Cable One, the Phoenix-based mid-sized cable operator serving some of the poorest communities in the country is charging some of the nation’s highest prices for broadband service, raking in an unprecedented 47% margin in the fourth quarter of 2017, the highest in the cable industry.

That growth has come courtesy of CEO Julie Laulis, who has doubled down on data caps — automatically enrolling customers in higher priced plans if they exceed data caps three times in any 12-month period, raised prices, and ended most new customer and customer retention promotions in favor of ‘take it or leave it‘ pricing, especially on broadband service. Laulis has also decided to devote most of Cable One’s marketing efforts on selling broadband service, while de-emphasizing cable television. As a result, customers dissatisfied with Cable One’s lineup are encouraged to leave quietly.

Because video programming is costly to provide and broadband is relatively cheap to offer, the more the company can extract from its internet customers, the higher the profits earned. In 2011, cable television represented 49.1% of Cable One’s $779 million in revenue, with residential and commercial broadband comprising 34%. Today, 57% of Cable One’s $960 million in revenue comes from selling internet service. Cable One not only de-emphasized its video business, it also raised prices on internet service to further enhance earnings.

New customers coming to Cable One can subscribe to an entry-level broadband plan of 100 Mbps with a 300 GB monthly data cap for $55 a month. There are no discounts or promotions on this plan. But Cable One also requires customers to lease ($10.50/mo.) or buy an added-cost cable modem, raising the price higher. To prevent customers from taking advantage of promotions on higher speed products, Cable One requires customers to disconnect from service for a full year before being considered a new customer once again.

Laulis

Cable One has been able to raise prices and attach stingy usage caps to customers primarily because there are no good alternatives in the rural markets it prefers. One analyst said 77% of Cable One’s customers are in largely rural areas of Arizona, Idaho, Illinois, Missouri, Montana and Oklahoma. But prices are clearly getting too high for some, because the company lost more video and phone customers that it gained in new broadband subscriptions during the fourth quarter of 2017.

The fact Cable One broadband is now considered by many subscribers to be “too expensive” is also reflected by the extremely anemic broadband growth at Cable One. In 2017, the company added just 1.5% to its residential broadband customer base, despite very limited competition from phone companies.

MoffettNathanson’s Craig Moffett has complained all winter that Cable One is sacrificing broadband subscriber growth in favor of profits from price increases.

“[Cable One has] the most limited broadband competition of any publicly traded operator, and they have the lowest starting penetration,” Moffett told his investors. “Should they not be growing broadband the fastest of anyone? If price elasticity is greater than anyone thinks, how long is the runway, not just for Cable One, but for any operator choosing a strategy of price increases rather than unit growth?”

Cable One is also squeezing its newest customers at its latest acquisition – NewWave, which now features pricing very similar to Cable One. It recently started to turn over past due NewWave customers to collections after going 40 days past due. Previously, it was 90 days before account holders were threatened with cancellation and collections.

For now, NewWave’s introductory offer remains: 100 Mbps High-Speed Internet is $39 for the first three months before these rates kick in:

More than 20 cable systems across Kansas will be terminating television and broadband service after a private equity firm, working with former Bresnan Cable executives, deemed them unprofitable and not worth upgrading.

Residents of Conway Springs (pop. 1,250), Chetopa (1,125), Sharon (158), and Harper (1,473) are among those who will find their cable and broadband service discontinued in the coming weeks. Abandoned cable subscribers are being told to buy satellite dishes to continue watching television. No immediate broadband solution was available.

Allegiance Communications, which provides cable TV, broadband Internet, and VOIP telephony services to rural and mid-size markets in Arkansas, Kansas, Missouri, Oklahoma, and Texas was acquired last month by former executives at Bresnan Communications, itself bought out by Cablevision Industries. The deal was largely financed by BBH Capital Partners, a New York City-based private equity firm.

The purchase by BCI Broadband orphaned nearly two dozen cable systems that Allegiance owned and operated, but were excluded from the sale. Subscribers are being notified they are about to be switched off permanently in letters signed by Allegiance executives.

Several former Bresnan Cable executives are behind BCI Broadband.

The service will leave rural Kansans without broadband service, cable television, or an alternative to AT&T and other independent phone companies operating in the state.

“This was not an easy decision for us, nor is it one that we came to hastily. The costs of doing business in Conway Springs can no longer be profitable,” Allegiance wrote in its letter, according to KSNW-TV.

Local officials in affected communities are rushing to find an alternative, appealing to providers like Southern Kansas Telephone to see if they can pick up where Allegiance left off, but the phone company has yet to respond.

Allegiance claims the outdated cable systems served few subscribers and the new owners were not interested in investing funds to upgrade them.

BCI Broadband is a new company run by former executives forced out of Bresnan Communications when the company was sold to Cablevision. BCI Broadband claims it wants to invest in system upgrades to improve service to remaining subscribers.

“Historically when we have purchased cable systems and invested in upgrading to the latest technology in markets like Shawnee, that has inevitably led to more customers and the need for more staff,” said Shawn Beqaj, vice president of public and government affairs for BCI Broadband. Beqaj was the former vice president of public affairs at Bresnan.

There has been an accelerating trend of industry consolidation among rural cable operators, particularly by private equity firms that are interested in the stable earnings cable operators usually generate.

GTCR, through its portfolio company Rural Broadband Investments LLC , separately announced its plans to acquire NewWave Communications Co., in what it hopes is just the first of a series of acquisitions. NewWave’s purchase was financed by debt capital from SunTrust Robinson Humphrey, Inc., and Goldman Sachs Bank USA.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KSNW Wichita Small towns losing cable service 2-7-13.mp4[/flv]

KSNW-TV reports more than 20 Kansas communities will lose television and broadband service when Allegiance Communications switches off the cable systems. (2 minutes)

Former Comcast customers throughout southern Illinois and north/central Indiana are saying goodbye to Comcast’s 250GB monthly usage cap now that a new service provider has arrived.  NewWave Communications acquired Comcast properties in the lesser-populated parts of the two states and is upgrading service to areas Comcast ignored for years.

For customers in Olney, DuQuoin, Pickneyville, Mt. Carmel and Benton, Ill., cable system upgrades will soon allow NewWave to provide cap-free 50/5Mbps speeds to homes and businesses.  The upgrades are long overdue.  NewWave often copes with customer criticism regarding the deteriorating cable systems it inherited from other providers.  Customers have previously accused the company of overselling their broadband service and for service outages.  Upgrades generally quiet the complaints.

NewWave Communications, headquartered in Sikeston, Mo. serves over 80,000 customers in the midwest and southeast United States, specializing in smaller communities larger providers typically ignore.  Comcast has spent most of its money and attention in larger cities in Indiana and northern Illinois, and although the company sometimes provide a range of services in more rural communities, upgrades typically came much later.

NewWave’s plan for success involves bringing advanced services to its mid-sized city service areas with the hope it will attract more service bundling and a bigger revenue stream.  NewWave will offer triple play packages of phone, cable, and broadband service and is introducing digital video recorders to a larger share of its customers.

The company has shown no signs of fearing the word “unlimited,” touting it in their literature for phone and broadband service.