Cable Lobbyists Stop Using The Word Cable In Hopes You'll Think Industry Has Evolved

from the song-remains-the-same dept

It often seems like the modern cable industry often goes out of its way to remain decidedly un-modern. Thanks to regulatory capture and limited competition, the sector consistently ranks among the very worst industries in terms of customer satisfaction and support. And whether it's opposing net neutrality or fighting efforts to bring competition to the cable box, you'll often find the industry's top lobbying organization -- the National Cable and Telecommunications Association at the forefront of fighting nearly every pro-consumer initiative that comes down the pike.

That's why it's more than a little amusing to see the NCTA announce this week that it's eliminating the word "cable" from its branding and overall vernacular, apparently as an attempt to modernize the cable sector's image in the Netflix age. According to a statement by the NCTA, the migration away from even using the word cable (despite coaxial very much remaining in use) is a reflection of "how the marketplace is no longer defined by silos of the past." This is how former FCC boss turned top cable lobbyist Michael Powell explained the shift:

"Just as our industry is witnessing an exciting transformation driven by technology and connectivity, NCTA’s brand must reflect the vibrancy and diversity of our members,” Powell said. “While our mission to drive the industry forward remains the same, our look now reflects a renewed proactive and energized spirit."

And by "driving the industry forward," Powell of course means supporting initiatives that do the exact opposite.

Most recently that has included using a massive sound wall of disinformation (including some help from the US Copyright Office and the likes of Jesse Jackson) to demonize attempts to bring competition to the cable box. The NCTA has also been busy working overtime to derail the FCC's attempt to apply some relatively basic privacy protections to the cable sector, has also supported protectionist state laws that hinder broadband competition, and has even fought raising the base definition of broadband to 25 Mbps. "Proactive and energized," indeed.

And while the cable industry is quick to argue it's facing more direct competition than ever before, the reality is notably different. As AT&T and Verizon give up on unwanted DSL customers, it's creating a stronger cable monopoly than ever before in many areas. As cable providers consolidate and their telco competitors crumble, cable is seeing 99% of the broadband net additions each quarter. The end result is a cable industry that intends to take full advantage of this lack of competition to impose draconian usage caps on consumer broadband connections in the hopes of thwarting Internet video competitors like Netflix.

All told it's going to take a lot more than a vernacular change to shift consumer and cross industry perception away from the reality that the cable industry -- and specifically the NCTA -- is an anti-consumer, anti-innovation, antiquated turf protection machine.

Filed Under: branding, cable, lobbyists, marketing, tv
Companies: ncta

Gizmodo Completely Misses The Point Of Cord Cutting

from the missing-the-forest-for-the-trees dept

Roughly every month or so I'll see a story proclaiming that cord cutting is a bad idea because you need to subscribe to multiple services to mirror the same overall volume of content you receive from pay TV. There are a few problems with that logic, first being that cord cutters aren't looking to precisely duplicate cable TV. They're looking to get away from paying a small fortune for hundreds of unwatched channels, including an ocean of religious programming, infomercials, whatever the Weather Channel is up to these days, and C-grade channels focused on inherently inane prattle.

Writers of these pieces always seem to forget that broadcasters dictate the pricing of content on both platforms, so any surprise that the pricing of television remains somewhat high (when you pile on multiple streaming services) is just kind of silly. All told, "cord cutting is really expensive when I subscribe to every streaming service in the known universe" is just a weird narrative that just keeps bubbling up across various media outlets despite not really making much sense.

The latest example is a recent piece over at Gizmodo by Matt Novak that proudly proclaims that "cord cutting isn't a bargain any more" when you sign up for a pile of different streaming services:

"So, let’s see, if you pay for Hulu Plus (which is now just Hulu, since they’re dropping their free tier) that sets you back about $8 per month. And if you go subscription free that’s $12 per month. And Netflix is another $10. And HBO Now is another $15. And obviously you’re going to get the new commercial free CBS, so that’s $10 per month. What are we up to? About $47 before tax? And then you toss on your high-speed internet bill, which you’re probably paying to the cable company anyway. Yeah, this whole cordcutter thing sounds like it liberated consumers alright, doesn’t it?

