Imagine If Everything Were Priced Like Cable Service
from the you'd-have-a-little-something-like-this... dept
The cable and internet worlds are not exactly known for being all that innovative, but that's misleading. Those giant conglomerates can be really innovative in figuring out ways to totally screw you over with their billing and customer service practices. For over a decade, we've pointed out how ridiculous it is to see telcos sneak all sorts of crap below the line by adding additional fees that sometimes can make up more than half of the total actual bill. Even all the way back then, we wondered what other businesses would be like if they used the same "hidden fee" system. What about a pizza, for example? You could announce an advertised price of $3, but then toss in a "Heating element recovery fee" of $1.50, a "crust browning surcharge" of $2, a "service fee" of $4, a "universal pizza fund" charge for $1.20, and a $2.18 "cleanup fee." Plus tax.And, let's not even get started with the whole "bundling" business by cable. Or, rather, let's. That's what Funny or Die did with this amusing new video starring Dave Koechner imagining a world where everything was priced the way cable bundles are priced:
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: bundles, cable company, customer service, pricing, tv service
Reader Comments
Subscribe: RSS
View by: Time | Thread
[ link to this | view in chronology ]
Re:
They might be filmed in a humorous fashion, but there's nothing "joke" about these videos. Every single word in them is true. Cable companies don't care about people or providing good service, all they care about is money.
[ link to this | view in chronology ]
Re: Re:
Cable companies are in business to make money, they are not social service organizations. There is nothing wrong with being in business to make money.
If you don't like the service your cable company provides, switch to Uverse, DirectTV, or Dish or better yet - cut the cord and go with Netflix/Hulu/HBONow/Amazon Prime/etc. If enough cable customers leave - they will have to change their tactics. That's how a free market works. I recently switched from Uverse to cable, cable sucked, I switched back. You have choices.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
Nobody is saying otherwise. The problem is that when business is working well, caring about people and providing good service is a critical part of how you make money. The cable business, however, is not that. It's an oligopoly at best, and monopoly at worst.
"That's how a free market works."
If the cable business was a functional free market then this would be a relevant point.
[ link to this | view in chronology ]
Re: Re: Re: Re:
My point is that consumers have many choices other than cable these days. Cable does not have a monopoly on content anymore.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Netflix: It has lots of content owned by Comcast.
Hulu: Comcast owns that.
Many people only have one ISP to choose from. The alternative is dial-up. You're quite lucky that you have two services in your area. Many only have dial-up and nothing else.
Not only that, but to get access to all of your favorite content, you have to pay for multiple services that end up costing you nearly as much as cable or you just pick one and go without the rest.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
Thanks!
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
This does not mean that the only two alternatives are shut up and deal with it, or do without. Publicizing and criticizing are perfectly legitimate ways to try to get companies to change their behavior. Even for something that is not a life or death situation.
In this case, I think nothing is going to save them. They will not acknowledge that they are tied to the train tracks until it's too late. Their size and inertia will not permit them to get out of the way of the Cord Cut Express and they are going to get run over. In the end, the very lack of competition they have set up is going to be their downfall. That's my prediction anyway.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
You write:
"Publicizing and criticizing are perfectly legitimate ways to try to get companies to change their behavior."
With respect, I disagree in this case. The only reason that public complaining about public or venture capitalized companies works in certain cases is that the company realizes that there is somewhere else for their consumers to go. In this case, the content/cable industry are aware, because they have spent a good twenty years testing the market, that while their consumers will talk, they won't do much else. They are also aware, because they have spent money to make sure of it, that their regulators are in their pockets. Finally, they're quite aware that nobody else is going to run the wires. Therefore, the consumer can blow off steam about pricing or simply leave. Blowing off steam is great, you understand, but it changes nothing and makes the blowers look... like people who scream and yell but won't do what they can to solve their own problem. Like desperate winers, basically. Leaving solves the problem for that consumer, at least, and if enough do it, it might solve the problem generally. Talking, unless it ends with "and that's why I no longer use the service", solves nothing.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re: Re:
I think both of those things are starting to change.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
You know what? Comcast doesn't need my money for that content because culture and art existed long before there was a business built around it. Art will survive without my money, so I'll just have it when, where, and how I want it. If companies like Comcast don't want to sell me the service I want to pay for, then I'll just help myself.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
What are my choices?
The internet is the most important part of the service for me. As long as I keep my service the way it is, I get a grandfathered rate of $60 for 100mbps service. It was $50, but they recently jacked up the price. My entire bill now comes to $150 a month. If I make any changes to my service, like dropping cable, the internet portion of the bill increases to at least $115 (probably more, since they recently raised the rates.
My only other viable choice is Frontier, a company that has had nothing but negative reviews since taking over U-Verse from AT&T. Everyone I know who has it, hates it. They have nothing but problems with it.
DirecTV or Dish Network? Are they going to provide 100mbps service for a cheaper price? Is DSL magically going to increase their speeds?
What choices do I have?
[ link to this | view in chronology ]
In the business to make money.
I remember learning even before Microeconomics about tricks like price gouging, cartels, creating monopolies, dumping, war profiteering (and on and on) were things you weren't supposed to do because, though you would profit, you would also wreck the economy or the society in the process.
