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Netflix Announces Biggest Price Hike Ever: Most Will Pay $12.99 a Month

Phillip Dampier January 15, 2019 Competition, Consumer News, Online Video No Comments

Like cable companies, streaming services are not immune to raising rates, and the country’s biggest and most popular streaming service — Netflix — this morning announced its largest rate hike ever.

Most Netflix subscribers will see their monthly rate increase by $2 a month.

Netflix’s rate card effective January 15, 2019 (for new subscribers).

The rate hike will raise at least $100 million a month in revenue and will apply first to new subscribers, and will gradually apply to all 58 million current U.S. subscribers over the next three months, as well as those in Latin America where subscriptions are paid in U.S. dollars (except in Mexico and Brazil, where rates remain unchanged). Rates for the 78 million Netflix subscribers outside of the U.S. are not expected to change immediately, partly due to ongoing promotional spending and marketing efforts to boost subscriber numbers overseas.

Wall Street had been increasingly pessimistic about Netflix’s revenue and profit projections because of ongoing increases in spending to finance an avalanche of original Netflix productions. The company’s stock price dropped by 21 percent, from a peak of $423.21 last June to $332.94 just before the market opened this morning. Netflix’s chief content officer told the media last spring about 85% of the company’s estimated $8 billion in content spending for 2018 was for original TV shows, movies, and other productions. By summer, Netflix had $12 billion in debt before borrowing another $2 billion in October. But that debt never changed Netflix’s plans to premiere 1,000 new movies and TV series in 2018, with an even larger number of productions scheduled for 2019.

Netflix has been pushed towards producing its own content as movie studios and studio-owned television production companies raise contract renewal prices on Netflix or end those contracts altogether, bringing content back to those studios as they prepare to launch paid streaming services of their own. WarnerMedia, Disney, and NBCUniversal are all planning launches over the next 24 months, while other existing services like CBS All Access and Hulu continue to beef up their own viewing menus, often with shows that were formerly found on Netflix.

Netflix is also depending on a growing international audience for its offerings, and has expanded original productions in many languages to find that global audience. Netflix usually benefits from much lower production costs for shows filmed overseas, and English language subscribers have surprisingly embraced dubbed and/or subtitled content at levels beyond Netflix’s expectations. Back in North America, the massive increase in demand for original content by Netflix and its competitors has made it possible for production companies, directors, writers, and talent to command dramatically higher salaries, raising Netflix’s expenses.

Investors cheered today’s price increase, causing its stock price to rise at least 6% in early trading. Wall Street believes Netflix is now nearly immune to cancellations over its price, which is still below the monthly retail price of HBO. But this morning’s announcement does represent the largest rate increase ever for the 12-year old streaming service.

Netflix will also use some of the additional revenue from the rate hike to pay down its substantial debt. Few expect any backlash reminiscent of Netflix’s 2011 decision to raise prices and unbundle its DVD-rental-by-mail service from video streaming, which resulted in a 60 percent rate increase for customers seeking both streaming and mail rental options. Netflix lost 600,000 subscribers after that announcement, initially making the company more cautious about future rate increases.

DirecTV’s Crazy December Customer Retention Deals Can Save You $90+ a Month

Phillip Dampier December 4, 2018 Competition, Consumer News, DirecTV, Online Video 5 Comments

AT&T is responding to its deepening losses of satellite television customers by slashing prices for those threatening to leave by as much as $90 a month and throwing in Visa debit cards worth up to $300 if customers agree to stay.

AT&T lost at least 346,000 subscribers during the last quarter and is on track to break an all-time record of subscriber losses, primarily attributed to cord-cutting.

When Stop the Cap! readers called to cancel, they shared stories of outrageous discounts available to anyone willing to spend a few minutes on the phone to ask, including slashed pricing, discounted or free channel upgrades, and equipment improvements. Some customers are now paying as little as $5 a month after the discounts were combined.

“It’s ridiculous,” said Stop the Cap! reader Dylan Marshall. “My old promotion recently expired and I called to threaten them with cancellation and they cut my bill by $90 a month for a year, which means my video package is costing me $15 a month. Then they offered me a free year of NFL Sunday Ticket, a $200 Visa debit card, and every premium movie channel available for three months at no charge!”

“I got $70 off my package after my credits expired last summer,” said Sandra Bizek. “It is always such a hassle to call in every year to argue with them, but they were very receptive this year. I almost thought I was being greedy when I also asked them about a gift card, which they usually won’t offer. They put you on hold and then come back and offer one. I got $100, but I know others were offered $200-300, depending on how long they have been a customer.”

It is easiest to score a good promotion if you do not already have one on your account, but it is possible for everyone — even customers still under contract — to get a better deal. One customer negotiated $25 off a month in early 2018. He had to surrender that credit, but in return his new bill will be $85 less.

Are you overpaying for AT&T’s DirecTV?

