In a move that clearly signals cord-cutting is taking a toll on Spectrum cable television, Charter Communications today unveiled a new streaming TV service priced to compete with “over the top (OTT)” streaming services like YouTube TV and DirecTV Now.

“Spectrum TV Essentials” will offer a package of 60 national cable networks for $14.99 a month, when the streaming service debuts in March. The lineup avoids costly cable channels focused on sports and will include no local channels.

“Spectrum TV Essentials is a OTT offering designed to provide Spectrum internet-only customers a new low-price, high-value video option,” said Charter CEO Tom Rutledge. “As we began to assemble the rights for this new video service, we received great enthusiasm and encouragement from these key programming partners, who share our view and embrace creating an innovative video offering we believe will resonate with our internet customers.”

Remarkably, one of Charter’s first programming partners for the newest slimmed-down cable TV package is Viacom, notorious for its bouquet of high-priced cable networks. Viacom has been so insistent on regular rate increases and forced bundling of multiple Viacom-owned cable networks, some cable systems like Cable One dropped all Viacom networks from their lineups just a few years ago.

A management change at Viacom apparently included a new willingness to combat cord-cutting.

“Viacom shared its strong belief and research that suggests there is a large untapped opportunity for a low-priced, entertainment-only bundle unencumbered by the high cost of broadcast retransmission consent fees and expensive sports programming,” Rutledge noted.

The 60-channel lineup is heavy on content from Discovery Networks, Viacom, Hallmark, and AMC. News junkies will be unhappy to find CNN, MSNBC, and Fox News are not on the lineup, although lesser-watched BBC World News, Bloomberg, and NewsmaxTV are there.

The full lineup:

A&E, AMC, American Heroes Channel, Animal Planet, AXS TV, BBC America, BBC World News, BET, BET Her, BET Jams, BET Soul, Bloomberg, Cheddar, CLEO TV, CMT, CMT Music, Comedy Central, Cooking Channel, Destination America, Discovery, Discovery Family, Discovery Life, DIY, Food Network, FYI, Game Show Network, Hallmark Channel, Hallmark Drama, Hallmark Movies & Mysteries, HDNet Movies, HGTV, HISTORY, IFC, Investigation Discovery, Lifetime, Lifetime Movie Network, Logo, MotorTrend Network, MTV, MTV2, MTV Classic, MTV Live, MTVU, NewsmaxTV, Newsy, Nickelodeon, Nick Jr., Nick Music, NickToons, Outdoor Channel, OWN, Paramount Network, Science Channel, Sundance TV, Teen Nick, TLC, Travel Channel, TV Land, VH1, Viceland, The Weather Channel and WEtv.

There will be no DVR option at launch, but Charter is reportedly testing cloud DVR technology for introduction later.

“We’re thrilled to expand and deepen our relationship with Charter. They share both our commitment to the evolution of the the Pay TV ecosystem as well as our understanding of the changing needs of consumers,” said Bob Bakish, Viacom CEO. “As the video marketplace continues to segment across price points and offerings, we believe a high quality, lower priced option for internet-only subscribers is very important. We’re excited to have our global brands as part of Spectrum TV Essentials at launch.”

Access will initially be available on the desktop through SpectrumTV.com and Spectrum’s Roku app. The service will also be available on iOS and Android phones and tablets, Apple TV, Xbox One, Amazon Kindle Fire, and Samsung Smart TVs.

Spectrum Junk Mail (image courtesy of: Cube Computer Channel)

Spectrum customers who thought Time Warner Cable sent out too much junk mail now regret criticizing their old cable company.

“I have really come accept the truth,” writes Stop the Cap! reader Dustin Hedges. “There are worst cable companies than Time Warner Cable and Charter Spectrum is one of them.”

Hedges is tired of the relentless junk mail he receives every week from the cable company, primarily to advertise cable television.

