Utterly Tone Deaf To Cord Cutting, Cable Contract Feuds And Blackouts Skyrocket

from the utterly-unsustainable dept

We've noted for years that as broadcasters and cable companies bicker over new programming contracts, already-annoyed customers are left in a lurch. Usually these feuds go something like this: a broadcaster demands a huge rate increase for the exact same content. The cable company balks, and the content is usually pulled out of the cable lineup. Customers aren't given any sort of refund for this missing content, they're just inundated with PR pitches from both sides trying to get them pissed at the other guy. Ultimately a new, confidential contract is struck, and the rate hikes are then passed on to the consumer.

In short, consumers are repeatedly punished with blackouts and petty PR bitching between companies incapable of responsibly signing new contracts, after which they get a lovely new price hike. It's no wonder that 2016 was a record year for cord cutting.

Utterly oblivious to the self-immolation that comes from pissing off an already historically unsatisfied customer base, cable providers and broadcasters are already doubling down on this dysfunction in 2017. In just the last few weeks, countless pay TV customers have lost access to content they're paying for, whether it's Bonneville International blocking Dish customer access to a local NBC affiliate in large parts of Idaho, DirecTV users temporarily losing access to 33 Hearst Stations, or Frontier customers losing access to Sinclair Broadcasting stations after the broadcaster demanded a 200% price hike.

The American Television Alliance, a coalition of mostly cable companies, was quick to point out that 2017 is on record to see more of these types of feuds than ever before, as broadcasters continue to push for rate hikes that neither consumers nor cable companies are willing to pay for. It's an utterly unsustainable business model to be sure, though the Alliance is quick to lay the lion's share of the blame, quite correctly, at the feet of broadcasters:

"Broadcasters ambushed innocent consumers on New Year’s Day with a tidal wave of television blackouts," said American Television Alliance national spokesman Trent Duffy. "Broadcast tycoons have brazenly and deliberately hijacked pay TV viewers once again, holding college football bowl games, the last weekend of the NFL’s regular season and network premiers for ransom in a naked ploy to extract more money from consumers."

Of course, cable providers aren't innocent little daisies either. While they may be a prisoner to broadcaster rates, they often impose rate hikes on service at every conceivable opportunity as well, whether it's higher fees to rent a cable box or digital signal converter, fees to pay your bill in person or via the phone, hidden obnoxious fees used to falsely advertise a lower price, or broadband usage caps and overage fees designed to seek out their pound of flesh from another area of the consumer wallet.

Again, this simply isn't sustainable. If the cable industry wants to seriously fight back against cord cutting and slimmer streaming alternatives, it needs to begin more seriously competing on channel bundle flexibility and price, something the sector as a whole appears to be incapable of realizing. As such, cord cutting and cord trimming (streamlining your cable package) are self-inflicted wounds from an industry so terrified of killing its precious legacy TV cash cow, it's actually accelerating the demise of its traditional customer base by doubling down on pissing them off.

Filed Under: blackouts, broadcasters, cable, contracts, cord cutting

Cable's Broadband Monopoly Is Becoming Stronger Than Ever

from the do-not-pass-go,-do-not-collect-$200 dept

Despite ample lip service to the subject of broadband, huge swaths of United States' broadband markets are becoming less competitive than ever before. Companies like AT&T and Verizon have proven completely disinterested in upgrading huge swaths of their networks, instead pivoting toward content and advertising, as evident by AT&T's $155 billion acquisitions of DirecTV and Time Warner, and Verizon's acquisitions of AOL and Yahoo. CenturyLink and Windstream are following suit, shifting their focus from residential broadband to enterprise service with their respective acquisitions of Level 3 and Earthlink.

That's not to say that telcos aren't upgrading their networks at all. Many selectively upgrade customers in markets where fiber is already in the ground and deployment costs are minimal (developments, college campuses), then use marketing magic to pretend these deployments are much larger than they actually are. But in reality most telco execs are now shifting their attention to higher-growth markets like content and advertising, well aware of Wall Street's outright refusal to wait on a return on broadband investment.

