Imagine If Everything Were Priced Like Cable Service

from the you'd-have-a-little-something-like-this... dept

Mon, May 18th 2015 3:49pm — Mike Masnick

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: Sounds about right. Either way, this one ranks up there with the wonderful video from a couple of years ago about the first truly honest cable company: Or, maybe this honest Comcast ad (also by Funny or Die): You know, considering how many such videos there are, you might think that the giant cable/telco companies might finally realize that it's time to act differently, right? But, I guess, as all the videos here show, they really just don't give a fuck because they don't have to.

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Filed Under: bundles, cable company, customer service, pricing, tv service

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Anonymous Coward, 18 May 2015 @ 4:05pm

So now even Techdirt is getting dumbed down like a Buzzfeed and filling posts with joke videos? Lame.
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John85851 (profile), 18 May 2015 @ 4:07pm

To be fair, airlines do this also
To be fair to cable companies, airlines do this also, and they're much worse since they're trying to compete on price.
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.
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That One Guy (profile), 18 May 2015 @ 4:39pm

The real punchline for those last two videos is that they're only saying honestly and upfront, what the companies say behind closed doors.
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David Dowdle (profile), 18 May 2015 @ 5:21pm

It seems to me that the complaints about channel bundling aren't fair. There's no additional marginal cost for delivering 5 channels vs 50. Why should cable companies deliver less channels than technology allows just to satisfy a consumer misunderstanding in how cable transmission works?
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Whoever, 18 May 2015 @ 5:52pm

Re: Bundling
Why should cable companies deliver less channels than technology allows just to satisfy a consumer misunderstanding in how cable transmission works?

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.
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Rekrul, 18 May 2015 @ 6:04pm

Re:
So now even Techdirt is getting dumbed down like a Buzzfeed and filling posts with joke videos? Lame.

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.
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Anonymous Coward, 18 May 2015 @ 6:17pm

Tax
Advertising prices that don't include sales tax would be considered fradulent in much of the world (e.g. if they say a pizza is $10, and you give them $10 but they won't give you a pizza, that's false advertising), but it seems almost all US stores get away with it. Tourists are frequently caught off guard by this and the expectation of tipping, finding prices are understated by 10-30%. So perhaps restaurants were a bad comparison. There's little difference between the USF and sales taxes; if a telco sees people everyone getting away with tax-exclusive prices, why wouldn't they exclude USF too?
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David Dowdle (profile), 18 May 2015 @ 8:50pm

Re: Re: Bundling
I'm aware that there is a cost but it's a licensing cost and not a marginal cost.
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.
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Anonymous Coward, 18 May 2015 @ 9:47pm

So... die?

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.
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Shmerl, 18 May 2015 @ 11:39pm

Re:
So how exactly do they get away with ignoring the Clayton Act?
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Anonymous Coward, 19 May 2015 @ 1:21am

Re:
Way to miss the point: that the US cable companies are so reviled that Poe's Law of satire can't apply.
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Teamchaos (profile), 19 May 2015 @ 6:15am

Re: Re:
Cable companies don't care about people or providing good service, all they care about is money.

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.
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Anonymous Coward, 19 May 2015 @ 6:18am

Re: Re: Re:
The point is that some people don't have a choice, they can eother choose a shit expensive service or a shit expensive service. There is no free market and no competition.
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John Fenderson (profile), 19 May 2015 @ 6:19am

Re: Re: Re:
"There is nothing wrong with being in business to make money."

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.
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Teamchaos (profile), 19 May 2015 @ 8:52am

Re: Re: Re: Re:
If the cable business was a functional free market then this would be a relevant point

My point is that consumers have many choices other than cable these days. Cable does not have a monopoly on content anymore.
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Anonymous Coward, 19 May 2015 @ 9:15am

Re: Re: Re: Re:
There are other things people can do besides watching video. I would have great sympathy if this were about food or water, but it's about video entertainment. The number of people who have died from a lack of entertainment is... minimal. I honestly don't see why people pay the bill and complain. You are not forced to pay the bill, you are not forced to consume the content, you are not forced to do very much in this, really. The cable company's billing practices, which basically say "we're screwing you because we can", are an insult. If someone insults me, I no longer work with them. Why not forget them and fill your time with other things?
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nasch (profile), 19 May 2015 @ 9:21am

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.
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Greevar (profile), 19 May 2015 @ 9:21am

Re: Re: Re: Re: Re:
No, you have very few choices.