“I cut the cord with them for a reason: they cost too damn much and considering all of the mailers they are sending me, I can now see where some of my cable dollar used to go,” Hedges tells us. “Some of them look like urgent notices about a late bill or claims to contain ‘important information’ about my account, which could mean another damn rate increase, but no — it is just another advertisement for their TV service I quit last year.”

Hedged ditched cable television after Spectrum converted to an all-digital format, requiring customers to start leasing cable boxes on their extra televisions.

“I tried the Roku route and didn’t like it because it took too long to change channels and it often buffered or ran 2-3 minutes late, meaning other things I might want to watch I would miss the start of because the Roku app made me late,” Hedges complains. “What really ticked me off is that they keep raising the cost of the box rental and the boxes they are giving out now are cheap garbage. They don’t even have a clock on the front anymore. My bill would have gone up $35 a month. I cancelled.”

Today, Hedges is a Spectrum internet-only customer, and thinks Spectrum does not appreciate the business he still gives to them.

“I pay these crooks $65 a month for internet service, when I used to pay Time Warner Cable less than $50, and they are still not happy about it,” Hedges complained. “They constantly send me TV offers for 10 channels, 25 channels, or to go right back to regular cable TV where I can fall for the same trap of low prices to start and boom stick to it you with regular pricing later on. I don’t watch it, I tell them I don’t want it, and that they can save everyone’s money by not sending me this junk mail. They tell me they won’t stop the mailers.”

Indeed, Charter Spectrum’s customer mailing policy indicates they do reserve the right to market existing customers additional products and services at any time. If a customer has a triple play package, they rarely receive anything from the cable company, at least until recently when Spectrum Mobile started a big marketing campaign. If one drops TV and/or phone service, the junk mail will soon grace your mailbox. By far, most mailers concern TV service. Spectrum markets cable cord-cutters and cord-nevers slimmed down packages delivered over their Spectrum internet connection. Occasionally, the company will also remind customer landline phone service is also still available, typically for around $10 a month. When Time Warner Cable pushed its Intelligent Home security service, those mailers were a common sight to many customers. Charter Communications has no interest in the security monitoring business, so although it maintains service for existing customers, it no longer markets Intelligent Home to attract new ones.

But we have good news for Mr. Hodges and other customers looking for a possible opt out path for junk mail, sales calls, and worst of all – door knocking sales teams. Charter Spectrum maintains an online privacy preferences form that should eventually stop marketing mailers for other products and services, including cable TV. Just click on the pertinent image(s) to be taken to their respective web pages, complete and submit the forms, and your mail volume should drop.

Legacy Time Warner Cable CPNI Opt-Out Form (only for use by customers still holding on to their old Time Warner Cable packages.)
Legacy TWC customers should also fill out the Privacy Preferences form:

Charter/Spectrum and Legacy Time Warner Cable/Bright House Customers
Privacy Preferences:

A YouTuber produced this rant about endless junk mail from Spectrum. (11:46)

Although Spectrum Cable customers will face higher cable TV bills starting next month, the company’s shareholders are delighted, boosting Charter’s stock price more than $50 a share on the news.

Spectrum’s latest increase (the second in four months) of its Broadcast TV Surcharge will set a uniform national fee of $11.99 a month for all of its cable television customers.

In 2018, customers paid an average of $8.75 a month in local TV surcharges. But last November, Charter raised the surcharge to $9.95 a month. Now, just a few months into 2019, Spectrum wants another $2 a month — a 20% increase — to watch local television signals that are available for free to those with an antenna. That’s a steep increase for what began as a $2 surcharge for some customers starting in 2015.

Charter’s investors reacted positively to the latest rate hike, jumping the stock price from $289.91 a share to $340.95 — a $51.04 boost after the fee increase was first reported by the Los Angeles Times.

The new surcharge will be reflected on customer bills beginning as early as Feb. 21.

Charter blamed broadcasters for the “rapidly rising cost” of including local TV stations on the cable lineup. In a letter to some state telecommunications regulators, the cable operator claimed it would be inefficient to not raise prices.