“They don’t even argue with you anymore,” said Narash, another Stop the Cap! reader. “Within two minutes he gave me $70 off my video package and then he found another $20 credit a month he could add, making my multi-hundred TV channel package about $5 a month. I couldn’t understand the guy very well and I think he thought I was hesitating to accept his offer so he also came up with a $300 Visa gift card out of the blue. I said ‘yes.’ Oh wow.”

Here is how to get your discount:

  1. Start by calling (978) 890-3027. This is DirecTV’s customer retention center in Massachusetts. If your account is combined with your AT&T wireless phone and you are billed by AT&T, they may have to transfer your call to a different call center. You can also try DirecTV’s general customer assistance number – 1-800-531-5000 and say “cancel service” when the auto-attendant answers. Answer “no” to the question about moving.
  2. When the representative answers, let them know you are planning to cancel DirecTV because you have a better offer from another provider (try to research an offer from a competitor that would generally interest you and be ready to discuss it). Add that you wanted to give them the opportunity to save your business by lowering your bill and enhancing the services you now get.
  3. You will be placed on hold as a representative reviews your account and any retention offers you are qualified to receive. Pay careful attention to the length of the discounts and any terms that might lock you into a contract. If you do not like what you hear, thank them for their time and call back. The next deal may be much more lucrative.

Our readers offered some important tips to maximize your savings:

  1. Print out your current bill so you understand exactly what you are paying for services now. If a representative tries to get you to remove services to lower your bill, let them know you can keep the same services and lower your bill with one of their competitors.
  2. Explain to the representative that you wish to cancel service because it costs too much and you are considering switching to a provider like YouTube TV or Hulu. Avoid mentioning DirecTV Now, which is also owned by AT&T.
  3. Do NOT simply accept the first offer made to you. When they try to lock you in, prevaricate. Ask, “is this really the best you can do?” and remind the representative you can create your own package of just the channels you want from one of their online streaming competitors like YouTube TV. You really want the lowest possible price, so could they please check one more time.
  4. When you are satisfied you have gotten the best possible deal, ask them about the availability of a gift card that you have heard about others getting, to compensate for the months you paid for channels you are not really watching. You may be able to get that as well, typically in amounts ranging from $100-300. But do not make it a dealbreaker and be sure it does not lock you into a long term contract.
  5. If a representative offers you nothing or seems uninterested in assisting, thank them and hang up and call right back. During high call volumes, regular representatives may be taking cancellation calls instead of customer retention specialists who are trained to offer the best deals to keep your business.

If you called for a better deal, let us know in the comment section what you were offered.

By 2022, Online Video Will Make Up 82% of Internet Traffic; 60% of the World Will Be Online

By the year 2022, 60% of the world’s population will be connected to the internet and 82% of online traffic will come from streaming video.

Those are the conclusions found in Cisco’s newest Visual Networking Index (VNI), based on independent analyst forecasts and real-world network usage data tracked by the networking equipment manufacturer.

“By 2022, more IP traffic will cross global networks than in all prior ‘internet years’ combined up to the end of 2016,” Cisco predicts. “In other words, more traffic will be created in 2022 than in the 32 years since the internet started.”

Key predictions for 2022

Cisco’s VNI looks at the impact that users, devices and other trends will have on global IP networks over a five-year period. From 2017 to 2022, Cisco predicts:

  1. Global IP traffic will more than triple

    • Global IP traffic is expected to reach 396 exabytes per month by 2022, up from 122 exabytes per month in 2017. That’s 4.8 zettabytes of traffic per year by 2022.
    • By 2022, the busiest hour of internet traffic will be six times more active than the average. Busy hour internet traffic will grow by nearly five times (37 percent CAGR) from 2017 to 2022, reaching 7.2 petabytes1 per second by 2022. In comparison, average internet traffic will grow by nearly four times (30 percent CAGR) over the same period to reach 1 petabyte by 2022.

      1 A petabyte is equal to 1,000 terabytes or one million gigabytes.

  2. Global internet users will make up 60 percent of the world’s population

    • There will be 4.8 billion internet users by 2022. That’s up from 3.4 billion in 2017 or 45 percent of the world’s population.
  3. Global networked devices and connections will reach 28.5 billion
    • By 2022, there will be 28.5 billion fixed and mobile personal devices and connections, up from 18 billion in 2017—or 3.6 networked devices/connections per person, from 2.4 per person.
    • More than half of all devices and connections will be machine-to-machine by 2022, up from 34 percent in 2017. That’s 14.6 billion connections from smart speakers, fixtures, devices and everything else, up from 6.1 billion.
  4. Global broadband, Wi-Fi and mobile speeds will double or more
    • Average global fixed broadband speeds will nearly double from 39.0 Mbps to 75.4 Mbps.
    • Average global Wi-Fi connection speeds will more than double from 24.4 Mbps to 54.0 Mbps.
    • Average global mobile connection speeds will more than triple from 8.7 Mbps to 28.5 Mbps.
  5. Video, gaming and multimedia will make up more than 85 percent of all traffic
    • IP video traffic will quadruple by 2022. As a result, it will make up an even larger percentage of total IP traffic than before—up to 82 percent from 75 percent.
    • Gaming traffic is expected to grow nine-fold from 2017 to 2022. It will represent four percent of overall IP traffic in 2022.
    • Virtual and augmented reality traffic will skyrocket as more consumers and businesses use the technologies. By 2022, virtual and augmented reality traffic will reach 4.02 exabytes/month, up from 0.33 exabytes/month in 2017.

