Think you are already paying too much for cable television? If you thought Comcast charges too much, consider what CBS thinks is fair to charge for an on-demand library of CBS shows and a single live stream of your local CBS station – $5.99 a month.

Retransmission consent disputes are all about the money. As your local provider fights with a local station or cable network over their latest demand for more money, channels get dropped, providers get blamed and the content owners get richer when networks are restored.

One of the richest of all is CBS, which has told investors it plans to empty $2 billion from the pockets of American cable customers by the year 2020, up from $500 million in 2013. Not only will CBS demand new programming fees from its affiliates, it is also cajoling stations to demand not less than $1.75 a month from every cable subscriber for access to the local CBS over the air station.

Each time a retransmission consent contract comes up for renewal, cable operators know as certain as the sun will rise from the east that programmers will demand a healthy rate increase for the next contract period. That is why many cable companies now look to broadband for much of their future profits, because the TV business is getting very expensive when everyone has their hand out looking for more.

Some cable companies want an end to being stuck in the middle of these disputes and are supporting a plan to compel programmers like CBS, ESPN, TNT, HBO, and all the rest to publish a retail rate for their channel or network and let consumers decide whether it is worth the asking price.

A proposal introduced last year called “Local Choice” would start the process with local television stations, which have demanded ever-higher carriage fees over the last 10 years, especially for network-affiliated stations.

Under the concept, customers would be given a choice of local stations by their provider. Theoretically, a customer could subscribe to CBS and ABC and tell NBC (and its local affiliate) to take a hike if they demanded too much. Another might be happy just paying for FOX and grab the rabbit ears for anything else they wanted to watch over the air for free.

Rockefeller

No local station or network would voluntarily say goodbye to the golden goose that lays compulsory retransmission consent fees programmers currently collect from every cable subscriber, so last summer Congress proposed to mandate the concept in a clause of the Satellite Television Access and Viewer Rights Act (STAVRA).

Then Senate Commerce Committee Chairman Jay Rockefeller (D-W.V.) and Ranking Member John Thune (R-S.D.) beat the bipartisan drum loudly for change. But lobbyists also had drums. Rockefeller and Thune began wavering almost immediately.

“During the last month, Chairman Rockefeller and Ranking Member Thune have successfully begun a discussion on Local Choice, which would empower TV viewers, maintain our policy of broadcast localism, and ensure TV stations get fairly compensated for the retransmission of their signals,” read a joint statement issued last September. “Because it is a big and bold idea, Local Choice deserves more discussion and a full consideration by policymakers, and the committee may not have time to include it as part of STAVRA. Rockefeller and Thune are focused on passing STAVRA next week, and continuing to work with their colleagues on Local Choice.”

After the sudden insertion of Local Choice into a satellite television bill, an orange glow filled the night sky at 1771 N Street in Washington. It was Gordon Brown’s hair on fire. Brown is president and CEO of the National Association of Broadcasters (NAB), the very powerful lobby representing television stations and networks. But that night, he sounded exactly like a cable guy.

“NAB opposes this proposal because it eliminates the basic [cable] tier upon which millions rely for access to lifeline information,” Brown responded in a statement. “It proposes a broadcast a-la-carte scheme that will lead to higher prices and less program diversity. Furthermore, STAVRA appears to confer unfettered and unprecedented authority for government intervention into private marketplace negotiations.”

The cable industry has fought its own battle against a-la-carte on exactly the same ground Brown was now occupying.

Rockefeller later claimed he was only poking the Broadcast TV Bear to provoke a response, and he got one. The idea of Local Choice was stripped out of the bill by the fall. Rockefeller was reduced to saving face.

“What we wanted to do was introduce those ideas,” Rockefeller later told The Hill. “We made it sound like it was the focus of the bill, and K Street just went crazy, which is always good. But we knew that we’d have to take it out.”

Yes they did, after the NAB and their allies launched a major PR campaign against Local Choice, attracting over 130,000 comments against the plan.

Polka

But Rockefeller knew the idea was not going away.

“As people get a taste of being able to say ‘I only watch 10 channels so I should only pay for 10 channels,’ they’re going to love that. It’s going to spread like wildfire,” Rockefeller said.

Fast forward to this spring and it was back to business as usual. Retransmission consent disputes yanked several networks and stations off cable systems, providers mailed their annual rate increase notices, and the cable industry’s popularity and reputation with customers now rivaled ISIS.

