GIVE us more money and TAKE what we offer you.

Bloomberg News is reporting what many of you already know — it is getting tougher to get a better deal from your cable or phone company.

As Stop the Cap! has documented since the completion of the Time Warner Cable/Bright House/Charter Spectrum merger in 2016, companies are pulling back on promotions, taking advantage of a lack of competition and offering best pricing only to new customers.

Charter Spectrum and Cable One (soon to be Sparklight) are the most notorious for implementing “take it or leave it” pricing. In fact, one of Charter CEO Thomas Rutledge’s chief complaints about Time Warner Cable was its “Turkish Bazaar” mentality about pricing. Rutledge claimed Time Warner Cable had as many as 90,000 different promotions running at the same time, typically targeted on what other companies were theoretically providing service and how serious the representative felt you were about canceling service. Time Warner Cable had basic retention plans available for regular representatives to offer, better plans for retention specialists to pitch, and the best plans of all to customers complaining on the “executive customer service” line or after filing complaints with the Better Business Bureau. There were plans for complaining over the phone and different plans for complaining at the cable store. Rutledge was horrified, because customers were now well-trained on how to extract a better deal every year when promotions ran out.

Last month, Rutledge said he was indifferent about cash-strapped consumers that cannot afford a runaway cable TV bill on a retired/fixed income or the urban poor who can’t imagine paying $65 a month for basic broadband service. To those customers, pointing to the exit is now perfectly acceptable. In fact, companies make more profit than ever when you drop cable television service and upgrade your broadband connection to a faster speed. That is because there is up to a 90% margin on internet service — provisioned over a network paid off decades ago and designed for much less space efficient analog television. Charging you $20 more for faster internet service is nearly 100% profit and costs most companies next to nothing to offer, and Time Warner Cable executives once laughed off the financial impact of so-called “heavy users,” calling data transport costs mere “rounding errors.” 

Even with a much tougher attitude about discounting service, Charter and Comcast are still adding new broadband customers every month, usually at the expense of phone companies still peddling DSL. So if you cancel, there are probably two new customers ready to replace you, at least for now.

Cable One redefines rapacious pricing. The company specializes in markets where the incumbent phone company is likely to offer low-speed DSL, if anything at all. As a result, they have a comfortable monopoly in many areas and price their service accordingly. Cable One’s basic 200 Mbps plan, with a 600 GB data cap, costs $65 a month, not including the $10.50/mo modem fee, and $2.75 monthly internet service surcharge. To ditch the cap, you will pay another $40 a month — $118.25 total for unlimited internet.

In fact, Cable One charges so much money for internet, they even have Wall Street concerned they are overcharging!

When Joshua May tried calling Spectrum to deal with the 29% more it wanted (around $40 a month) after his promotion expired, the customer service representative told him to go pound salt.

“I expected they’d at least offer free HBO or Showtime,” May, 34, of Springfield, Ohio, told Bloomberg News. “They did nothing.”

He did something. He cut the cord. The representative could have cared less.

The product mix cable and phone companies offer has not really changed, but the era of shoving a triple play bundle of internet, TV, and phone service sure has. Charter and Comcast now treat cable television as a nice extra, not the start of a bundle offer. Broadband is the key item, and the most profitable element, of today’s cable package. Beleaguered phone service gets no respect either. Time Warner Cable used to sell its triple play bundle including a phone line for less money than their double play bundle that omitted it. Today, it’s a simple $9.99/mo extra, given as much attention as a menu offering premium movie channels.

Comcast differs from Charter by offering a plethora of options to their customers. If you don’t want to spend a lot for high speed internet, spend a little less for low speed internet. Their television packages also vary in price and channel selection, often maddeningly including a “must-have” channel in a higher-priced package. Like Spectrum, their phone line is now an afterthought.

AT&T and Verizon have their own approaches to deal with reluctant customers. Verizon FiOS customers face steep price hikes when their promotions expire, but the opportunity to score a better deal is still there, if Verizon is in the mood that quarter. Verizon remains sensitive about their subscriber numbers and growth, so when a quarter looks like it will be difficult, the promotions turn up. AT&T prefers to play a shell game with their customers. Most recently, the company has given a cold shoulder to its U-verse product, treating it like yesterday’s news and best forgotten. AT&T literally markets its own customers to abandon U-verse in favor of AT&T Fiber. Verizon and AT&T treat their DSL customers like they are doing them a favor just by offering any service. All the best deals go to their fiber customers.

