If you subscribe to a cable or satellite service, chances are you’ve seen your bill consistently increase in price. Providers usually claim this is due to rising fees from networks, but one way to get around those increases has been to threaten to leave for another service in order to get a lower bill.
Now, due to changes in the industry, customer retention isn’t seen as important, and providers are not seeing the benefit of catering to consumers looking to lower their cable bills or receive premium packages or services for a significant discount.
According to Bloomberg, this is due to internet service being more profitable for providers. Corporations who own cable, landline phone, and internet service subsidiaries executives are becoming more accepting of consumers cutting the cord because execs know they still need the internet to watch whatever OTT service they subscribe to (which might even be owned and operated by the same corporation), and that’s where the profit ultimately is right now.
Cable and satellite providers issue discounts when you bundle multiple services as a way to entice consumers to remain subscribers, but those discounts are minimal at best. And as Altice USA CEO Dexter Goei discussed, some people who cut the cord not only lose their bundling discount, but they may even upgrade to faster internet service, allowing providers to make even more money.
Goei said, “Pay-TV providers are making up for the lost revenue by charging everyone more. When subscribers cancel cable TV, they no longer get a discount for bundling TV with internet. When Optimum customers around the New York area cancel TV service, they also typically upgrade to faster — more expensive — internet.”
Given that the provider isn’t paying any carriage fees for internet services, they’re more than willing to reap the rewards and let the OTT services take the hit.
This is a reason why many people have a problem with corporate mergers. Even though the cable/satellite industry isn’t a monopoly, it’s geared for corporations to make money no matter what. It’s just another reason why AT&T bought DirecTV and Charter now owns Time Warner. As corporations grow, the choices of consumers become more limited – and that’s not taking into account areas that are only wired for one provider. Unless cutting the cord really means cutting the cord and going off the grid, you’re going to be paying one of these providers a whole lot of money, and one of your options to save money is becoming more of a non-starter for providers.