So............................................. ¯\_(ツ)_/¯"

And that's it. Pretty much Gizmodo's entire argument is that because the author had to pay $47 for four streaming services, cord cutting isn't a bargain and can't be taken seriously. But compared to traditional cable, that's not really a bad deal. Novak also appears to ignore that countless people save a significant amount of money when they decide to trim back their programming lineup or cut the cord entirely. As such, it was entertaining to watch users over at Reddit quickly and repeatedly point out how much money they've saved by moving on from traditional cable:And it's worth pointing out that these consumers are still saving money despite every effort by the broadcast and cable industry to make cord cutting as difficult as possible, whether that's via restrictive licensing agreements, lawsuits intended to deter innovation, or the use of usage caps to otherwise penalize users who try and leave the legacy TV pasture. The entire point of cord cutting is the flexibility to mix and match various services to craft the precise lineup of content you want, something the cable industry continues to pay empty lip service to via "skinny bundles" saddled with obnoxious fees and caveats.

The cable industry has a long, proud history of advertising one rate, then socking consumers with a significantly higher bill thanks to hardware rental costs and various other fees. That's something correctly pointed out by Jared Newman, who apparently found Gizmodo's narrative as tiring as I did:

"Cable TV might seem cheap when you first sign up, but that’s only because you’re getting a short-term promotional deal, and the advertised price rarely factors in hardware rental and other hidden costs, such as regional sports fees and broadcast retransmission fees. Keeping your payments down requires constant vigilance, and you’ll never actually pay the advertised rate anyway."

There's also a weird tendency among TV beat writers to act as if piracy doesn't exist just because it's not formally sanctioned by the United Nations or Homeland Security as a legal and accepted way to obtain content. But reality doesn't work that way. You don't get to magically eliminate discussing piracy as an avenue for consumer cost savings when discussing the pay TV landscape just because it's naughty. Many cord cutters pirate because the cable industry refuses to give them the flexibility and pricing they want. That doesn't somehow mean piracy isn't a legitimate competitor for consumer affections and shouldn't be discussed when analyzing cost savings.

If there's a problem with the streaming model, it's one that Gizmodo almost accidentally stumbles into. Namely that broadcaster licensing has increasingly fractured streaming content availability, forcing users to hunt and peck between multiple services to find the content they're looking for, something that's only going to increase as broadcasters exclusively offer their own content via their own services. That's incredibly confusing for the consumer, especially given the frequency with which content disappears as licensing periods expire. Ultimately this confusion will only make piracy more attractive.

And yes, consumers in the future will likely have to pay even more as more and more ISPs turn to usage caps to simultaneously cash in on a lack of competition while protecting legacy TV revenues. But that's not somehow the fault of cord cutting as a concept. Cord cutting may not be for everybody (especially sports viewers), but it's a very organic response to an aggressively inflexible pay TV sector that absolutely refuses to compete on price despite the obvious writing on the wall. So yes, ¯\_(ツ)_/¯ indeed.

Filed Under: broadband, bundles, cable tv, cord cutting, options, streaming, tv
Companies: amazon, comcast, hulu, netflix

Remember Claims That Cord Cutting Was On The Ropes? It's Actually Worse Than Ever

from the numbers-don't-lie dept

Despite the obvious realities that ratings are down and consumers are cutting the cord, there's a vibrant and loyal segment of executives and analysts who still somehow believe cord cutting is a myth. Every few months, you'll see a report about how cord cutting is either nonexistent or overstated. Earlier this year, these voices were quick to argue that the industry had cord cutting on the ropes because several of the biggest cable providers saw modest subscriber gains in the fourth quarter (ignoring several that saw net subscriber losses for the year).

Those folks have been pretty damn quiet the last few weeks as second quarter earnings show cord cutting is worse than ever.

