Comcast Says It Will Respond To Cord Cutting In 2020 With...More Price Hikes

from the that's-not-how-this-works dept

Cord cutting continued to set records in 2019 despite years of cable and broadcast executives trying to claim the trend wasn't actually happening. Now that they're finally acknowledging the threat is real, many of these same executives are doubling down on the kind of behavior that brought them to this point in the first place.

For example, Comcast's Q4 earnings report released this week shows the company saw a 3.2% drop in traditional cable TV subscribers in 2019, double the 1.6% loss rate the company saw 2018. How does the company plan to tackle the customer exodus driven by ramped up streaming competition from the likes of Disney, Apple, and others in 2020? Why even more price hikes, of course:

Comcast CFO just said that with rate increases planned for 2020 and continued consumer shift away from bundled video packages, investors should expect higher Comcast video sub losses in 2020 $CMCSA #cordcutting https://t.co/0a8POqFLid — Rich Greenfield (@RichLightShed) January 23, 2020

Keep in mind, US consumers already pay some of the highest rates for fixed and mobile broadband in the developed world. These latest price hikes are occurring the same time Comcast's cable division CAPEX dropped 10.5% in 2019. You know, the exact opposite of what the Ajit Pai FCC promised when it obliterated FCC authority over telecom providers at lobbyist behest.

This isn't the first time Comcast has made it clear that its strategy to tackle the rise in streaming competition and fleeing users is to just double down on price hikes. Company executives have noted several times that any money they lose on television, they simply make up for on the broadband side:

"Watson added that while Comcast tries to keep customers through a variety of programming and broadband packages, but added that when a customer leaves as a result of price, the impact is actually favorable to the company. “We segment the marketplace,” Watson said, adding that when a low-end customer drops video service over price, but keeps their broadband service – at a higher monthly charge – the company makes out better.

Oddly the reason this is possible is something most analysts and trade magazines don't much like to talk about for whatever reason: Comcast's growing monopoly over broadband and its stranglehold over state and federal regulators and lawmakers.

As US telcos give up on residential broadband, they're giving giants like Comcast and Spectrum an even greater monopoly over faster broadband across massive swaths of the country. So when users in those markets cut the TV cord and move to streaming, Comcast's free to sock them with rate hikes, nonsensical fees, and bogus usage caps and overage surcharges. Because there's no competition and currently no federal regulators looking out for consumers, there's no penalty for this behavior. The telecom lobby has even tried to ban states from stepping in to fill this vacuum and protect users from monopoly harm.

While 5G is often bandied about as a free market panacea for what ails the US telecom sector (ie "we don't need to fix this problem because amazing wireless will soon arrive to save the day"), many of these same problems plague wireless as well (regulatory capture, competition eroding consolidation, regional fiber/backhaul monopolies, etc.). In short, without healthy competition or functioning regulatory oversight you shouldn't put too much stock in giants like Comcast being forced to give much of a damn anytime soon.

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Filed Under: cable tv, competition, cord cutting, internet access, price hikes

Companies: comcast