As a result, not only are these "broadband" companies incapable of technically offering millions of their customers the FCC definition of broadband (25 Mbps), they're quite actively trying to drive these unwanted customers away with the one-two punch of outright apathy or price hikes for 2003-era speeds.

As a result, phone companies have seen broadband subscriber net losses in five of the last six quarters. In fact, in the first three quarters of 2016, cable companies added about 2,440,000 broadband subscribers, while Telcos lost about 475,000. Last quarter alone the top cable providers added about 775,000 net broadband customers, compared to a net loss of 150,000 broadband subscribers for the nation's telcos:Cable's faster broadband speeds and telco apathy also mean cord cutting is hitting telcos much harder. Leichtman Research states that pay TV overall lost about 255,000 subscribers last quarter (other estimates from folks like SNL Kagan peg that number at closer to 430,000). But whereas cable providers lost just 90,000 net pay TV customers last quarter, the telcos lost 375,000 net pay TV customers. In short, customers frustrated with slow DSL are fleeing to cable, then signing up for cable TV bundles they may not even want, usually because they're priced more cheaply on promotion than cable broadband alone.

Obviously this is all wonderful news if you're a cable broadband provider. As telcos back away from the residential broadband markets they don't want to upgrade, cable's monopoly becomes stronger than ever. As a result, cable providers can implement their weapon-du-jour against streaming video providers (usage caps and overage fees), without fear of the competitive repercussions you'd see in a healthy market. There's also less incentive than ever to lower prices, or to shore up what has historically been some of the worst customer service in any U.S. industry.

While some (including AT&T and Verizon) like to claim that fifth-generation wireless will come in and save us from this more powerful cable monopoly, there's absolutely no indication these services will be uniformly available -- or cheap. While 5G technically does provide significantly faster broadband with lower latency, usage caps and overage fees will ensure these services are priced out of the range of many households. And again, with the only competition being either expensive and capped satellite broadband, or expensive and capped cable broadband, the end result won't so much be competition as it will be competition theater.

Keep in mind cable providers are being allowed to consolidate at a faster rate than ever before, at the same time we seem intent on turning a blind eye to letting incumbent ISPs quite literally write awful protectionist state laws that hamstring broadband competition and creative solutions to spotty coverage. Combine that with the early signs that a Trump Presidency will likely focus on gutting net neutrality and other consumer protections, and the writing on the wall for U.S. broadband markets should start to come into focus.

Filed Under: broadband, cable, competition, fcc, monopoly

Time Warner Cable Sued Again Over Sneaky Hidden Fees...By Plaintiff Not Seeking Monetary Damages

from the new-low-rates dept

For some time now broadband providers have taken a page out of the banking playbook and hitting consumers with sneaky, below-the-line fees for TV and broadband service. Whether it's the use of "regulatory recovery fee" (a bogus fee designed to sound like it's government-mandated to misdirect blame) or an entirely pointless and nonsensical fee like CenturyLink's "Internet Cost Recovery Fee," these surcharges exist for one purpose: they let the ISP advertise one price, then charge something dramatically different.

You'd be hard pressed to find any regulator willing to crack down on this practice, leaving a rotating crop of lawsuits as the closest ISPs get to seeing actual punishment for such behavior. A few years ago Time Warner Cable was sued for false advertising and deceptive business practices after promotional rates wound up being significantly larger once the customer bill came due. While that suit still stumbles forward, Time Warner Cable (and new owner Charter) have just been hit with another, similar suit, this time more specifically focused on the company's use of "broadcast TV fees" and regional sports network fees.