Much of the collateral damage (apart from the collective emptying of your wallet) continues to be felt by America’s smallest cable operators that cannot negotiate for what passes as fair and reasonable programming rates from networks like ESPN and CBS. They cannot qualify for volume discounts that are so compelling, it drove AT&T (U-verse TV) into the arms of DirecTV just to get enough subscribers to knock a few more cents off the monthly price of regional sports channels. Only the biggest players in the game have the power and get the savings.

Matthew Polka, president of the American Cable Association (ACA), the other cable trade association representing the interests of small, often family owned cable systems, may not have the most power but he could have the strongest argument against the status quo. While the National Association of Broadcasters spent tens of thousands of dollars arguing today’s retransmission consent system works just fine, some of America’s smaller TV stations apparently didn’t read the NAB’s talking points.

The “TV Station Group,” an informal collective of small market TV stations seeking a renewal of their carriage contract with DirecTV has been stonewalled by DirecTV for months. Last week, the station owners filed a complaint with the FCC asking them to stop or block AT&T’s merger with DirecTV until the satellite provider agreed to negotiate in good faith. It was clear from their filing DirecTV’s idea of negotiation is to send ‘take it or leave it’ nastygrams to the TV stations, serving markets like Spokane, Wash., and Yuma, Ariz. The only thing clear from the back and forth is that DirecTV has no doubt it can squash the stations like little bugs:

[W]e will not fall victim to your silly and obvious tactics to try to audit our retrans deals so you can see them all. We did not ask you to send to us your supposed rates, and your unilateral decision to do so doesn’t give you the right to see our other deals. But trust [us], no other station group – especially small groups such as Northwest – are paid by DIRECTV nearly what you have proposed, let alone what your sheet says.

A few weeks later, in response to another request from the broadcasters, DirecTV scolded them like a misbehaving teenager:

To repeat yet again, DIRECTV is not going to get pulled into your transparent trap to define what is ‘market’ by seeing our other deals. That is a precedent we will not set, including for NW. Please do not ask again.

“Judging from the TV stations’ complaint, it is evident that the retransmission consent market is broken and not working for these broadcasters any better than for cable operators,” Polka wrote in a press release issued today. “The time has come for these TV stations and others that have also filed good faith complaints to step out from NAB’s long shadow and join ACA in supporting efforts to update the rules and equip them with a strong referee that can help protect consumers and competition when negotiations break down.”

Polka continues to advocate letting customers decide whether they want to pay for local stations and cable networks. He argues CBS is already doing that today with its All Access program for broadband customers. In 94 markets, serving 64% of U.S. households, consumers can voluntarily subscribe to a live stream of their local CBS station and access a large 6,500 title on-demand library of CBS content for $5.99 a month.

Nobody besides CBS knows how many have agreed to pay for All Access, but executives have told investors they are pleased with how the program is working. Still, Marc DeBevoise, executive vice president and general manager of CBS Digital Media at CBS Interactive knows he walks a very fine line promoting a product that could eventually undermine CBS’s current commitment to today’s retransmission consent system. DeBevoise told The Drum it does not market or intend to offer All Access as an alternative to the current cable model.

“At a high level, our strategy in launching CBS All Access was two-fold. First, to delivery our best fans access to the most CBS content we could on any device at any time – really delivering a service for our ‘superfans,'” DeBevoise said. “Additionally this service enables us to reach ‘cord-nevers’ that want to watch CBS content but don’t have a traditional cable package –a significant audience, with industry estimates ranging from 6.5 to 16 million households.”

But at $5.99 a month, that price may prove too steep for many casual viewers looking only for a show or two. Many viewers now rely on ad-supported Hulu, a project of the major American broadcast networks except CBS. Most Hulu customers watch their favorite network shows for free. The future possibility of paying $6 for each of four major American broadcast networks will likely be seen as out of line, especially by more casual viewers.

But for Polka and ACA member cable systems, the idea that customers will direct their All Access price shock wrath out on CBS, not the cable company, may be worth it.

A system audit by Comcast has created a firestorm across Florida’s Panhandle after customers lost dozens of channels while Comcast used it as an opportunity to sell customers more expensive television packages.

The cable company has been installing new technology that will help it verify customers are not getting channels or services they are not entitled to receive. After auditing subscribers in the Tallahassee area, many long-time Comcast customers found their TV lineup dramatically reduced, often with no warning.

“We found customers had access to channels not included with their service level,” Comcast spokeswoman Mindy Kramer told the Tallahassee Democrat. “Meaning, they were getting some channels that they had not subscribed to in their specific package.”

Comcast used the audit to upsell customers to a pricier package to get those missing channels back, annoying customers.