Charter’s share price shot up on the news it was increasing its Broadcast TV Surcharge by 20% just four months after the last increase.

“Containing costs and efficiently managing our operations are critical to providing customers with the best value possible,” wrote Melinda Kinney, Charter’s senior director of government affairs for Charter’s Northeast Division. “Like every business, Charter faces rising costs that require occasional price adjustments.”

But many customers, especially those in marginal reception areas, are loudly complaining that Charter is raising its Broadcast TV Fee even as it drops regional over the air stations from its cable lineup. In 2017, Spectrum customers in western Massachusetts reported a gradual exodus of local TV stations from their lineup, starting with WWLP, the NBC affiliate in Springfield with strong local news coverage of the western half of the state. Today, Spectrum only provides western Massachusetts with a single NBC station — WNYT in Albany, N.Y., which keeps viewers up to date with the latest political machinations of the New York State legislature.

Next to go was Boston’s ABC affiliate, WCVB — airing the strongest coverage of local and state news of any ABC affiliate in the state. In its place, viewers now receive WTEN, the ABC station in Albany, which is covering Sen. Jim Tedisco’s support for splitting New York into two separate states — a ‘crucial’ issue for subscribers living in the Berkshires and beyond.

Other states facing “out of market” channel losses include Connecticut, California, Nevada, and Nebraska. Many of the affected stations were dropped as Charter upgraded its cable systems to all-digital television, perhaps counting on subscriber confusion amidst other changes to the cable system.

Barrett on Charter: “Greed”

The loss of local stations while rapidly increasing the surcharge for those stations has some people calling foul.

Massachusetts State Rep. John Barrett III (D-North Adams) called it “greed.” Charter mandates the Broadcast TV Fee be paid by all video customers, including those on “price locked” promotions. By breaking the fee out of the cost of the cable television package, Charter Spectrum gets to advertise packages to new and returning customers at a low cost, only to deliver bill shock when customers discover the surcharge, along with equipment and franchise fees, that collectively increases their total monthly bill.

As the second largest cable company in the country, Charter is estimated to be collecting an extra $211 million annually from its first increase in November 2018 and $391 million annually from the latest increase now taking effect. Together, that amounts to $602 million annually in new revenue starting in March. Charter will not disclose exactly how much of this money is paid to each local television station.

Charter also has a habit of boosting its set-top box equipment fees about $1 a month per box each year — an increase we are likely to see later this year, and the company already slightly increased prices for internet service late last year.

Charter executives told shareholders on its most recent quarterly results conference call that the company’s revenue increased 4.9% in 2018 to $43.6 billion. Combining that extra revenue with a $1.9 billion cut in upgrades for 2019 will allow the company to focus on additional share buybacks, increased payouts to Charter shareholders, and debt reduction.

Despite the growing impact of cord-cutting, Comcast is following companies like Charter Spectrum by cutting back customer retention discounts that savvy subscribers negotiate to keep their cable bill reasonable. Despite losing more than 344,000 cable television customers in 2018, almost twice as many as it lost in 2017, Comcast has lost interest in cutting prices to keep customers.

Traditionally, customers using the word “cancel” with a customer service representative would quickly be offered deeply discounted service if they agreed to stay. Customers willing to stand their ground in tough negotiations with the cable company could win promotional pricing indefinitely, often saving several hundred dollars a year without losing channels or services. In 2016, after Charter Communications completed its merger with Time Warner Cable and Bright House Networks, Charter CEO Thomas Rutledge vowed to impose “pricing discipline” on Time Warner Cable’s “Turkish bazaar of promotional deals” after Charter took control of the company.

Rutledge called out the ‘madness’ of offering customers fire sale prices on internet and television service at a MoffettNathanson Media & Communications Summit in May 2017.

