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.

The Federal Communications Commission (FCC) has proposed a new policy allowing cable companies to deduct the fair market value of their obligations to serve the public interest from franchise fee payments to towns and cities.

The proposal, MB Docket No. 05-311 — Cable Franchise Fee Deduction, will turn cable franchise laws upside down in virtually every state, reducing local government revenue and threatening public, educational, and government (PEG) access channels, access to cable in schools and other educational institutions, and undermining local control over the placement of wireless cell equipment and other infrastructure that some cable operators propose to install.

Critics of the proposal claim it would continue a concerted effort to shift oversight and regulatory controls away from local communities and states to a federal government that currently has a policy of favoring the interests of telecommunications companies over the interests of community leaders and the public.

Concord, Calif. Mayor Edi Birsan warned the FCC that if it adopts its proposal, it would strip his city, along with others, of its ability to manage where cable companies place cellular equipment and at what price.

Birsan

“Local governments may lose their authority to manage a cable company’s deployment of non-cable facilities, such as ‘small cells,’ Birsan wrote in a letter to the FCC. “This preemption would threaten to extend to fees for use of the rights of way, meaning:

• Cable companies can use local rights of way for any purpose, regardless of the terms of the franchise, and avoid having to pay fair compensation to the local government for the use of publicly funded assets in the rights of way.
• Cable companies could potentially install “small wireless facilities” with little to no public input, without having to meet any aesthetic or equipment size requirements aimed to mitigate blight and preserve community character.
• Cable companies would gain a significant advantage against their competitors, including telecommunications providers even though the FCC has just adopted an order lowering their deployment standards, resulting in a race-to-the-bottom deployment strategy for both cable and telecommunications companies.”

Officials in King County, Wash., which includes the city of Seattle, were critical and suspicious of the FCC’s argument that the burdens of providing benefits to communities as defined in franchise agreements are slowing down the deployment of broadband services, a claim Tanya Hannah, chief information officer of the Department of Information Technology and Christina R. Jaramillo, manager of the Office of Cable Communications found had little merit and no evidence to back it.

Hannah

“It is not obvious that if a cable operator’s profit increases by one dollar that the operator will invest an additional dollar in broadband infrastructure deployment,” they wrote in a joint letter to the FCC. “Many cable companies are functional monopolies. Because the data transfer speed of fiber-line cable systems significantly exceeds the speed of wireless systems, cable broadband is the preferred broadband service if the prices for other broadband services are comparable.”

The two officials made it clear that since the FCC was proposing to impose these changes retroactively on town and cities around the country, the result would be detrimental to local government finances.

“If the FCC were to allow the value of the proposed franchise fee offset activities that were done in the past to be deducted from current or future franchise fee payments, the results to local  governments would be debilitating,” the officials wrote. “It could essentially end all monetary fee payments to King County by Comcast and WAVE Broadband for a number of years. This is not a feasible option. It is not realistic and it is not fair.”

The Alabama League of Municipalities told the FCC the issue was about basic state sovereignty, and Alabama does not want the federal government to run its affairs.

“Section 220 of the Alabama Constitution of 1901 provides that no person, firm, association, or corporation shall be authorized or permitted to use the streets, avenues, alleys, or public places of any city, town, or village for the construction or operation of any public utility or private enterprise without first obtaining the consent of the proper authorities of such city, town, or village,” the League wrote. “The Supreme Court of Alabama has labeled this grant of authority as ‘an essential and sovereign power in local authorities […] in the nature of a bill of rights [that] recognize certain fixed constitutional rights which shall not be invaded.'”

Under the FCC’s proposal, Alabama’s Constitution would be violated by allowing cable operators near carte-blanche access to public rights-of-way without fair compensation or permission, the League argued.

For a lot of communities, any reduction in franchise fee payments will lead to a corresponding decrease in funding for PEG television services.

“Our town’s ability to invest and support its public access television unit and the telecommunications curriculum in our schools is directly linked to the funding received from Charter Communications as part of the franchise fee (“cable tax”) agreement,” noted Robert J. Oliveira, chairperson of the Westport, Mass. Cable Advisory Board. “Any reduction in these funds would mandate a corresponding reduction in programming levels and information access to the community and curriculum support to our students.”

Public comments are due to the FCC by the end of today — Wednesday, Nov. 14. Consumers can share their opinions by visiting the docket on the FCC’s website, and then selecting + Express on the left hand side of the page, which will open an online comment form. Municipalities can file formal submissions using the + New Filing link.

Comcast kicks the door open to the European television market.

Europe is about to get a taste of Comcast, the cable company most Americans abhor, after the Philadelphia-based cable giant won control of Sky, Europe’s largest satellite TV provider.