The plaintiff in this case isn't seeking any monetary damages; the complaint itself going to great lengths (pdf) to point out how these kinds of deceptive charges now account for more than 20% of Charter's revenues. The case spends a lot of time focusing on the now-industry-standard "broadcast TV fee," which tries to take the cost of programming and bury a portion of it below the line:

"In March 2014, TWC began utilizing a shady backdoor way to increase prices to its prospective and current television service subscribers, while continuing to advertise and promise the same flat lower monthly rates for its service plans. Rather than implementing a top-line price increase for its advertised television service or bundled service plans - which would have been noticed by its prospective and current customers - TWC instead kept the advertised price the same and hid the price increase in a newly invented and inadequately disclosed “Broadcast TV Fee.”

You might recall that Comcast, when also sued for this exact same fee, tried to claim that taking the cost of business and hiding it below the line was just its attempt at being "transparent" with the company's customers. And of course once this fee is implemented it quickly soars — in Time Warner Cable's case having tripled in just three years to an additional $6.05 per month. These fees not only let companies falsely advertise a lower price, it also allows them to falsely crow about how they haven't raised rates in "X" years, even if they're technically raising rates pretty much constantly.

And while the FCC had been pondering a "nutrition label" for broadband & TV services that would have required ISPs be more clear about pricing, that program was voluntary and, like so many recent FCC initiatives, isn't particularly likely to see much attention under a Trump Presidency.

Filed Under: broadband, cable, fees, lawsuits, tv
Companies: time warner cable

Vox Joins Growing Chorus Of Outlets Weirdly Crapping On Cord Cutting

from the cheaper,-more-varied-options-really-suck dept

For a few years now there's been a lazy trend among reporters analyzing "cord cutting," or the practice of leaving legacy cable TV for streaming alternatives. Usually the narrative goes something like this "cord cutting is (stupid/failing/irrelevant/on the ropes) because users need to subscribe to multiple streaming video services to get the same amount of content they used to get with cable." Despite these stories popping up pretty much constantly these reports miss a few key points, the biggest being that nobody wants to duplicate the 300 channels of bullshit that comprises the traditional cable bundle.

Gizmodo recently ran one such article where the author was shocked and outraged after he discovered that subscribing to four different streaming services cost him a measly forty-seven bucks, proof positive in the author's estimation that cord cutting "isn't a bargain any more." And while Reddit users were quick to point out how cord cutting saves them significant cash every month, this narrative never seems to die. Case in point is Vox, which appears to have piggybacked on the Gizmodo report with a similar story proclaiming that "cord cutting is bound to fail":

"Recently, Gizmodo ran the numbers and concluded that if you subscribed to every streaming service collecting most of the TV shows and movies you’d likely want to see (and thus excluding niche services like horror-centric Shudder or anime-centric Crunchyroll or etc., etc., etc.), your monthly bill would be more expensive than an average cable bill on its cheapest tier."

Again though, Gizmodo didn't "run any numbers." The author just subscribed to HBO Now, CBS All Access, Netflix and Hulu and thought (incorrectly, if you ask actual cord cutters) that the $47 total was incredibly expensive. Analysts oddly forget that the same companies setting licensing rates for traditional cable also set the licensing rates for streaming alternatives. As such, pricing for both is probably going to be higher than anybody would like, and that's why Hulu, Amazon and Netflix are feverishly developing original content.

But the fact remains that streaming alternatives offer something cable refuses to: more flexibility at a lower price point. Vox's central thesis is that because cable providers have all the leverage in negotiations with broadcasters, they can strike much better deals than streaming video providers, offering their own dirt-cheap bundles of streaming packages:

"So there’s going to be a lot of demand for some form of bundling — of an option to subscribe to a bunch of streaming services, both mainstream and niche together — in packages that will be slightly more affordable than ordering each service a la carte. And when it comes to bundling, the cable companies know it better than anybody else."