“During a recent system audit, it was discovered that you may be receiving channels that are not part of the video service to which you currently subscribe,” a Comcast letter said. It then gave an example of a channel the person had been receiving in error and suggested the customer upgrade if they wanted to continue receiving the same service.

“We apologize for any inconvenience this change may cause,” the letter said. “We appreciate your business and thank you for being a loyal Comcast customer.”

Numerous Tallahassee customers contacted the newspaper and local media outlets to complain they lost dozens of channels without notice, many they had received for years. More recent subscribers also discovered their packages were suddenly much smaller.

Among seniors, the loss of Turner Classic Movies brought the most complaints. Customers who had received the network erroneously as part of a Digital Starter TV package ($43.45-68.95/mo) were told they must upgrade to Digital Premiere service to get that single channel back. That represents a rate increase of $22.94-47.54 a month, depending on the area. Digital Premiere costs $90.99-$131.99/mo., according to Comcast’s website.

Ron Crolla ended up paying a promotional rate increase of about $20 a month to restore his 85-year-old father’s Comcast service in a Tallahassee assisted living facility. Crolla said Comcast dropped about half of his father’s TV channels and did the same for many others in the same facility.

“The TV is his primary form of entertainment; he can’t drive, he can’t walk much,” Crolla told the newspaper. “It just seems all underhanded,” he said. “It just seemed like a crappy thing to do.”

Others thought about the same, judging from the newspaper’s Facebook page, overwhelmed with so many complaints about Comcast, a reporter covered the angry responses in another story:

Man, do people hate Comcast.

I can say that because that’s what many people told me this week, after a story ran in this newspaper about Comcast stripping cable customers of channels they weren’t paying for.

Dozens of emails and hundreds of Facebook and online comments came in hot. Most people shared their stories in gritty detail, breaking down their channel line-ups, what they paid and when. Some even passed on the name of the customer service representative they were dealing with, others just spun into a tirade.

People freely tossed out words like “furious,” “worst,” “sucks,” “hate” and others not fit for print. Something was triggered. People were pouring their hearts out in emails. It was personal. They were feeding off each other, finding solace in having a common enemy.

For many, it wasn’t about justifying the fairness of getting the extra channels for free, it was about Comcast’s method of ferreting out customers and dropping the channels with what many claim was no warning.

“If they wrote me a letter and told me I was getting extra channels for free, I probably wouldn’t even realize it because Comcast’s packages and lineups are so confusing,” said Tallahassee resident and Stop the Cap! reader Neil. “The classy way to handle it would be Comcast admitting it was entirely at fault and offering a special deal to keep the channels on at their wholesale cost for 6-12 months. I don’t want them to have to pay for something I am getting for free, but they decided to profit from their mistake at the customer’s expense. That is why Comcast is so despised around here. It is always an angle with them to get more money. If I make a mistake, I own up to it. If they make a mistake, they want to bill me for it.”

Time Warner Cable held its first post-merger-flop conference call with investors this morning and reported surprisingly good subscriber numbers for the first quarter of 2015.

Despite disappointing investors for not meeting projected profit and revenue numbers for the first three months of the year, Time Warner managed to add 30,000 net video customers for the first time since 2009. High-speed data customers grew by 315,000, compared with 269,000 a year ago, while voice customers increased by 320,000, compared with 107,000 in the prior-year period. The company also reported $26 million in wasted merger-related costs.

Time Warner’s latest triple play promotion has fewer gotchas in the fine print than usual, but the modem fee is still there so buy your own.

A renewed love for Time Warner Cable was not the reason the cable company added customers. Aggressive pricing with fewer fine print “gotchas” and Time Warner Cable Maxx upgrades helped the company pick up new subscribers. Last October, Time Warner added a $90 triple play offer valid across much of its service area, offering unlimited calling phone, Preferred TV, and 30Mbps broadband with one set-top box for $89.99 a month for one year, an offer Artie Minson, chief financial officer of Time Warner Cable called “clean.”

For the last two years, Time Warner Cable executives decided to de-emphasize promotional pricing on phone service, preferring to draw more attention to its double-play television and broadband offers. This year, that thinking is long gone as the cable company re-emphasizes its triple-play packages and offers current customers the chance to add phone service for as little as $10 a month. The strong growth in new phone customers during the quarter reflects the success of those promotions.

Minson was less impressed with the sales of “skinny bundles” of bare basic cable television, HBO, and broadband service, noting it had little impact on Time Warner’s subscriber growth. The allure of its $14.99 everyday low price, low speed Internet offer has also waned.

