Charter Spectrum Celebrates Megamerger One-Year Anniversary With Blanket Price Hikes For 'Mispriced' Customers

from the synergies! dept

You may recall that when Charter proposed spending $79 billion to acquire Time Warner Cable and Bright House Networks last year, the usual promises of job creation, lower prices, better broadband, and improved customer service came along for the ride. The problem: none of those things have materialized under the new company (Spectrum). In fact, like so many telecom mergers, many customers of the nation's now second-largest cable provider say Charter's prices have gotten higher and the company's customer service (already ranked among the worst in any industry) has somehow managed to get worse.

With this week being the one-year anniversary of this mega-deal, customers in acquired territories say the company is engaged in yet another round of blanket rate hikes. In Lexington, Kentucky, for example, Spectrum customers say they're being forced to pay $20-$40 more (plus assorted fees to swap out their cable boxes) for effectively the same service. And when they call in to complain, they're discovering that part of the new Spectrum experience involves a company that's no longer willing to haggle on promotions (because it doesn't have to):

"Fitzgerald tried to haggle — Time Warner usually cut you some slack on price increases in order to keep your business, he said — but the representative stopped him. This is Spectrum’s deal. Take it or leave it. “It was bull crap,” Fitzgerald said. “They don’t give us any notice, they just spring it on us in the middle of the month. And then they tell us we’re getting an 'upgrade.' This isn’t an upgrade, it’s the same channels we already had!"

Spectrum's latest rate hikes are part of a sweep of customer accounts to identify customers that company executives claim are "mispriced" (read: aren't paying enough). Like Comcast, Charter benefits from a dwindling amount of broadband competition with the telcos, who have simply refused to upgrade their aging DSL networks at any real scale. As a result, customers looking for ISPs that can actually provide the base FCC definition of 25 Mbps usually have only one option to go to: cable. And when they arrive, they're usually forced to bundle TV service they may or may not even want in order to get the best price.

As a result, Charter added 350,000 broadband subscribers last quarter. But even then, Charter managed to lose 47,000 pay TV subscribers last quarter, the majority of them former Time Warner Cable customers that have used the price hikes as an opportunity to cut the cable cord. Customers clearly aren't happy with the way the merger is going, but Charter CEO Tom Rutledge is positively giddy at the "value proposition" he's presenting these customers:

"It’s a difficult thing to model,” said Rutledge, whose 2016 pay package was $98.5 million. “But we’re coming at it both ways, both from creating a value proposition in the pricing and packaging we have, and doing those smart things that you can do with an existing customer base that’s been mispriced to move them in the right direction."

While the former Obama administration approved what is clearly an awful deal, they did affix a few conditions to the merger. Namely that Charter has to adhere to the FCC's net neutrality rules (even if thrown out by the FCC), needs to expand broadband to 2 million additional locations, and can't impose usage caps and overage fees for a period of seven years from the date of the deal's signing. But the current FCC has been busy trying to roll back many of those conditions, making an already awful merger even worse.

Good news though: if you really adore higher rates, bogus promises, and historically-abysmal customer service, there appears to be many more telecom mergers like this one headed your direction.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community. Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis. While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: broadband, competition, mergers, price hike

Companies: charter