A new report by Leichtman Research notes that the pay TV industry collectively lost about 665,000 net video subscribers last quarter, a number some other analysts say was closer to 757,000. Dish Network alone lost 281,000 subscribers, while the new, larger Charter (after acquiring Time Warner Cable and Bright House Networks) lost 143,000 subscribers. "Phone" companies were hit particularly hard, telcos alone losing 500,000 subscribers in just one quarter. In fact, with AT&T and DirecTV now being one company, every single pay TV provider saw a net loss in TV subscribers during Q2:

It's kind of hard to spin this kind of bloodshed, so cord cutting denialists are likely to remain quiet -- at least for a few months.

Most analysts believe that these losses are due in large part to folks that are moving to a new home or apartment, and not bothering to sign back up for cable when they do. But if you factor in that these numbers aren't scaling alongside housing growth, things are even uglier than the numbers indicate. But because companies like Comcast occasionally see quarters with very modest subscriber gains (thanks in part to their monopoly over broadband and bundling), you'll still somehow see folks trying to argue that cord cutting is either non-existent or an over-hyped fad.

But occasionally somebody will step back and take an intelligent big picture look at the numbers, making the overall trend pretty damn apparent:None of this is to say that cable providers couldn't quickly change the entire narrative by simply competing more seriously on TV service price (at the cost of higher broadband bills, of course). But instead, most cable sector executives still desperately cling to the narrative that cord cutting is a fad that stops once Millennials procreate. This is, they clearly believe, just a touch of cash cow indigestion that will magically resolve itself, so there's no reason to stop hitting consumers with biannual rate hikes for bloated bundles of unwatched channels.

Filed Under: cord cutting, internet, tv

Hulu Ditches 'Free' Model Without Giving It A Chance To Succeed

from the the-illusion-of-disruption dept

For years we've noted how as a product of the cable and broadcast industry, Hulu has often gone out of its way to avoid being truly disruptive. Owners 21st Century Fox, Disney and Comcast/NBC have worked hard to ensure the service is never too interesting -- lest it cannibalize the company's legacy cable TV cash cow. So Hulu has been doomed to walk the halls of almost but not quite compelling purgatory, a rotating crop of execs for years trying to skirt the line between giving consumers what they actually want -- and being a glorified ad for traditional cable television.

Fast forward to this week, when Hulu announced that the company is backing away from free as a core component of its business model. While Hulu began as a free option, it has slowly but surely been making free content harder to come by. Instead, users now have the option of paying either $8 per month for a streaming service with ads, or a $12 per month service (mostly) free of advertising. As such, the company proclaims that offering anything for free is no longer part of the company's vision of the ideal "Hulu experience":

"For the past couple years, we’ve been focused on building a subscription service that provides the deepest, most personalized content experience possible to our viewers,” Hulu senior VP and head of experience Ben Smith said in a statement. “As we have continued to enhance that offering with new originals, exclusive acquisitions, and movies, the free service became very limited and no longer aligned with the Hulu experience or content strategy."

Instead, Hulu intends to focus on its subscription services, and the launch of a live TV subscription platform sometime in early 2017. It will offer some free content 8 days after a program's air date, but only via a new Yahoo/Verizon web portal that may or may not even exist next year at this time. Thanks to intentional release delays, a shrinking catalog of free options and other restrictions you'll note Hulu can't specifically claim that the free business model failed, because it was never truly given a chance to succeed.

And because this is the cable and broadcast industry, Hulu's "content strategy" will remain hamstrung by all manner of unnecessary restrictions. Time Warner, which recently paid $583 million for a 10% stake, has been pushing to pull all current seasons of shows from the service. It's also worth remembering that the 2011 NBC Universal merger conditions blocked Comcast from meddling in Hulu management (not that this always stopped Comcast) to prevent anti-competitive shenanigans. But those restrictions will sunset in early 2018, at which point ownership pressure to ensure Hulu isn't too disruptive will only grow.

So on one side, you have Hulu claiming it wants to become disruptive and profitable. On the other side, you have its owners intentionally doing things to ensure it never becomes too disruptive and profitable. And offering free services as part of your business model certainly doesn't line up with the goal of keeping the legacy cable industry cash cow happily mooing for another decade. As we've long noted, most cable and broadcast companies think this whole cord cutting thing is a fad that ends when Millennials start procreating. As such the focus is on the illusion of innovation while they wait for the storm to pass.