“There’s a lot of attraction in the press about skinny packages,” echoed Dinesh C. Jain, chief operating officer of Time Warner Cable. “I think a lot of the times, customers don’t want to get bogged down in a lot of choices to make on those kinds of things. There’s a lot of value in our triple-play packaging right now and it’s a simpler sale.”

Marcus used the conference call to re-emphasize the company has not been distracted by 14 months of merger talks with Comcast and has executed on its pre-merger business plan all along.

Coming in 2017 (If We Live That Long)

Network upgrades under the TWC Maxx program are continuing on schedule.

“New York City, LA and Austin are complete, Dallas, San Antonio and Kansas City are underway and Charlotte, Raleigh and Hawaii on the docket for later in the year,” said Marcus. “We also plan to begin the Maxx process in San Diego this year and finish up in early 2016. It’s still early days, but Maxx certainly appears to be making a difference. Customer feedback has been great and churn among Maxx customers with new DOCSIS 3.0 modems is dramatically lower.”

But it will take another two years to complete the entire Time Warner footprint, of which 40-50% will be upgraded by the end of this year.

“The exact pace at which we continue that process in 2016 and 2017 depends on the experience we have in 2015. We’re feeling better about our ability to roll out all-digital this year than we did last year, which was really the first year of the program,” said Marcus. “And we’ll evaluate, as we go into 2016, how quickly we think we can ramp the next batch of systems.”

In a recurring theme throughout the conference call, executives emphasized Time Warner does not want to pioneer tinkering with the traditional cable package.

For example, Marcus acknowledged Cablevision’s experiment with Wi-Fi calling as a cellular replacement strategy, but said Time Warner Cable will take a wait and see approach.

“I’m inclined to watch and see how that evolves and then we’ll see how best to develop our own strategy on that front,” Marcus said.

Marcus

“There’s a lot of talk and a lot of work going on out there from other guys,” said Jain, referring to slimmed down cable packages and unbundling. “And if any of their things work, we’ll just be fast followers on that stuff because I think there are some segments of our customer base where that is going to have appeal.”

Marcus also complained there was far too much attention being paid on Millennials as an excuse to break up the traditional cable experience.

“There tends to be, in my opinion, an obsessive interest in Millennials, maybe at the expense of the broader customer base,” Marcus said. “For the vast majority of our customers, the way we currently deliver the video product is pretty darn attractive. That said, sure, there’s a group of customers who might very well like to access video via other means. So it is definitely the case that over time, I can see a world where more and more customers consume our offering without needing to lease a set-top box from us. But that doesn’t mean we’re going to abandon the largest portion of our customers who actually do like the current model.”

On other subjects, the implementation of Net Neutrality under Title II regulations will have no impact on Time Warner’s future plans or investments, according to Marcus.

“We’ve said in the past that our normal business practices comply entirely with the notion of the open Internet, no blocking, no discrimination, no throttling, and transparency are fundamental parts of the way we do business. So to the extent that that’s the full scope of what’s getting incremented under Title II, I think you won’t see a change in the way we do business.”

But he warned if the FCC intends to more broadly regulate Internet access, that could have an impact on pricing and future investment.

Marcus also re-emphasized his intention not to change the way Time Warner sells broadband. That means no compulsory usage caps or usage-based pricing.

“We’re very focused on delivering compelling products to customers at a price that delivers real value,” said Marcus. “We can’t think in terms of taking gross margin dollars that are lost because we lose a video customer and somehow embedding those into high-speed data [with usage pricing] and not seeing an impact on high-speed data.”

That paragon of virtue Comcast is back in the news again with yet another customer service horror story.

After Americans once again rated Comcast one of the most-hated corporation in America, employees are launching the equivalent of a “right back at you” retaliation campaign aimed at departing and downgrading customers with name-calling we cannot print on Stop the Cap!

It all started with Lisa Brown, a volunteer for a missions organization in Spokane, Wash., who told Elliot.org Comcast retaliated against her husband for daring to downsize his Comcast cable package. Brown said her husband’s name Ricardo was changed to “A**hole” on their bill. She tried in vain to get the unauthorized name change corrected, but nobody made things right in the local cable office or in Comcast’s executive customer relations department.

When a reporter called Comcast to confirm the profane name change, alarm bells rang as Comcast realized it had the latest PR Disaster of the Month on its hands.

Steve Kipp, Comcast’s vice president of communications in the Washington State region was shocked, shocked to discover customer service abuse was going on inside Comcast offices. He must not have worked there back in 2005 when the cable company called one woman a “b*tch dog” on her bill.