AT&T Randall Stephenson is a recent convert to the “who cares about video customers” movement. Services like DirecTV Now were originally channel-rich bargains, but now they are a place for rate hikes and channel deletions. Over a half-million streaming customers have already canceled after the most recent price hikes, but Stephenson claims he does not mind, because those bargain-chasers are low-quality customers worthy of purging. AT&T’s dream customer is one who appreciates whatever AT&T gives them and does not mind a parade of rate hikes.

Comcast’s chief financial officer Mike Cavanagh said it more succinctly: seeking subscribers that “really value video and our bundle despite the increases in prices,” and has “the wallet for a fuller video experience.”

Customers who decide to take their business to a streaming competitor are already learning the industry still has the last laugh. As package prices head north of $50/month, that is not too far off from the pricing offered by cable and phone companies for base video packages. In fact, Spectrum has begun undercutting most streaming providers, offering $15-25 packages of local and/or popular cable channels with a Cloud DVR option for around $5 more a month.

AT&T is offering a permanent way out of its 1 TB data cap.

Customers who buy and activate two AT&T Smart Wi-Fi Extenders ($99.98 for two) by June 30, 2019 can get a permanent bill credit worth $30 a month for ongoing unlimited internet access as long as their internet account remains active and in good standing.

Here is how:

• New or existing residential AT&T Internet customers who buy and activate two (2) AT&T Wi-Fi Extenders will receive a $30 bill credit for unlimited internet data allowance plan.
• You must have a Pace 5268, NVG599, or BGW210 gateway. Existing AT&T Internet customers without compatible gateways will need to first be upgraded to a compatible gateway.
• Offer does not apply to DSL or fixed wireless customers.
• Credit starts within 3 bills.
• Internet service account must be active and in good standing for continued receipt of bill credits.
• Offer available with internet plans 768 kbps–1,000 Mbps.
• Employees and retirees not eligible.

Sales tax applies, but AT&T is offering free ground shipping. The fine print:

As AT&T bleeds satellite and streaming TV customers, a new class action case is planned on behalf of investors who feel ripped off after buying AT&T stock on assurances from top executives that the company was aggressively seeking a leadership role for its DirecTV Now streaming service.

According a complaint from the Schall Law Firm, AT&T made false and misleading statements to the market and caused some investors to lose more than $100,000 from the declining value of AT&T stock.

DirecTV Now entered the streaming business with a generous package of TV channels and a significantly lower price than some of its competitors. It also offered high value promotions including free equipment, and for some AT&T wireless customers, free service. By October 2018, DirecTV Now grew to a peak of 1.85 million customers.

But several weeks later, AT&T CEO Randall Stephenson announced the service was cutting back on promotions and planned to raise prices and cut back on the number of channels to boost profits.

“This resulted in existing customers leaving the service when their discount expired, and new customers avoiding the service altogether based on high prices,” the Schall Law Firm said in a press release. “Based on these facts, the company’s public statements were false and materially misleading. When the market learned the truth about AT&T, investors suffered damages.”

Publicly traded companies cannot lie or deceive investors in public statements about the company or its performance, according to securities laws. Shareholders are entitled to prompt and forthcoming disclosures about materially adverse events that could significantly impact on the performance of a company. AT&T has already lost over 500,000 TV customers in the first quarter of 2019. Stephenson this month told investors at a J.P. Morgan Conference he now expects more customer losses for the rest of 2019, including more than a half-million more anticipated cancellations during the second quarter of this year. Stephenson called it a “customer cleanup” that will purge “low value” subscribers.

Investors with significant losses were encouraged to reach out to the law firm before May 31, 2019.

Stephenson

AT&T CEO Randall Stephenson on Tuesday told investors that AT&T will deploy a combination of fiber optics and 5G wireless and be able to sell a “true, high-speed internet network throughout the United States” within the next three to five years.

“In three to five years out, there will be a crossover point,” Stephenson told investors. “We go through this all the time in industry. 5G will cross over, performance wise, with what you’re seeing in home broadband. We’re seeing it in business now over our millimeter-wave spectrum. And there will be a place, it may be in five years, I think it could be as early as three, where 5G begins to actually have a crossover point in terms of performance with fiber. 5G can become the deployment mechanism for a lot of the broadband that we’re trying to hit today with fiber.”

Although the remarks sound like a broadband game changer, Stephenson has made this prediction before, most recently during an AT&T earnings call in January, 2019. Stephenson told investors he believed 5G will increasingly offer AT&T a choice of technology to deploy when offering broadband service to consumers and businesses. In high-cost scenarios, 5G could be that choice. In areas where fiber is already ubiquitous, fiber to the home service would be preferred.

