AT&T Says It's Eyeing 'Wireless Discounts For Ads.' But It's Not Going To Be What You Think.

from the when-a-discount-isn't dept

AT&T is telling Reuters that it's considering offering wireless customers a "$5 to $10 reduction in their bill" in exchange for some targeted ads:

"I believe there’s a segment of our customer base where given a choice, they would take some load of advertising for a $5 or $10 reduction in their mobile bill,” Stankey said. Various companies including Amazon.com Inc, Virgin Mobile USA and Sprint’s Boost Mobile have tested advertising supported phone services since the early 2000s but they have not caught on. AT&T is hoping that better advertising targeting could revive the idea."

Doling out discounts in exchange for ads doesn't sound like a bad idea on its face. The problem is that's not quite what AT&T is planning. AT&T's goal here is to create a paradigm where people willing to be tracked and hammered with behavioral ads will pay less than those who want to have their privacy respected. In recent years, AT&T has made it very clear the company wants a paradigm whereby opting out of snoopvertising and tracking will cost you more, effectively making privacy a luxury line item (not great for a country already in a broadband affordability crisis).

AT&T already tried some variation of this idea once, and it wasn't just "discounts for ads." The company spent several years charging its broadband subscribers up to $500 more (!) per year to opt out of its snoopvertising systems. The kicker: it only opted you out of receiving behavioral ads, not out of being tracked. This was then passed off to consumers and the press as some kind of discount, when again it was simply making privacy (more accurately the illusion of privacy) only possible with an additional charge.

The other problem, of course, is that this is AT&T. A government-pampered telecom monopoly with a very long history of talking a lot about innovation, then inevitably falling flat on its face once it actually attempts it. It's also a company with a very long history of cozying up to the NSA, repeatedly violating consumer privacy, and undermining absolutely any effort whatsoever to craft even modestly serious privacy guidelines. It's been particularly opposed to any privacy guidelines that would prohibit companies charging a surcharge for privacy protection.

This is all fairly important context Reuters' scoop oddly fails to mention.

AT&T's new pivot to ad-sponsored plans, which is still a year or two out, involves hoovering up an awful lot of location, viewing, and other data from the company's wireless, broadband, phone, and TV customers. AT&T's been a little slow to capitalize on all this data due to a heavy debt load, executive dysfunction, and an investor revolt, but the scope of what they're building from a consumer tracking perspective should be fully understood:

"AT&T engineers are creating “unified customer identifiers,” Stankey said. Such technology would allow marketers to identify users across multiple devices and serve them relevant advertising. The ability to fine tune ad targeting would allow AT&T to sell ads at higher rates, he said. AT&T has invested in developing targeted advertising on its own media properties using data from its phone, TV and internet customers, but the company has been “slower in coming up the curve” on expanding its marketplace that allows advertisers to use AT&T data to target other media companies’ audiences, Stankey said."

AT&T policy folks and lobbyists have (with the GOP's help) managed to convince a big chunk of DC and tech policy Twitter that when we talk about privacy, monopolization, and the health of the internet that "big tech" is the root of all evil. As a result we're launching a slew of "antitrust inquiries" into "big tech," while effectively gutting all meaningful oversight of telecom giants that have the same ad and consumer tracking ambitions but access to as much if not more data than the biggest Silicon Valley giants. I'm sure that kind of accountability vacuum and wholly asymmetrical tech policy won't be a problem down the road though, right?

Filed Under: discounts, fees, price increase, privacy, targeted ads
Companies: at&t

Charter Spectrum's Bullshit 'Broadcast TV' Fee Soars To $16.45 Per Month

from the nonsensical-surcharges-may-apply dept

Like countless other American business sectors, U.S. cable and broadband providers have been using hidden fees to covertly jack up their advertised rates for much of the last decade. These fees, which utilize a rotating crop of bullshit names, help these companies falsely advertise one rate, then sock the consumer with a significantly higher rate post sale (often when locked into a long-term contract). They also let them falsely try and claim that prices haven't increased, when they pretty clearly have.

Back in 2014, Comcast introduced a new $1.50 per month surcharge on cable bills it called its "Broadcast TV Fee." Said fee was really just a portion of the cost of doing business for Comcast (programming costs), busted out of the full bill and hidden below the line -- again to help the company falsely advertise a lower price. Fast forward to 2020 and the fee is now $15 per month, per user, and growing -- despite a number of lawsuits (correctly) alleging that the fees are misleading and predatory.