While ditching free may not be a great idea, the real threat to the viability of a streaming revolution remains exclusive licensing and fractured content availability. As broadcasters increasingly focus on their own streaming services, exclusive arrangements (like CBS with Star Trek) are flourishing. In Hulu's case, it means losing access to the CW network, now exclusive to Netflix. It also means losing access to the Criterion Collection of films, now the streaming exclusive of a new Turner-owned streaming platform called Filmstruck. This fractured availability only frustrates and confuses customers, many of which will simply return to piracy.

Filed Under: free, streaming, tv
Companies: hulu

BBC Now Training Its Secret, Likely Imaginary, Fleet Of Detector Vans On Your WiFi

from the is-this-really-a-good-use-of-resources? dept

Nearly a decade ago, we wrote about the fact that the BBC supposedly has a fleet of totally secret "detector" vans that drive around trying to figure out who was watching the BBC without paying for it. As you probably know, if you live in the UK, you're forced to buy a BBC license if you have a TV or a TV turner card. And, for years, they've claimed to have had these magical detector vans. When we wrote about them in 2008, it was because a freedom of information request to find out about the vans was denied for the most ridiculous of reasons: revealing the details of the vans "would damage the public's perception of the effectiveness of the TV detector vans." In other words, the "vans" -- if they exist at all -- were more about scaring people into paying, rather than actually detecting those watching the BBC without a license.

Either way, those vans are back in the news, after the Telegraph reported that the vans have now been outfitted with apparent WiFi detection tools as well to go after people watching the BBC online without paying:

The Telegraph can disclose that from next month, the BBC vans will fan out across the country capturing information from private Wi-Fi networks in homes to “sniff out” those who have not paid the licence fee.

The corporation has been given legal dispensation to use the new technology, which is typically only available to crime-fighting agencies, to enforce the new requirement that people watching BBC programmes via the iPlayer must have a TV licence.

A researcher interviewed in the article suggests -- without actual knowledge -- that the system could work in a manner in which the BBC's iPlayer deliberately sends packets of certain sizes, and then the van could use a packet sniffer to look for matching sized packets, without actually capturing any of the actual internet traffic. In other words, it might make use of certain forms of (you guessed it...) metadata. Of course, this is all speculation, and given the earlier reports on the van's Potemkin Village nature, it pays to be skeptical that the vans really do anything at all, beyond trying to scare people into paying licensing fees. After lots of people ran with the Telegraph's original claims, it now appears (thankfully) that at least some reporters are finally skeptical of these special new "WiFi snooping" vans.

Even if the vans don't really work (or exist), it still should serve as a clear reminder of how surveillance efforts are at least a constant temptation for those in power, allowing what was officially put in place for "national security" to creep into totally unrelated areas. If media companies could actually build a van to cruise around and sniff WiFi looking for pirates, does anyone really think they wouldn't do so?

Filed Under: detector vans, surveillance, tv, tv licenses, uk, wifi
Companies: bbc

Dish Sues Tribune Because It Called The Company 'Dishgusting'

from the self-inflicted-mortal-wound dept

For years now, consumers have been stuck in the middle of increasingly-ugly carriage fee disputes between broadcasters and cable companies. Usually they go something like this: a broadcaster demands a massive rate hike from cable companies to carry their channels. Cable TV providers balk, and the broadcaster pulls access to the channels in question until the cable provider pays up. Consumers not only lose access to content they're paying for (refunds are never provided), but they're also hammered by ads from both sides trying to get consumers to call and bitch at the other guy for being greedy.

Fast forward a month or two, a new confidential deal is struck, and the rate hikes are immediately passed on to consumers. Yes, broadcasters are predominately at fault for demanding insane price hikes at a time when consumers are cutting the cord. But cable providers aren't faultless either. They quite frequently are broadcasters themselves (as with regional sports networks or Comcast NBC Universal), and when they aren't -- they're usually just as busy tacking on their own wide assortment of misleading fees and hardware charges.

In short, everybody in the chain is violently milking a dying cash cow, oblivious to the actual needs of the consumer.