“Time Warner wanted to make a video number, and there were data packages that cost less if you took video than if you didn’t,” Rutledge said. “And a lot of those were churning out. And a lot of them were basic-only. So on the margin, at the end – in the last year, I think they were selling 40% of their connects as basic-only. [TWC had] 90,000 different promotional offers, many of them deeply discounted and piled on top of each other.”

Rutledge said Time Warner Cable represented the worst of an industry practice that gave unprecedented power to customers to get what they wanted, at least for awhile.

“You’d call in, bargain … And so there’s a lot of that out there. And they’re also exploding packages. Meaning, at the end of the term, they go back to full price,” Rutledge complained.

Rutledge called an end to negotiations by offering customers the opportunity of keeping their current package, but gradually raising it to a price that was often higher than Spectrum’s own non-negotiable packages and pricing. Regardless of what package a customer chose, it was a win for Charter because regular pricing ensured the company was making money either way.

Comcast has apparently been won over by Rutledge’s message to the industry and is now gradually moving in a similar direction.

Strauss

Matt Strauss, executive vice president of XFINITY Services, told Business Insider Comcast will now attempt to keep and win back its cord-cutting customers not by discounting prices, but by creating much smaller cable TV packages with fewer channels — a practice known as slimming down packages into “skinny bundles.” Comcast also plans to stop pushing customers into its “best value” triple-play packages of television, phone, and internet services, understanding many customers have no interest in some of those services.

“Our strategy is very focused on segmentation and getting more sophisticated in putting together the right video offering for the right customer at the right time in their life,” Strauss said, not by offering deep discounts on bloated packages (including a landline or hundreds of unwanted TV channels) that would reduce profitability.

Charter is already offering an ultra-slim, a-la-carte local TV package combining Music Choice with the customer’s pick of 10 national cable channels for $21.99 a month. The package is targeted to those with internet-only service and is accessed through a Roku set-top box. DVR service is available, if a customer was willing to pay a steep DVR service and box rental fee.

Comcast’s new strategy will market internet packages that include the added-cost option of a super-slim TV package of local channels and a handful of cable networks.

Strauss disagrees with some industry pundits who have suggested cable companies are planning to abandon selling cable television altogether in favor of internet-only service.

“We continue to be very bullish on video, but you’re just going to see us be more focused on how we go to market with video,” Strauss said.

Comcast’s Cyber Monday promotions failed to include in its advertised prices up to $31.25 in monthly surcharges.

Comcast will use two mandatory surcharges to hike cable TV customers’ rates on Jan. 1, including those on promotional or fixed contract pricing, while also raising the optional modem rental fee to a record $13 a month — a new industry high.

• Broadcast TV Surcharge (varies per market) will increase to $10.00 a month.
• Regional Sports Network Fee (varies per market) will increase to $8.25 a month.
• Most customers will see an increase of about $3.75 a month for cable television.
• The modem rental fee, shown on the bill as “Internet/Voice Equipment Rental” will increase $2, to $13 a month.

Cord Cutters News first reported the rate increases. Ars Technica noted Comcast raised the broadcast TV fee from $6.50 to $8 and the sports fee from $4.50 to $6.50 about one year ago, making these two mandatory surcharges a lucrative source for extra revenue. Comcast does not waive these fees (or future increases) for its cable TV customers, even those on new customer promotions. The company boosted modem rental fees $1 a month in 2017. Now it wants an extra $2, but customers can easily avoid that fee by buying their own cable modem, which will quickly pay for itself.

Comcast typically raises rates in different cities over the course of a year, so only some customers will experience the rate increase on Jan. 1, but by the end of 2019, all Comcast customers will see a higher bill.

The use of surcharges to implement hidden rate increases is controversial. Comcast and other cable companies can and do advertise their services without including increasingly steep surcharges and fees, which can dramatically raise the bill far beyond what companies advertise.

A typical Comcast customer offered a 2018 Cyber Monday bundle of television and internet, advertised for as little as $49.99 a month, would pay an additional $31.25 a month in surcharges, not including an additional outlet service fee if a customer wants to watch on one more than television set.