But because the cable industry can do this doesn't mean they will do this. Yes, your cable provider could offer cheap bundles of streaming services. But this would cannibalize their existing legacy TV cash cow subscriber base, and the sector has made it abundantly clear it simply refuses to seriously compete on price. Instead, industry executives would rather pretend that cord cutting isn't a real problem, and defections will cease once Millennials have more babies. As a result the closest we've seen to price competition are skinny bundles that give the illusion of value, but saddle users with hidden fees.

If there's one thing the Vox report gets right, it's that consumers are growing increasingly frustrated with and confused by exclusive, temporary licensing and vanishing streaming catalogs. But that brings us to something all of these analysts and reports willfully, hysterically ignore: piracy. You'll note that none of the "cord cutting is dying" articles ever acknowledge that piracy exists as an option for the consumer frustrated by high prices, poor service or confusing exclusivity arrangements. It's as if these authors are not formally allowed to acknowledge piracy's existence by their editors because it's naughty.

But as this website has noted repeatedly, piracy is a competitor. Because you don't like that fact doesn't make it less true. The reality is that if streaming begins to fail the consumer as a cheaper, more flexible alternative to cable, the last place many of these customers will be headed is back to cable. Instead, countless millions will simply hide behind a VPN and head back to piracy, a shame given the progress we've collectively made in dragging many of these broadcasters, kicking and screaming, into the modern age.

Filed Under: cable, cable tv, cord cutting, tv
Companies: vox

What Cord Cutting? Cable Sector Hiked TV Prices 40% In Last Five Years

from the blind-deaf-and-dumb dept

We've noted time and time again that the cable and broadcast industry could compete with cord cutting by lowering prices, it just chooses not to. Even with last quarter seeing the biggest quarterly defection by paying subscribers ever recorded, time and time again you'll see sector sycophants proclaim that cord cutting either doesn't exist, or has been violently over-hyped and isn't worth taking seriously. In fact, most sector executives still believe that the shift away from traditional cable will magically end once Millennials start procreating (protip: it won't).

As such, they've continued to raise cable TV rates at an absurd rate in the belief that they can keep milking the legacy cable TV cash cow in perpetuity. And while broadcasters certainly take the lion's share of the blame for raising the cost of programming, you'd be hard pressed to find a cable TV provider that isn't making things worse by also saddling consumers with misleading fees for nothing and soaring cable box, modem, and other hardware rental costs.

The end result is users paying 40% more for cable TV than they did just five years ago. In fact the average cable bill is now $103.10 per month, an increase of 4% in the past year. And while the cable sector is quick to proclaim that this just reflects the "increased value" of cable TV, the reality is that most cable ops are trimming back overall channels to try and offset the bloated, soaring cost of sports programming.

While it remains true that the vast majority still subscribe to cable TV and cord cutting is a slow trickling phenomenon, last quarter saw 800,000 pay TV customers leave for cheaper pastures. And things are actually a little worse than that when you remember that cable TV subscriber totals aren't scaling with a rebounded housing market. In other words, millions of people are not reconnecting cable after they move:

"About 82% of households that use a TV currently subscribe to a pay-TV service. This is down from where it was five years ago, and similar to the penetration level eleven years ago," said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. "The rates of those exiting the category, or intending to leave, are actually similar to recent years. The decline in penetration is also due to a lack of those who are coming into the category, and the industry not keeping pace with movers and related rental housing growth."

A different study this week predicted that TV providers could lose nearly $1 billion in revenue as another 800,000 customers cut the cord over the next 12 months:

The study, which is based on an online survey of 1,119 U.S. customers, estimates that pay-TV providers lose about $1,248 per cord-cutter annually. That’s because the average cord-cutter saves $104 a month—about 56% of their bill--from dropping cable TV...“The consumer is discovering they don’t need the mean, evil cable company to get the content that they want, and they can get it for a better deal,” said Steve Beck, managing partner at cg42. A $1 billion loss of revenue is small for the entire pay TV industry, but it is a warning sign.