“We have spoken with our customer and apologized for this completely unacceptable and inappropriate name change,” Kipp told Elliot.org. “We have zero tolerance for this type of disrespectful behavior and are conducting a thorough investigation to determine what happened. We are working with our customer to make this right and will take appropriate steps to prevent this from happening again.”

Comcast eventually refunded back 24 months of cable service to the Brown family.

Notice Comcast charges a $9.50 “administrative late fee” on all accounts that are past due more than 10-14 days after the billing due date. Customers who do not clear their earlier balance to zero may be subject to this fee indefinitely with each billing statement.

Zero tolerance lasted about five minutes before more complaints began pouring in from other Comcast customers who have also been on the receiving end of Comcast’s wrath:

• One customer said a Comcast employee changed his name to the phonetic spelling of the “f word,” unprintable on this website;
• Julie Swano reported her December 2014 Comcast bill was addressed to “Whore” Julia Swano;
• Carolina Heredia: “They changed my name to ‘dummy’ on my online account, so that the greeting was ‘Hello, dummy,’” she said.

Notice Comcast customers who want a paper bill pay $5 more each month than those who accept eBills. Comcast customers complain “EcoBill” offers illusory savings, because for many the $5 “credit” was applied to bills that were also $5 higher than before. (Click image to read complaints)

Comcast’s Tom Karinshak, senior vice president of customer service, treated the incidents as some type of computer glitch or honest mistake.

“We’re retraining our teams on the importance of making name changes properly,” Karinshak said. “We’re looking for automated solutions to prevent this from happening in the future.”

“What amazed me then was that I had talked with at least 20 people at Comcast between Dec. 16 and Jan. 6 who could see that my name was ‘whore’ and they did nothing about it,” Swano said.

But once the matter went viral and could influence regulators contemplating Comcast’s buyout of Time Warner Cable, Comcast got serious enough to write about the incident on its blog.

“We have apologized to our customer for this unacceptable situation and addressed it directly with the employee who will no longer be working on behalf of Comcast,” wrote Charlie Herrin, senior vice president of customer experience.

Swano does not believe it is an isolated incident.

“I have no record of any recent contact with Comcast until Dec. 16. So whoever chose to re-name me picked my account out of a hat,” she said. “That says there are probably millions of us out there who Comcast employees have renamed. We need to find all of them.”

The American Customer Satisfaction Index pegged Time Warner Cable as the nation’s most unloved company in 2014, with its Internet service rated 236th out of 236 companies in customer satisfaction, and its TV service rated 235th. Comcast Corp.’s Xfinity Internet service placed 234th out of 236 and its TV service landed at 232 in the list released in May.

[flv]http://www.phillipdampier.com/video/CNN Another Comcast customer-service gaffe 2-1-15.flv[/flv]

CNN talks with the customer Comcast called an “a**hole” on their bill after the family dared to downgrade their cable service. (1:53)

JPMorgan Chase reports average cable rates reached $88.67 in 2013. (Image: The Oregonian)

Cable TV rates are too low and need to be hiked to boost revenue and offset rising programming costs, even if rate increases further alienate cable subscribers, according to a new report from JPMorgan Chase.

The Wall Street bank concluded customers have few options, noting that after providers raised prices around 5% last year, they lost only 0.1% of subscribers.

“Cable operators are better off raising video prices than eating higher content costs,” said Philip Cusick, a JPMorgan analyst, in the report. “Our analysis indicates that cable companies are better off raising prices and catching customers with broadband if cord cutting becomes widespread, (rather) than eating the programming increase.”

The bank recommends imposing (or raising) broadcast TV and sports programming surcharges as well as general rate hikes on basic cable service.

JPMorgan notes that increased broadband pricing and cable modem rental fees paid off for the industry during the fourth quarter of 2013, when earnings topped estimates. By doing the same for cable television packages, providers can continue to boost revenue with little risk customers will find a suitable competitor that isn’t also increasing prices.

Even if customers get rid of cable television, a practice known as cord-cutting, cable operators can still keep customers by providing broadband service. Some of the lost revenue can be recovered from the services customers have not canceled.

Cusick says the industry is being challenged by a handful of content companies that increasingly dominate the cable package, among them Walt Disney, Time Warner (Entertainment), CBS, and FOX.

“With the majority of content controlled by only six or seven programmers, aggregate prices for content are rising around 10% annually and forecasts in many media models continue that rise for years,” Cusick said.