10 Things Cable companies Won’t Tell You

  • By Jonnelle Marte, MarketWatch
  • June 04, 2014

7. “Buying services piecemeal hurts you, not us.”
While bundled packages will often offer cable, phone and Internet together for $100 bucks or less, some customers aiming to trim their monthly bills will find that it costs more buy services individually from separate providers than it does to pay for them all together from one. The reason: Some providers are now using tiered pricing plans where they charge the most for the first service, say cable or Internet, add on the second service at a discount, and the third service at a deeper discount, says Dampier. (A plan might charge, say, $60 for Internet, $30 for cable service and an extra $10 for a phone connection, he says.)

Verizon FiOs cable customers, for example, can add Internet to their package for an average of $15 more a month, says Kula. And Comcast offers some $50 plans that include cable and Internet; for Internet only, the charge would be $70. The strategy discourages subscribers from picking and choosing their services. But while some customers may resent being forced into choosing a single company for all their services, the cable companies say bundling actually helps them retain customers, since people who get multiple services from them are also less likely to cancel their plans. Such discounted prices, Dampier says, could in fact cut into cable companies’ profits, while benefiting consumers. To be sure, some customers may still save by purchasing a single service — especially if they don’t need the other services. And in some cases, those bundling discounts don’t last: They’re often temporary or are available to new customers only.

8. “Use the word ‘cancel,’ and you’ve got our attention.”
Cable customers can often avoid price hikes if they threaten to cut back on services, says Dampier, who cut his own monthly Time Warner Cable bill in half to $100 last February after sending the company a message on Twitter saying he was considering a plan from the phone company in his neighborhood. Within a few days of sending the tweet, he received a call from a customer service representative asking him questions about his plan and discussing ways he could cut costs on his package, which includes two cable boxes, DVR, Internet and phone service. Time Warner Cable says it actively uses Twitter to address customer concerns and solve problems.

Cable providers are willing to negotiate with customers because it costs less to keep a current subscriber than it does to bring on a new one, especially when a technician has to be sent out to install equipment, insiders say. And studies show that once a cable provider loses a customer, it faces an uphill battle in winning him back. Roughly a third of those people who eliminated their cable and satellite services said they would not reinstall them, even after a dramatic discount, according to a June survey by TechBargains.com, a deal aggregation site.

As a result, many existing customers can often get a better deal on their services by simply picking up the phone (or hitting Twitter) and letting a customer service representative know that they are interested in a plan from a competitor, experts say. Further, Dampier suggests, if the cable company can’t match a competing offer, customers should ask for other perks like free premium channels or a waived installation fee. Still no luck? Set a cancellation date, which could spark some calls from a customer retention specialist ready to offer you a better deal, Dampier says. Cable companies are more likely to accommodate long term customers who pay their bills on time. Those who regularly pay late, or who switch companies frequently hopping from one promotional offer to the next, are more likely to be let go, he says.

9. “We will squeeze your Internet.”
Some cable providers are quietly introducing limits on how much Internet data customers can use to upload and download content each month. People who surpass those limits are charged extra. Cox, which has one of the lowest caps, according to Consumer Reports, limits Internet data usage to 30 gigabytes a month on some plans. Comcast eliminated its monthly cap of 250GB in May but replaced it with a trial multi-tier usage program that allows up to 300GB of data usage on some plans. Customers who exceed that are charged $10 for every additional 50GB of data. Comcast declined to comment on the switch.

Many consumers may not be impacted by these additional charges, says Dampier. Indeed, Cox says less than 4% of its customers exceed the monthly data usage, adding that its reps work with customers to help them find a plan that fits their needs. But the changes come as homes are substantially upping their Internet use. The average amount of data used in North American households increased to 51.3GB a month in the second quarter, up from 32.1GB at the start of the year, according to analytics firm Sandvine. And some customers who consume a lot of media, including music, TV and movies, are already crying foul. It takes roughly 5GB of data to stream two high definition movies, estimates Dampier, who led a 2009 protest in Rochester, N.Y., when Time Warner Cable proposed introducing an Internet cap for customers in the area. Street picketers were supported by Sen. Chuck Schumer (D., N.Y.), and Time Warner eventually backed down, citing widespread “misunderstanding” of its plans. Instead, the company introduced a plan for light users that offers a $5 discount on monthly broadband bills for customers who keep their usage below 5GB a month, charging them $1 for every additional gigabyte up to a maximum of $25.

To be sure, many cable providers have also improved the speed and quality of their Internet services in the past year. The average broadband speed offered by the major Internet service providers, including cable companies like Cablevision and Comcast, increased by 30% in 2012 from the year before, according to an FCC report on broadband speeds. And after the same report last year found that actual Internet speeds can fall short of the levels promised, Internet providers also got better at delivering advertised connection speeds: The companies delivered 96% of advertised Internet speeds during the peak hours of 7 p.m. to 11 p.m. on weekdays, up from 87% in 2011. (Speeds can be 5% to 10% slower during those busy hours, according to Consumer Reports.)

10. “We’re cracking down on piracy.”
Time Warner Cable, Verizon, Comcast and Cablevision are among the Internet service providers introducing an antipiracy program commonly called the “six-strike policy” at the end of November. Customers who illegally download music, movies or other copyrighted content on “peer-to-peer” networks will be alerted that their account is potentially being used to share files illegally. It’s not clear, however, what will happen to customers after six warnings, says Joe Karaganis, vice president of the American Assembly, a forum for public policy issues that is affiliated with Columbia University. The system calls for “mitigation measures,” which could include reducing Internet speeds or redirecting traffic until the customer contacts the Internet provider, according to the Center for Copyright Information, the collaboration between the Motion Picture Association of America, The Recording Industry Association of America and major Internet service providers that created the policy. But the penalties will likely vary by provider. Time Warner Cable, for instance, says it will not slow Internet service, but customers who repeatedly violate the policy may have their accounts terminated. Verizon says it has not yet detailed its process for handling customers who receive several alerts.

The policy does have a review process for subscribers who want to challenge the validity of alerts they’ve received. And the tracking isn’t done by the Internet service providers like the cable companies, but rather by third party groups who work with content companies represented by the movie and record industry associations, according to a Sandvine report. Subscribers are then contacted based on the Internet Protocol or “IP” address which identifies which specific computer may have been used for illegal sharing. Still, cable companies offering internet services have more incentives to crack down on online copyright infringement now that more consumers are relying on online viewing services — both legal and not — and cutting back on their cable plans. “They’re in the business of making Internet access less attractive than cable service, so enforcement is in their interest,” says Karaganis. 

This article originally appeared on MarketWatch.com and is reprinted by permission from Marketwatch.com, 2014 Dow Jones & Co. Inc. All rights reserved. 

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