And it's not just Comcast. Charter (Spectrum) has also heavily embraced such a fee, its own "broadcast TV surcharge" getting jacked from $13.50 to $16.45 a month starting in August:

Charter has raised the fee repeatedly—it stood at $9.95 in early 2019 before a series of price increases. At $16.45 a month, the fee will cost customers an additional $197.40 per year. Charter sells TV, broadband, and phone service under its Spectrum brand name and is the second largest cable company in the US after Comcast.

One other "handy" benefit to the fee (for Charter and Comcast) anyway, is that it lets the companies tap dance out of consumer "price lock" guarantees or promotional rates, by letting them pretend that arbitrary fee increases are not actual price hikes. Charter also imposes a slightly smaller Broadcast TV fee on its streaming TV plans, with that fee getting jacked from $6 to $8.95 a month. That's, of course, in addition to all the other arbitrary fees and surcharges tacked onto your monthly bill, including broadband usage caps and overage penalties.

It's the sort of running scam that would be prohibited by functioning, objective consumer protection regulators or lawmakers, were we to actually have such a thing.

Filed Under: bogus fees, broadcast tv fee, cable tv, fcc, ftc, price increase, truth in advertising
Companies: charter, comcast

The Cable Industry's Response To A Banner Year For Cord Cutting? Massive Across The Board Price Increases For 2016

from the pouring-gasoline-on-a-house-fire dept

2015 was the year cord cutting stopped being written off as fringe behavior and truly went mainstream. 23% of consumers engaged in "cord trimming" in 2014 (reducing their overall package where they could), while 16% said they had unsubscribed from pay-TV services in the past year. Billions in stock value evaporated in a flash as Wall Street realized cord cutting wasn't a fad. in 2015, 4.9 million consumers called themselves former cable customers, a tally that's expected to jump 12.5% in 2016. Consumers are finally tired of paying an arm and a leg for bloated channel bundles, when they only watch, on average, about 17 of them.

Facing an unprecedented shake up in their industries and a dire need for evolution, cable and broadband companies are ringing in the new year the only way they know how: rampant tone deafness and major across the board price hikes starting in January. AT&T, Verizon, Dish, DirecTV, Comcast and Time Warner Cable are pummeling customers with $2 to $10 rate hikes for cable TV service in the new year. Not only are base channel bundles seeing a hike, but all providers are jacking up regional sports fees and so-called "Broadcast TV" fees:

"Comcast, the nation's largest cable provider, announced earlier this month that subscribers nationwide will see prices go up an average of 3.9 percent, and increases already have taken effect in some markets. The company will also hike its "broadcast TV fee" by 66 percent from $3 a month to $5. This relatively new fee covers the cost of retransmission fees that over-the-air broadcast TV networks like CBS, NBC, ABC and FOX charge cable companies for redistributing their networks on pay-TV systems."

Those retransmission fees are simply the cost of doing business (read: the cost of programming). But cable operators have started breaking a portion of these costs out below the line in order to misleadingly keep their advertised rates low. In other words, fees like this are why your already absurdly expensive cable rate is usually significantly higher once you actually get your bill.

As all cable operators are quick to do, they cry to the media, stating they too are simply victims of the soaring cost of TV programming nobody seems able to do anything about:

"Cable and satellite companies say the higher prices cover some but not all of the higher programming costs. The amount that Time Warner Cable pays local broadcast channels has risen 85 percent in the past two years, while its costs for carrying sports networks have increased 116 percent since 2008, according to spokesman Bobby Amirshahi."

While it's true many cable operators (especially smaller ones) are finding TV profit margins tightening, there's a few problems with cable operators' faultless narrative. One, many companies like Comcast/NBC Universal are also broadcasters and -- like Time Warner Cable -- own the regional sports networks contributing to higher costs. More importantly, it's worth noticing that many of these cable operators -- the same ones breathlessly pretending to be consumers' friends on the issue of soaring programming rates and retransmission disputes -- are busy raising rates on most of their non-TV-related services as well.

For example, Time Warner Cable's going to be ringing in 2016 by jacking up the cost of cable modem rentals from $8 to $10 a month (if you're still renting a modem, do yourself a favor and buy your own). DirecTV's jacking up the cost of the company's "TV fee," which the provider's website (seriously) claims is a monthly equipment fee that "allows us to keep our monthly fees low." Most providers are also jacking up the rental costs of set top boxes, and even the fees charged to pay your bills in person or over the phone. That's before you even get to the relentless pursuit of usage caps and overage fees.

And to tie these new year rate hikes off with a bow, most providers insist on insulting their customers' intelligence by claiming these increases are about improving the customer "experience," ignoring most of these companies rank lower in customer service and satisfaction than any other U.S. industry or company. In other words, the cable and broadband industry plans to respond to a banner year for cord cutting by pouring gasoline on a house fire, highlighting why they're absolutely begging for a disruptive ass kicking in the new year.