And it's a warning sign that's going to continue to be ignored by the cable and broadcasting industry. It's abundantly clear that beyond lip service to "innovation," the cable sector doesn't plan to do the one thing that would stop cord cutting dead in its tracks: lower rates. Instead, knowing full well they hold a monopoly over the broadband last mile, they've decided to raise rates on broadband via usage caps and overage fees. Should customers continue to cut the cord, skyrocketing broadband usage surcharges will simply let them grab their expected pound of flesh in a different way.

Filed Under: cable, cord cutting, price hikes

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

FCC Pressure Helps Bring Netflix To Comcast Cable Boxes

from the pretending-to-be-open dept

We've long noted how Comcast is a bit of an anti-competitive jackass on both the TV and broadband fronts. When the nation's biggest cable provider isn't using usage caps to hinder streaming video competitors, it's busy finding new and creative ways to prevent paying customers from wandering too far outside of Comcast's well-cultivated walled garden. And while many global cable companies have joined the year 2016 by integrating Netflix functionality into their cable boxes for consumer benefit, Comcast has historically fought such a move, instead trying to drive consumers to its own Netflix knockoff.

But with the FCC considering new rules that would open up ye olde cable box to competition, Comcast is busy trying to portray itself as open to the changing competitive tides in the hopes of pre-empting new FCC regulations. The company this week is getting oodles of sudden praise for informing Recode that it will "allow" Netflix on to its X1 cable box:

"Said the pair in a statement: “Comcast and Netflix have reached an agreement to incorporate Netflix into X1, providing seamless access to the great content offered by both companies. We have much work to do before the service will be available to consumers later this year. We'll provide more details at that time." Sources said the deal to be on the cable giant’s set-top box would be akin to the arrangement that Netflix has cut with smaller cable operators in the United States and bigger ones across the globe.

It's kind of amazing what the faintest threat of a regulator actually doing its job can do. And while that's great that Comcast is joining the modern era by making its cable boxes actually useful, it's still a problem that Comcast can determine what consumers can and can't access via cable boxes they own and rent, which are looking more and more antiquated in the Roku and smart phone era. That's why the FCC is proposing rules that would require cable providers to simply provide existing programming to third party hardware vendors, in the hopes of creating better, cheaper set top boxes free of traditional walled gardens.

Comcast's sudden about face comes hand-in-hand with the cable industry's attempt to pre-empt FCC regulation on this front with an "app-based" plan of its own. Under the cable industry's "counter proposal" to cable box competition, cable providers would instead be able to keep the traditional cable box and walled gardens intact, provided that it offered its own cable TV lineup via an "app" for third party streaming devices. And while that sounds great on its face, this being the cable industry the plan has a number of ingrained caveats, such as the fact to use DVR recording you'd still need to rent a cable box. This is not a $21 billion annual monopoly the cable sector will give up easily.

So while it's all well and good that Comcast is being slowly forced to join the modern era, it should be clear that this is Comcast trying to forestall real, open cable platforms, not embrace them. The fact that Comcast still needs to "allow" its customers access to the most popular online service potentially ever conceived remains the real problem.

Filed Under: cable, fcc, set top boxes, television
Companies: comcast, netflix

Under Cable Lobbying Assault, FCC Commissioners Waffling On Cable Box Competition Plan

from the $21-billion-reasons-to-fold dept

The cable industry's relentless lobbying assault on the FCC's plan to bring competition to the cable box appears to be working. As we've been covering, cable lobbyists have been filling editorial sections nationwide with all manner of misleading dreck, claiming the FCC's plan (which you can read here (pdf)) will increase piracy, hinder innovation, hurt minorities, and rip giant holes in the time-space continuum. They've also engaged in the time-honored tradition of paying lawmakers that have no idea how technology works to make all manner of false claims about what the FCC's plan actually does.

Unfortunately for those of you tired of paying the cable industry $21 billion annually to rent a shitty cable box, it looks like the efforts are working.