It was for this reason that it surprised me that Romney's experience at Bain Capital was considered an asset to his resume as a presidential candidate, when the business strategy of Bain was to buy up other companies, use their credit to take out huge loans, and then sell the company leaving them with the debt so that they go bankrupt.
I don't know Comcast's 2014 profit margin, but Time Warner's was 95%. That's better than drugs or guns or government contracts.
Teamchaos, are you saying that this is the way things should be?
[ link to this | view in chronology ]
Re: Re: Re:
Correct, but cable companies' stated purpose is to make money by providing services that people want in a fair and consistent manner, and they don't do that.
There is nothing wrong with being in business to make money.
On its face, no. When you're screwing over your captive market, however...
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
To be fair, airlines do this also
For example, a ticket from Orlando to Miami might be listed for $50. But then there's a "seat reservation" fee, then a "checked luggage fee", then a 9/11 security fee, then a landing fee, then a mandatory airport fee.
Before you know it, you're paying $200 for a ticket advertised for $50.
And this is perfectly legal! It makes me wonder why more companies don't do this.
[ link to this | view in chronology ]
Re: To be fair, airlines do this also
And this is perfectly legal!
That's the real problem. It should be illegal to advertise a price that's impossible to actually pay. If you want to add a carryon baggage fee and checked bag fee and water fee headphones fee and anything else that's optional, I have no problem with that. However, I cannot decline many of these fees they charge, therefore the advertised price is nothing short of false advertising.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re: Bundling
Why should I pay for ESPN channels (which are not free to the cable company) that I never watch?
Your analysis assumes all channels are provided to the cable company at no cost. This is false.
[ link to this | view in chronology ]
Re: Re: Bundling
The real question is how much of the average consumer's cable bill goes into paying those broadcast licenses as opposed to paying for all of the other costs a cable company experiences.
Many people are under the assumption that if they were able to pay for a plan that had 10 times fewer channels then their cable bill would be 10 times less. This is simply not true.
I admit, I don't know how much cheaper an a la carte plan could be but I'd like to see research that answers this question. Until then, I'll continue to see most of these complaints as ignorant.
[ link to this | view in chronology ]
Re: Re: Re: Bundling
[ link to this | view in chronology ]
Re: Re: Re: Bundling
According to a Business Insider article from 2011, license fees account for about 40% of the average cable bill. The percentage is even higher for basic cable subscribers. Also, those rates in aggregate are increasing at around 4% per year.
Even weirder, the most expensive networks (such as ESPN, which charges more than any other -- costing every subscriber from basic cable on up right around $5/mo) do not tend to be the most popular ones.
As of last year, the five channels that charge the highest license fees (and the cost per cable subscriber) are: ESPN ($5.54), TNT ($1.22), Disney ($1.15), NFL Network ($1.13), and Fox News ($0.94). The five most watched channels (starting with the most watched) are: USA ($0.71), Disney ($1.15), ESPN ($5.54), History Channel(unknown, but not in top 10 so less than $0.60), TNT ($1.22)
"Many people are under the assumption that if they were able to pay for a plan that had 10 times fewer channels then their cable bill would be 10 times less."
Perhaps, but I've not met any. Most of the people I've talked to expect a much more modest reduction in cost. The bigger deal is not being forced to subsidize things that they don't want to subsidize (usually sports is mentioned in that context).
[ link to this | view in chronology ]
Re: Re: Bundling
[ link to this | view in chronology ]
Tax
[ link to this | view in chronology ]
And channel bundling is just as much, if not more, a content company problem as it is a cable/satellite/IPTV company problem. Content companies encourage and/or require bundling certain channels.
Want to know why you have to get ESPN even if you don't want it? Here's why: http://en.wikipedia.org/wiki/List_of_channels_owned_by_Disney
Don't care for MTV? http://en.wikipedia.org/wiki/List_of_assets_owned_by_Viacom#Media_networks
CNN? http://en.wikipedia.org/wiki/List_of_assets_owned_by_Time_Warner#Turner_Broadcasting_System (P.S., someone is inevitably going to bring up Time Warner Cable; however, it is a totally separate company)
Hopefully you can figure out Fox.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Who owns what...
1 XFINITY On Demand
2 NWCN
3 KWPX (ION)
4 KOMO (ABC)
5 KING (NBC)
6 KONG (IND)
7 KIRO (CBS)
8 Discovery Channel
9 KCTS (PBS)
10 Government Access
11 KSTW (CW)
12 KVOS (IND)
13 KCPQ (FOX)
14 KBCB (IND)
15 KFFV (IND)
16 QVC
17 HSN
18 KWDK (Daystar)
19 Hallmark Channel
20 KTBW (TBN)
21 Government Access
22 KZJO (My TV)
23 TVW
24 C-SPAN
25 C-SPAN 2
26 Educational Access
27 CBUT
29 KUNS (Univision)
And how many of those are REQUIRED to be carried? Just the local and Government Access chennels. Hallmark and shopping are not, but they are forced upon us.
[ link to this | view in chronology ]