Filed Under: broadband, cable, cord cutting, price increase, tv
Companies: at&t, comcast, directv, dish, time warner cable, verizon

eMusic Tries To Defend Price Increase... Still Seems To Be Missing The Point

from the nice-try dept

We recently posted about the incredibly poor communications job eMusic did in announcing a price increase at the same exact time as it signed up with Sony Music, its first major record deal. For many eMusic customers, the two events were (not surprisingly) seen as being connected. Even worse, some users were then apparently censored when complaining about it. There was a little mini-drama after we posted about that -- as eMusic contacted us to insist that it was absolutely not true, and that they had not deleted any comments. So we updated the post... and then more and more people demonstrated increasingly damning proof that eMusic flat out lied to us, and that they had, in fact, removed comments.

Either way, eMusic's CEO spoke with Wired earlier this week to try to explain the situation and defuse some of the controversy, and the best he could come up with was basically claiming that the price increase had nothing to do with Sony Music at all, but that it was the indie labels who had been demanding it. So why tie the announcement to the Sony announcement?

We were looking for a "catalyzing event" to do it. And really, the catalyzing event is adding catalog, adding more content. We used this as an opportunity to do it, but we didn't do it because of Sony. We did it because in order to sustain the economics for our label suppliers and their artists, we needed to do it.

While this is what I had assumed happened in my original post, it still doesn't excuse the actions of the company. It makes you wonder how eMusic could be so tone deaf to the sort of customers it has (folks who love indie music, for the most part), that they would think that people wouldn't automatically associate the inclusion of a major record label's content with the price increase. Waiting for a "catalyzing event" doesn't make much sense -- especially when that "catalyzing" might not be at all what users want.

Filed Under: music, price increase
Companies: emusic, sony

Sirius XM Passing Music Royalty Rates On To Subscribers, Raising Lots Of Questions

from the disparity dept

Beginning at the end of July, Sirius XM satellite radio subscribers will see an extra charge of about $2 per month on their bill, as the company will begin passing along the music royalty rates it must pay to subscribers. We've written a lot about music royalties and licenses, particularly about how they serve to stifle the very innovation the music industry needs to survive, in favor of upfront demands for cash -- money which seems to have a hard time making its way to artists. This news from Sirius XM not only is likely to raise the hackles of its subscribers, but also raises some questions about the royalty system, and how it affects consumers.

First, the royalty rate for Sirius XM was set by the CRB at 6.5% of gross revenues for 2009, increasing by half a percent per year over the following three years. So why, then, is Sirius XM charging a $1.98 fee -- or 15.2% -- on its $12.95 monthly subscription fee? That seems like much more than "passing along" the royalty rate. As part of the governmental approval for the merger of Sirius and XM, certain conditions were placed on the company, including a three-year price freeze. The company has gotten around this before by separating out services, like online listening, that used to be included in the general subscription fee, then requiring an additional charge for them. Now it looks to be getting a boost by "recovering" a significantly higher percentage of its subscription fees than it must pay out in royalties. The FCC's merger conditions allow the company to pass the royalty fee on to consumers -- but why would they let the company pass on a fee almost three times as high as the actual royalty rate? Mobile phone companies have used similar "fees" to pad their revenues for some time, and the FCC apparently doesn't mind that, either.

Second, and perhaps more importantly, this situation highlights the disparity in how the music royalty rates are applied. Terrestrial radio broadcasters, unlike satellite broadcasters, don't have to pay musicians (or, rather, their labels) royalties. Satellite radio was presumably, an easier target for the likes of the RIAA, given its relative lack of lobbying strength, so the industry cartel defined it as an "interactive" service -- industry-speak for "pay us more money." It's hard to see how satellite radio is really any different than terrestrial radio, except for a different business model, albeit one with the same end, so it's also hard to understand why the two should be treated differently from a royalty perspective. The RIAA and its cronies have been working to change this -- by trying to force terrestrial broadcasters to pay up as well. They call radio "a kind of piracy", again ignoring the fact that radio, whether it's satellite or terrestrial, promotes their products. The National Association of Broadcasters, which represents traditional broadcasters, likely doesn't really mind the fact that Sirius XM has to pay royalties, given its well-documented disdain for the company. But by standing idly by while Sirius XM gets hit with the royalty mandate, it weakens its own argument against its members having to pay royalties. The equitable solution here isn't really to force terrestrial broadcasters to pay up, to level the proverbial playing field. It's to eliminate the royalties that are hamstringing new services and promoting music. Sooner or later, the industry will figure this out -- but at this point, it looks like that realization will come only after it's run itself into the ground.

Filed Under: price increase, satellite radio, subscriptions
Companies: sirius xm