Earlier this month Dish Network balked at a price hike demand from Tribune Broadcasting, resulting in Tribune pulling Dish customer access to 42 local Tribune channels in 33 markets across 34 states and the District of Columbia. That resulted in Tribune creating a salty new website accusing Dish of being a "regulatory profiteer" and urging Dish customers to switch to another pay TV provider -- pretty standard for these kinds of inane disputes. The website also makes some not-particularly-creative use of the Dish brand name, accusing the satellite TV provider of being "dishgusting" and "dishturbing": In the escalating arms race of stupidity, Dish has now sued Tribune Broadcasting (pdf), claiming that the website and advertisements that publicize the feud are causing serious harm to Dish:

"Tribune’s publication of the misleading and deceptive statements on its channels and these websites causes actual harm to DISH. Among other things, DISH’s subscribers flood DISH’s customer service lines with questions about the Tribune messages, some subscribers cancel their DISH subscriptions, and DISH’s goodwill as a reliable service provider is eroded. Tribune is therefore deliberately and purposefully interfering with DISH’s contracts with its subscribers as well as with DISH’s prospective economic advantage, both through current subscribers who terminate their agreement with DISH and through prospective subscribers who elect not to sign up for DISH services."

To Dish's credit, they're one of the only pay TV providers standing up to broadcast rate hikes at a time when customers increasingly have made it clear they want cheaper, more flexible channel lineups. Also to their credit, Dish is one of the only companies with the guts to actively offer a product that makes this happen (Sling TV), despite the obvious risk of cannibalizing its own, more profitable legacy TV customer base. But Dish has been involved now in fifteen blackouts of this type in the last three years, and it's not doing much to slow down broadcaster rate hike demands.

And while broadcasters do deserve the lion's share of blame for these fights, the idea that anybody in the broadcaster cable TV chain actually cares about the customer is a stretch. No matter which side "wins" in these ugly public feuds, the consumer always loses. They lose access to content they pay for, never see refunds, and generally see rate hikes no matter what the final contract looks like. Cable TV providers then tack on some misleading below-the-line fees of their own (like the "broadcast TV" fee, or usage caps if they also offer broadband) to ensure they're not the ones footing the bill.

Ultimately, these fights only illustrate how the legacy pay TV sector is utterly tone deaf to consumer desire despite years of warnings on the wind. Cable TV executives see the giant meteor (cord cutting, streaming TV competition) coming, but they just think the best possible response to the looming cataclysm is a one-two punch of denial and speeding up the rate at which they gouge paying customers. These are dinosaurs drinking cocktails ahead of the disruption apocalypse.

Filed Under: carriage fees, defamation, dishgusting, insults, transmission fees, tv
Companies: dish, tribune, tronc

Senate Hearing Shows Cable Companies Routinely Overbill Customers, Do Little To Correct Errors

from the wrist-slaps-and-platitudes dept

If you've been distracted by something like a coma, you may have noticed that the cable industry has developed an atrocious reputation for poor customer service, built over a generation of regulatory capture, prioritizing growth over customer service, and just generally not giving much of a damn. By and large, a Congress slathered in telecom and cable campaign contributions has ensured that nothing much changes on that front, with most politicians taking every opportunity to in fact defend this dysfunctional status quo from innovation, competition, or change.

As such, it was marginally adorable to see Congress hold a hearing last week designed to deliver a few light wrist slaps to cable executives for their inability to seriously improve. Senators Rob Portman and Claire McCaskill simultaneously released a study (pdf) exploring how a number of large cable companies routinely overbill consumers, and do little to nothing to actually resolve such errors. In fact, a study released by the Senate found that Charter and its recently acquired subsidiary Time Warner Cable routinely overbill customers to the tune of around $7.2 million per year:

Between January and April 2016, Time Warner Cable overbilled customers nationwide an estimated $639,948. The Subcommittee projects that, in 2016, Time Warner Cable will overbill customers nationwide a total of $1,919,844. Charter has not yet completed the underlying work necessary to determine how much it has overbilled customers. But it has informed the Subcommittee that it overbilled customers by at least $442,691 per month.