Two of the Democratic Commissioners that originally voted yes on the plan say they're starting to get cold feet, surely only coincidentally after the cable industry decided to ramp up lobbying to levels not seen since 2009 to try and kill the plan. FCC Commissioner Jessica Rosenworcel, for example, is now claiming that the FCC plan she voted for is "too complicated" and that the FCC should compromise with the cable industry on some kind of new arrangement:

"Kudos to the chairman for kicking off this conversation [Rosenworcel voted along with Wheeler and Democrat Mignon Clyburn to kick off that conversation], but it has become clear the original proposal has real flaws and, as I have suggested before, is too complicated. We need to find another way forward." She was not endorsing the cable effort, but instead appeared to be supporting the effort to find a compromise proposal that addresses the flaws. "I am glad that efforts are underway to hash out alternatives that provide consumers with more choice and more competition at lower cost."

Except there's nothing really that complicated or "flawed" about what the FCC is proposing. Under the plan, cable operators simply have to provide access to their programming -- using systems and copy protection of their choice -- to third-party hardware vendors without the need for a cable card. While there's certainly some engineering challenges with the idea, the "complicated" part only really comes from the cable industry's decision to fight cable box competition tooth and nail.

Meanwhile, the "compromise" referenced by the article that appears to have swayed Rosenworcel isn't much of one. Instead of real cable box competition, the cable industry has proposed a plan whereby they simply have to deliver their programming via app -- but consumers would still have to pay for a cable box if they want to do things like record via DVR. Consumer advocates and groups like INCOMPAS are warning that the cable industry will go out of is way in any voluntary proposal to find creative ways to continue forcing consumers to use their hardware and services.

And Rosenworcel doesn't appear to be alone in waffling. Commissioner Mignon Clyburn also appears to be buckling under the weight of false narratives suggesting the FCC's plan somehow needs to be rolled back, lest it damage "copyright, security and privacy":

"We also asked Democratic Commissioner Mignon Clyburn's office if she still supports the original proposal and got this response: "Commissioner Clyburn appreciates and welcomes the constructive ‎efforts by industry to put forward an alternative apps-based proposal. She continues to study the proposal with an eye towards a solution that adheres to Section 629 of the Communications Act; ensures truly competitive choice; enhances access to diverse programming; and provides the protections for copyright, security and privacy that consumers have come to expect."

Note again that the two waffling commissioners don't really provide any solid reasons why the FCC's original proposal couldn't work, but it's pretty clear that they've been influenced -- to one degree or another -- by the paid sound wall cable lobbyists have constructed in trying to scuttle real cable box competition. With their fellow Commissioners Pai and O'Rielly voting no on the proposal (because voting no on consumer friendly policies is their entire purpose in life) and foundering support among Democratic commissioners, Wheeler won't have the political firepower to get the plan approved.

Again that's not the end of the world. The legacy cable TV industry's empire is slowly crumbling with or without the FCC's help, it will just take a little longer if the FCC doesn't give the entire process a swift kick in the ass. If the FCC's cable box proposal sinks, the agency has more time and calories to focus on what's truly going to be important in the new streaming TV age: bringing real, sustained competition to bear on the broken U.S. broadband market.

Filed Under: cable, cable tv, competition, fcc, jessica rosenworcel, mignon clyburn, monopolies, set top box, tom wheeler, unlock the box
Companies: comcast, time warner cable

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

Cable Industry: Our Shitty TV Apps Are Just As Good As Real Cable Box Competition, Right?

from the half-baked dept

The cable industry is aggressively fighting the FCC's attempt to bring competition to the cable box market. So far that's been via a two-pronged approach of buying a torrent of incredibly misleading editorials by people pretending to be objective observers (including Jesse Jackson), and throwing money at politicians who oppose the plan, but pretty clearly have no goddamned idea what they're actually talking about.