Comcast, criticized in some circles for overbidding, easily eclipsed 21st Century Fox’s bid to win control of the television provider that is a household name in the United Kingdom.

Sky customers are being groomed to think highly of the deal by Comcast’s PR department, promised a healthy increase in original programming, expansion into more European markets beyond the UK and Ireland, Germany, Austria, Switzerland, and Italy, and a richer selection of American and European programming owned or controlled by Comcast, which also owns NBCUniversal.

Analysts expect European customers will soon get the bitter taste of what their American counterparts have endured for decades — frequent and steep rate hikes widely expected from Sky’s new owner.

Comzilla

Comcast sees the American television market as saturated, but Europe is wide open for more television services. Comcast believes Sky is not meeting its value potential, giving the company plenty of room for hike rates as new programming and channels are introduced, especially on the European continent. British viewers already benefit from the consolidation of English language global media brands, bringing most American network fare to British and Irish audiences. But there is plenty of room to grow in Italy and Germany, where state public broadcasters are hardly meeting their audience potential and pay television networks are still lacking.

Sky currently has 27 million subscribers across Europe. Just 5.2 million of those subscribers are in Germany, a country with nearly 83 million people. Most are attracted to Sky’s ad-free movie service and sports networks. Sky has traditionally lacked the deep pockets necessary to compete effectively with global streaming providers like Netflix, which have scooped up a considerable amount of foreign language content.

These days, Sky is typically a co-partner in original programming ventures, but it rarely comes away with key ownership rights. Comcast’s ownership of NBCUniversal is expected to dramatically change that, with NBC and Universal Studios capable of aggressively entering the original programming business on behalf of Sky, keeping rights in-house.

European regulators will be watching how the Comcast-owned venture develops. Many countries already have concerns about the American “invasion” of entertainment programming, often a mainstay on the lineups of European networks. Comcast’s involvement will only escalate the amount of American content seen on European televisions, either in its original English, subtitled, or dubbed.

Currently, UK customers subscribing to the full Sky HD package, including the Sky Q set-top box, pay up to $119 a month. In Germany, the smaller “full package” costs $82 a month after promotional pricing expires. Comcast is likely to raise prices significantly over the next few years, possibly reaching $150 a month in the UK and $100 in Germany. In contrast, Netflix is building a giant market share in Europe keeping pricing low. A 4-screen subscription to Netflix currently costs $13 a month in the UK, with Netflix’s new Ultra subscription priced at $19.96 in Germany.

Despite potential price increases, few believe Sky will lose many subscribers, at least as long as it continues to hold the rights to must-have sports programming, notably the English Premier League soccer matches in the UK and Bundesliga matches in Germany, which Sky Deutschland shares with public broadcaster ZDF and Eurosport.

Downdetector shows a major service outage for Spectrum customers in Central Florida.

A widespread service outage affecting Spectrum customers in central Florida that began Sunday caused a crowd of 100-150 customers to turn out at a Spectrum office on Semoran Boulevard in Orlando this morning to switch cable boxes or cancel service.

Customers lost television service Sunday evening and the outage continues in many areas, leaving thousands without service for more than 14 hours. Orange County Public Schools spent this morning without internet service, also provided by Spectrum. The school district e-mailed parents:

“OCPS families, we want to make you aware that throughout our community the internet and networks are down throughout due to issues with Spectrum. This outage is impacting many of our schools. At this time, Spectrum cannot provide a timeframe for restoration of service. We want to make you aware that contacting schools may be limited due to the outages. We also want to assure you our digital classrooms are always prepared to adjust to such circumstances as they can use blended methods for learning so instruction can continue regardless of problems with the internet. Thank you for your support. We will update you as we get new information.”

Many customers are angry about what they perceive as a deterioration in service after Charter Communications acquired Bright House Networks.

“It seems like since Spectrum has taken over from Bright House, every time the wind blows, the cable and the boxes go out and you have to come down here and stand in a line to change a box. It’s a waste,” Spectrum customer George Roberts told WFTV.

Communities affected include: Orlando and surrounding suburbs, Cape Canaveral, Sanford, Daytona Beach, Sky Lake, Palm Coast, and beyond.

“The storms last night caused damage to operations impacting customers in the Central Florida region,” said Spectrum spokesperson Joe Durkin. “I won’t speculate on completion but as Spectrum engineers are working to restore full video services to our customers and as time goes on – some areas are coming back. We confirm there’s no internet outage at all that could still be affecting Orange County Public Schools.”

Spectrum, like most cable operators, will not issue a service outage credit unless customers specifically request one. The best way to do that is to login to Spectrum’s website and use online chat or call your local cable office and ask for a service outage credit.

WFTV in Orlando reports angry crowds gathered at a Orlando Spectrum cable store to switch boxes or cancel service because of a service outage impacting Central Florida. (2:08)