What's more, the study found that these two companies specifically have a habit of doing even less than other upopular cable companies (read: nothing) after customers were overbilled:

During the six and a half year time period covered by the Subcommittee’s investigation, Time Warner Cable and Charter did not automatically refund or credit customers for equipment overcharges they discovered. By contrast, Comcast and DirecTV provided full refunds to overcharged customers, and Dish’s sophisticated billing system is designed to prevent these types of issues from occurring in the first instance.

And as a reminder: Time Warner Cable and Charter just merged, potentially creating a Voltron of errant overbilling. And thanks to binding arbitration mouseprint now buried in every cable and broadband contract under the sun, overbilled customers can't technically sue.

While both Time Warner Cable and Charter have promised to implement systems to avoid overbilling customers moving forward, such inquiries are usually geared toward scoring some cheap political brownie points among cable-loathing constituents, and rarely result in much of a follow-up (and there could be follow-up, since much of this technically constitutes false advertising). Still, to her credit, McCaskill also touched on the practice of misleading below-the-line fees used by cable operators to covertly jack up the advertised rate of services post-sale:

"We found that customers are being charged a host of fees that are not included in advertised pricing, some of which are for programming that used to be included in a customer’s video package. We also found that, just as many customers have long believed, some of these fees, like the HD and DVR service fees, aren’t a true reflection of the cost to the company of the service, but rather are based on the revenue goals of the company, and the price a customer is willing to stomach.”

Again, that has been a problem for years in both cable and telecom, thanks in part to Senators and regulators that have a nasty habit of pretending it's not happening. From "broadcast TV fees" that bury the cost of programming below the line, to bizarre, nonsensical charges like "internet cost recovery fees" -- most of the "innovation" in telecom and cable these days occurs in the realm of adding misleading charges to your bill, not in improving actual service or support.

A second study presented at the hearing goes into more detail, examining how cable providers also make it difficult if not impossible to comparison price shop (another benefit of below the line fees). McCaskill even offered up a recording of her recent call with DirecTV, made after she realized the company for years had been charging her an $8 per month "protection plan" fee she neither wanted nor asked for.

"I said, 'well, were you going to tell me this?' They said, 'no you have to call in and ask,'" McCaskill said at the hearing (you can find a full video of the hearing here). "If I hadn't called in and asked, that $10 could still be on my bill today based on the billing practices of the companies represented at this hearing."

And while cable's best and brightest spent plenty of time at the hearing claiming they've learned the error of their ways and are doing everything under the sun to change, that's the same promise they've given every year for more than fifteen years. Surely this wrist slap will be the wrist slap that sends them running back to the drawing board with a heartfelt desire to change?

Filed Under: cable, claire mccaskill, customer service, fraud, overbilling, tv
Companies: comcast, directv, time warner cable

Russian Culture Minister Claims Netflix A U.S. Mind Control Effort

from the glass-house-propagandists dept

Already on the shitlist of U.S. broadband companies for supporting net neutrality and opposing things like usage caps, Netflix now has a new factually-challenged enemy: Russia. Russia's Culture Ministry took over government film funding through the Cinema Fund in 2012, and more recently unveiled a list of approved subject matter should film makers in Russia wish to get funding. Approved subject matter should include tales that herald "traditional values," "the constructive actions of civil society" or "heroes fighting crime, terrorism and extremism."

With Netflix now pushing into 190 different countries and launching in Russia last January, Russia has clearly become nervous about the influence the US streaming company could have on Russian culture and homegrown production efforts. As such, streaming services like Netflix have been saddled with a significant number of restrictions, including requirements that online video services must be run through a Russia-registered subsidiary, produce 30% of its content locally, and potentially apply for a broadcast license.

Apparently believing these restrictions won't hamper Netflix fully enough, Russian Minister of Culture Vladimir Medinsky last week upped the rhetoric to 11, proclaiming that Netflix was little more than a US government attempt to control the minds of Russian citizens:

"Vladimir Medinsky, Russia's minister of culture and a loyal supporter of President Vladimir Putin, claims the online streaming service is on the US government payroll. Speaking to a Russian news service, he said the White House had realised "how to enter every home, creep into every television, and through that television, into the head of every person on earth, with the help of Netflix."