Regionally, Asian-Pacific internet users are expected to use far more internet data than North Americans — 173 exabytes a month by 2022 vs. 108 exabytes in North America. Usage caps, usage-based pricing, and overall slower internet speeds in the U.S. and Canada have slowed growth in new high-bandwidth internet applications. The prevalence of low-speed DSL in rural areas also restricts potential traffic growth. Large parts of the Asia-Pacific region use very high-speed fiber to the home technology.

The slowest growing regions — Latin America and the Middle East/Africa, which lag behind in internet penetration, often apply low usage caps or bandwidth restrictions and often do not have the ability to financially scale growth to meet demand. Even by 2022, Latin America will generate only 19 exabytes of traffic per month.

Happy Holidays from Comcast: Your Bill is Going Up!

Phillip Dampier November 27, 2018 Comcast/Xfinity, Consumer News 2 Comments

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.

Optimum and Suddenlink Getting Speed Upgrades as Customers Demand More

Altice USA’s Optimum (formerly Cablevision) and Suddenlink are getting upgraded technology as the two cable companies face increasing demands for speed and broadband usage around the country.

“Over the last two years, the percentage of customers taking over 100 megabits of speed has risen to about 80% of our total customer base,” noted Dexter Goei, CEO of Altice USA. “Recently, we have shifted focus to growing the penetration of 200 Mbps services with about 80% of gross additions now taking these speeds or higher, reaching about half of our total customer base at the end of the third quarter, up from less than 5% two years ago.”

Goei noted that the average of all Optimum and Suddenlink broadband customers’ internet speeds has risen from 56 Mbps to 172 Mbps over the last 24 months, and this is increasing every quarter.

“Average data usage is now over 240 gigabytes per month per customer,” Goei added. “And this continues to grow over 20% per year.”

Goei

To meet growing demand, Altice USA is spending money upgrading its cable properties. The company is scrapping its coaxial cable network in the northeast and in selected parts of Suddenlink territory. In smaller communities that Suddenlink typically serves, the company will either bring fiber to the home service or upgrade the existing cable system to DOCSIS 3.1.

“The first objective is to have 1 Gbps broadband services available virtually everywhere,” Goei said. “For our legacy coax network in the Optimum footprint, we just need to do a Digital Switched Video upgrade now to move us to DOCSIS 3.1 and 1 Gbps speeds, which we can complete over the next few quarters. We just soft launched our fiber network in select areas of Long Island, and it is performing just as we expected so far, delivering a great 1 Gbps symmetrical single-play data service with the new advanced wireless gateway. The smart meshed Wi-Fi we’ve introduced is also doing extremely well.”

Goei says Optimum’s fiber network will be capable of delivering more than 10 Gbps speeds, as well as enhanced Wi-Fi, and improved system reliability.

“For the Suddenlink footprint, we already offer up to 1 Gbps services, so we will add further 1 Gbps capacity through some node splitting and CMTS upgrades,” Goei said. “We are also doing a QAM to IP migration on the cable plant to deliver future IP services. And with the move to DOCSIS 3.1, customers will have a uniform SSID across all of their devices, for an improved seamless Wi-Fi experience.”

The upgrades will mean Suddenlink customers will be more likely to receive 1 Gbps speeds even during peak usage times.

By transitioning video services away from the current QAM platform, IP video will free up additional bandwidth Suddenlink can devote to its internet customers.

Goei told investors on a quarterly results conference call that the five-year fiber upgrade project in the northeast may stretch into a sixth year due to permitting delays in some communities where Optimum provides service.

Some Wall Street analysts questioned Goei about the merits of a costly fiber upgrade, asking if it was necessary. Jonathan Chaplin of New Street Research suggested if cable systems were already capable of gigabit speed service under DOCSIS 3.1, any revenue benefits gained from offering gigabit service could already be realized without stringing fiber optic cable. Other Wall Street analysts wanted to know when Altice would deliver the next revenue-increasing rate hike on Optimum and Suddenlink customers.

The company acknowledged it lost customers after the last round of price increases last spring. Its biggest losses are coming from cord cutting. Altice saw 20,700 Optimum TV customers cancel service between July and September, with a total of 76,000 customers dropping service so far this year. But that won’t stop Altice from raising rates again. Goei anticipated the next rate hike will likely take place during the first half of 2019.

Altice USA is also working on its own cellphone service, which will be powered by its large Wi-Fi hotspot network in the northeast and rely on the services of Sprint to connect customers while away from Wi-Fi. The company did not release pricing or service information.

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