Stephenson’s predictions about nationwide service will depend in part on the commercial success of millimeter wave 5G fixed home broadband, which will be required to satisfy broadband speed and capacity demands. Verizon Wireless has been offering fixed 5G in several markets with mixed results. The company’s early claims of robust coverage have been countered by Verizon’s own cautious customer qualification portal, which is more likely to deny availability of service to interested customers than offer it.

But Stephenson remains bullish about expanding broadband.

“So all things considered, over the next three to five years, [with a] continued push on fiber, 5G begins to scale in millimeter-wave, and my expectation is that we have a nationwide, true, high-speed internet network throughout the United States, [using] 5G or fiber,” Stephenson said.

Whether anything actually comes of this expansion project will depend entirely on how much money AT&T proposes to spend on it. Recently, AT&T has told investors to expect significant cuts in future investments as AT&T winds down its government-mandated fiber expansion to 14 million new locations as part of approval of the DirecTV merger-acquisition. In fact, AT&T’s biggest recent investments in home broadband are a result of those government mandates. AT&T has traditionally focused much of its spending on its wireless network, which is more profitable. For AT&T to deliver millimeter wave 5G, the company will need to spend billions on fiber optic expansion into neighborhoods where it will place many thousands of small cell antennas to deliver the service over the short distances millimeter waves propagate.

AT&T could sell a fixed 5G broadband service similar to Verizon Wireless, confine its network to mobile applications, or offer fixed wireless service to commercial and manufacturing users in selected areas. Or it could offer a combination of all the above. AT&T will also need to consider the implications of a fiber buildout outside of its current landline service area. Building fiber optic networks to provide backhaul connectivity to AT&T’s mobile network would not antagonize its competitors nearly as much as the introduction of residential fixed 5G wireless as a home broadband replacement. The competitive implications of that would be dramatic, especially in communities skipped by Verizon FiOS or stuck with DSL from under-investing independent telephone companies like CenturyLink, Frontier, and Windstream. Should AT&T start selling 300+ Mbps fixed 5G wireless in these territories, it would cause significant financial distress for the big three independent phone companies, and could trigger a competitive war with Verizon.

Wall Street is unlikely to be happy about AT&T proposing multi-billion dollar investments to launch a full-scale price war with other phone and cable companies. So do not be surprised if AT&T’s soaring rhetoric is replaced with limited, targeted deployments in urban areas, new housing developments, and business parks. It remains highly unlikely rural areas will benefit from AT&T’s definition of “nationwide,” because there is no Return on Investment formula that is likely to work deploying millimeter wave spectrum in rural areas without heavy government subsidies.

For now, AT&T may concentrate on its fiber buildout beyond the 14 million locations mandated by the DirecTV merger agreement. As Stephenson himself said, “When we put people on fiber, they do not churn.” AT&T has plenty of runway to grow its fiber to the home business because it attracts only about a 25 percent market share at present. Stephenson believes he can get that number closer to 50%. He can succeed by offering better service, at a lower price than what his cable competitors charge. Since 5G requires a massive fiber network to deploy small cells, there is nothing wrong with getting started early and then see where 5G shakes out in the months and years ahead.

The top 10 service providers in the United States collectively lost over 1.25 million paid television customers in the first three months of 2019, providing further evidence that cord-cutting is accelerating.

Multiscreen Index estimates if that trend continues, an average of 14,000 Americans cancel their paid cable or satellite television service daily.

AT&T suffered the greatest losses, primarily from its satellite television service DirecTV. More than a half-million satellite customers canceled service in the first quarter of the year. AT&T lost another 89,000 streaming customers as news spread that the service was increasing prices and restricting generous promotions to attract new subscribers. DISH Network, DirecTV’s satellite competitor, also lost more than 250,000 customers.

Many cable television providers announced this quarter they would no longer fret about the loss of cable TV customers, and many have dropped retention efforts that included deeply discounted service. As a result, customers are finding it easier than ever to cancel service. Comcast lost 107,000 TV customers, while Charter Spectrum lost 152,000. Spectrum recently increased the price of its Broadcast TV Fee to $11.99 a month and has pulled back on promotions discounting television service.

“There were losses across the top 10 television services in the United States, with even the DirecTV Now online service losing customers following previous heavy promotion. Between them, they lost over one-and-a-quarter million subscribers in three months. They still command a significant number of customers but the rate of attrition has increased,” said Dr. William Cooper, the editor of the informitv Multiscreen Index.

The total figures for the quarter show roughly 81.90 million Americans are still paying one of the top-10 providers for cable or satellite television service, amounting to less than 70% of television homes — a significant drop. Privately held Cox Communications is excluded because it does not report subscriber numbers or trends.