"It turns out that our ideological friends [the US government] understand perfectly well which is the greatest of the arts," he said, alluding Lenin's famous comment about the propaganda of cinema. "And you thought, what? That all these gigantic start-ups appear by themselves? That some boy student thought something up and billions of dollars flutter from above?"

Scary! Nobody denies that both countries have used oceans of disinformation and media propaganda to portray the other side in a negative light, but suggesting Netflix has much of a motivation beyond money is an entertaining leap. Medinsky's complaint is particularly amusing given that Russia was just exposed for running disinformation factories twenty-four hours a day whose sole function is to fill the internet with anti-Western bile. But regardless of which side is generating the propaganda; if your social values are so fragile they can be unraveled by a half-hour sitcom or a documentary, you may want to reconsider your ethos.

That said, the real villain in this latest chapter in the information wars isn't Netflix, but Netflix-produced shows and other fare that dare to show homosexuals as something vaguely resembling actual human beings.

Filed Under: american culture, culture, mind control, movies, russia, tv, vladimir medinsky
Companies: netflix

AT&T's Broadband Caps Go Live This Week And Are The Opening Salvo In An All-Out War On Cord Cutters

from the tightening-the-noose dept

For a company that just spent $69 billion on DirecTV to unlock "amazing synergies" across the TV, wireless and broadband sectors, AT&T's latest quarterly earnings subscriber tallies landed with a bit of a thud. The company actually posted a net loss of 54,000 video subscribers, a net loss of 363,000 postpaid phone subscribers, and a net gain of just 5,000 broadband customers during the quarter -- suggesting that any "synergies" AT&T envisioned are going to be somewhat slow in coming, if they arrive at all.

That AT&T spent $69 billion on a satellite TV provider on the eve of the cord cutting revolution -- especially given its fixed broadband network lags cable speeds and is in desperate need of upgrade -- turned numerous heads on Wall Street. But skeptics haven't yet really keyed in to the cornerstone of AT&T's plans or its ultimate secret weapon in the war on evolving markets: usage caps.

We've long noted how usage caps are little more than anti-competitive weapons and glorified price hikes levied on uncompetitive broadband markets. And this week, AT&T formally took aim at millions of you with the launch of usage caps on all of the company's broadband customers. Starting this week, U-Verse customers now face caps ranging from 300 GB to 1 terabyte depending on speed -- caps that users can avoid if they're willing to pay an extra $30 per month. Things are worse for DSL customers, who face a fixed cap of 150 GB and need to pay $10 for each additional 50 GB of data consumed.

But usage caps don't just have the benefit of letting duoplists like AT&T and Comcast charge customers more money for the same exact product. In addition to using caps to punish cord cutters, AT&T hopes to (ab)use usage caps to prevent cord cutting altogether. The company has announced it's eliminating caps entirely for customers who subscribe to DirecTV service. In other words, you can avoid aggressive price hikes on your broadband line -- if you pay even more money for a TV service you may not even want. AT&T's doing something similar in wireless, where customers can now only get unlimited data -- if they subscribe to DirecTV.

So while the merger may not have provided notable "synergies" yet, the long play is that it gives AT&T the ability to effectively abuse the lack of fixed-line competition -- to drive captive, capped customers toward AT&T TV services. And as the justification for usage caps has been increasingly debunked, ISPs have stopped really justifying the moves at all. AT&T's statement on the matter barely even tries to give a reason for the new limits:

"We want to continue providing a great experience for our Internet customers so we’re giving U-verse® Internet customers more choices and more data, including an unlimited data option available to any U-verse Internet customer."

And here's the thing: AT&T's only just getting started. Leveraging its NFL Sunday Ticket platform acquired in the merger, AT&T says it wants to launch not one -- but three nationwide streaming services later this year in a bid to become the streaming video provider across the United States. And should the FCC's net neutrality rules fail to stand up in court (and perhaps even if they do), guess who's streaming video service won't count against any of these usage restrictions?

Filed Under: broadband, cord cutting, data caps, tv, usage caps
Companies: at&t, directv