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.
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nasch (profile), 19 May 2015 @ 9:24am

Re: Re: Re: Bundling
There wouldn't be so many complaints if the prices were more reasonable. If you're paying $30 a month for 500 channels and watching 10 of them, not many people are going to complain about that (some people will complain about anything). If you're paying $150/month for the same thing, that's going to be a lot harder to swallow.
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Teamchaos (profile), 19 May 2015 @ 9:33am

Re: Re: Re: Re: Re: Re:
http://www.tomsguide.com/us/cord-cutting-guide,news-17928.html
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Anonymous Coward, 19 May 2015 @ 9:46am

Re: Re: Re: Re: Re: Re:
and what happens if you don't have access to "your favorite content"? Is it like insulin? Do you go into shock? I'm trying to dial back the sarcasm here, but am having a hard time. Cable is not vital to health. People lived for many thousand years without cable. If the companies make it too expensive, don't buy it, and don't buy other video content. A pleasing byproduct will be that the content companies and the cable companies will suffer loss of customers.
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nasch (profile), 19 May 2015 @ 10:06am

Re: Re: Re: Re: Re: Re: Re:
Cable is not vital to health.

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.
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Anonymous Coward, 19 May 2015 @ 10:30am

Re: Re: Bundling
Why should I pay for shows on Netflix that I never watch?
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Melab (profile), 19 May 2015 @ 10:30am

Re: Re: Re: Re: Re:
The number of choices is actually irrelevant to the matter of network neutrality, though.
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Melab (profile), 19 May 2015 @ 10:32am

Re: Re: Re: Re: Re:
Sorry. I meant to say that the number of choices available is irrelevant to this issue.
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Anonymous Coward, 19 May 2015 @ 10:44am

Re: Re: Re: Re: Re: Re: Re: Re:
@Nasch.
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.
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nasch (profile), 19 May 2015 @ 10:48am

Re: Re: Re: Re: Re: Re: Re: Re: Re:
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.

I think both of those things are starting to change.
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Rekrul, 19 May 2015 @ 11:52am

Re: Re: Re:
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.

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?
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John Fenderson (profile), 19 May 2015 @ 3:45pm

Re: 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."

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).
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BernardoVerda (profile), 19 May 2015 @ 4:36pm

Re: Re: Re: Re: Re: Re: Re:
> http://www.tomsguide.com/us/cord-cutting-guide,news-17928.html

Thanks!
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Greevar (profile), 19 May 2015 @ 8:04pm

Re: Re: Re: Re: Re: Re: Re:
That doesn't excuse the fact that your options are less than what they could provide. That's like using gum to plug a hole in the Hoover dam. I'm not going to allow myself to be pissed on and have them try to convince me it's rain. Those services are a pale shadow of what could be offered.
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Greevar (profile), 19 May 2015 @ 8:20pm

Re: Re: Re: Re: Re: Re: Re:
Oh, how silly of me! I didn't realize that I don't have a legitimate grievance when it's not vital to my survival!

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.
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Uriel-238 (profile), 19 May 2015 @ 9:30pm

In the business to make money.
There's a thing I missed somewhere between the Eighties and today, which was where it became socially acceptable, even ethical for a company or a person to seek to make money without ethical or moral considerations.

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?
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Sheogorath (profile), 25 May 2015 @ 3:02pm

Re: Re: Re:
Cable companies are in business to make money, they are not social service organizations.
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...
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Sheogorath (profile), 25 May 2015 @ 3:23pm

Re:
Don't do that! I read SOAPNet in the list of channels owned by Dibsney, and I thought it said SOPANet! ;)
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Ed, 29 Jun 2015 @ 1:12pm

Re: Who owns what...
These are the Basic channels in my are:
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.
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