Under the FCC's plan (pdf), cable providers would be required to provide their existing programming to third-party hardware vendors, creating competition and hopefully a flood of better, cheaper hardware without the need for expensive, and annoying CableCARDs. But with the average user paying $231 annually in set top box rental fees, the cable industry is pulling out all the stops to protect $21 billion in annual, captive revenues.

The cable sector's latest attempt to scuttle the FCC's plan? A voluntary counter-proposal that pretends to deliver what the FCC is asking for, but falls well short. Under the proposal unveiled during recent meetings at the FCC (pdf), the cable industry would instead provide much of its existing programming via apps. This, the cable industry claims, would somehow create competition in the third-party hardware market without FCC involvement:

This alternative could be built on enforcing an industry-wide commitment to develop and deploy video “apps” that all large MVPDs would build to open HTML5 web standards....They expressed their belief that such an approach could further advance competition for independent device manufacturers within the context of a market transformation already underway and in a manner that fully protects and respects the rights of content owners.

But while this has been portrayed as some kind of revolutionary concession by hired telecom sector policy cheerleaders and several different press outlets, it isn't much different than what cable operators offer today. Currently, most cable providers offer some of their content via apps usable on tablets, smartphones, and many streaming devices. Historically, they offer fewer features and less content than is available via full, traditional cable; little more than a token gesture toward innovation in the hopes of keeping paying customers from jumping ship to Netflix, Amazon, or a collection of other cheaper options.

Under this latest proposal, you'd be able to watch some cable content via apps, but if you wanted to, say, record via DVR -- you'd still have to sign up for old, vanilla QAM-based cable and pay for the same, old, clunky set top box. Ultimately, my guess is that these cable executives would eventually get rid of the cable box if you use their apps, but force you to pay a monthly fee for their cloud-based streaming or other services. Potentially using zero rating (exempting their services from usage caps) to ensure fealty. Slight variation on the same, existing song.

INCOMPAS, a trade association that has Google, Amazon, Netflix, and some ISPs as members (mostly telcos with no interest in selling cable TV), issued a statement pointing out that this "compromise" wasn't much of one, while reminding everyone that cable sector promises historically don't mean much:

...The cable industry is proposing competitive choice for streaming devices, but still seeks to retain a controlling grip on DVRs and recordable devices. “The cable industry has made promises before about ditching the set-top box, that have not materialized. So it is important for the FCC’s unlock the box proposal to include enforceable standards that will create a thriving market for competition, congruent with the law.

Consumer groups too were quick to point out that the cable industry's proposal is murky and falls short:

"The proposal does not allow for many features that consumers want, such as home recording, and it does not allow for true user interface competition," Public Knowledge Senior Staff Attorney John Bergmayer said in a statement sent to Ars. "Additionally, core aspects of the proposal are unclear, in particular, the precise mechanism by which MVPDs propose to provide apps for various hardware and software platforms, and whether consumers would need a broadband connection to access video programming instead of leveraging their existing pay TV connections."

While it's good this proposal at least brings the cable industry to the table, skepticism is more than warranted. This is, after all, an industry with a long, proud history of engaging in anti-competitive behavior under the auspices of phantom technical justification, with net neutrality and usage caps being only a small part of the equation. Comcast, for example, is so eager to limit streaming competition it refuses to let its broadband customers access HBO Go across a wide variety of devices, providing only fleeting, half-baked justifications for the behavior.

Make no mistake, the cable industry is absolutely terrified of not only losing tens of billions in rental fees, but of truly open hardware platforms willing to direct customers to cheaper streaming alternatives. Under this app-based approach, you can be dead certain that cable would include all manner of caveats to ensure customers still need to sign up for traditional cable or their DVR services if they want the "full TV experience." Anyone who thinks the sector's going to honestly volunteer any plan that puts its existing monopoly power at any serious risk -- simply doesn't know the cable industry.

If the FCC is truly intent on real competition to the set top box market, the cable industry may need to be dragged kicking and screaming to the finish line.

Filed Under: apps, cable, cable tv, competition, fcc, set top box, unlock the box