in one town I switched my number over to it and was using it with Comcast, and when I moved to another town I just grabbed my OOMA box and brought it with me and plugged into my AT&T U-Verse internet service and had my home phone back. Then I had my Dad move into my house and I got his Number transferred also to my OOMA Box and he lived is yet another town. For 2 numbers I'm forced to pay for their service besides the Taxes, so it's about $15 a month for both lines with all kinds of features. I have a phone for each line. They each have a different ring tone and their own mail boxes. I get my own calls and He gets his own calls on our phone numbers we've had for years. 20 years now for me, and like 30+ years for him. That's yet another way to save money. Best thing is the calls sound better. I don't have the static like I did with my phone service which used to be on AT&T before I went to VOIP.

Many ways to so money. I don't miss Cable service at all!!! I have more content to watch then time by a mile. Why be a sucker throwing away good money when there's no need to? Why should they get richer while you get broker? I'm just saying.
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got_runs? (profile), 12 Nov 2014 @ 4:17pm

Vulture Capitalism is the American way of business.
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Anonymous Coward, 12 Nov 2014 @ 4:54pm

Re: Re:
As long as ISP / Cable companies have the monopoly on the internet and content distribution, they can charge and do whatever they want. That's why anything new and potentially disruptive technology is immediatley declared illegal. It's not even possible to apply for a job without internet, school, banking, getting the right cables or batteries ... I feel sorry for kids trying to get a start in this enviroment. Developing the next latest greatest thing = a jail sentence.
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Anonymous Coward, 12 Nov 2014 @ 5:03pm

Re: How much pain will customers accept a case study.
"It will be interesting to see what unique forms of 'self immolation' these companies will go through as they try to learn to deal with their own denial of inevitable reality."

We've already watched 20 years of it. I don't see any signs of reality yet.
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Andyroo, 13 Nov 2014 @ 7:03am

seriously
Almost anyone can start a video service on the internet even i could if i had the website software, oops there is so many of that advertised on here, popcorn time for one. I doubt it will be that difficult to make it a pay service .
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WIndow Man, 13 Nov 2014 @ 8:48am

Vacation
I would totally take a vacation with all of that saved money.
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Anonymous Coward, 14 Nov 2014 @ 7:09am

We don't have to worry about internet video services since when our business becomes unsustainable we sell out to Comcast and walk away with a hefty payday.
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Anonymous Anonymous Coward, 16 Nov 2014 @ 9:34am

Re: Re: How much pain will customers accept a case study.
AT&T did not spend ten years in court because they thought they were gonna win the antitrust suit, they were delaying because they were; A) looking for the next thing, and B) positioning themselves for whatever the next thing was gonna be.

Big corporations have patience, especially when they are fighting a rip tide. They swim along the beach until there is an opening.

Thing is, these guys seem to have a bit of hubris in their game, as if they think they could win in the long run. Time to hold on to your wallets and have a very jaundiced eye toward any proposal they endorse.
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