Selling Cable's Latest "Golden Age"

Selling Cable's Latest "Golden Age"

Selling Cable's Latest "Golden Age"

Moneybox
Commentary about business and finance.
July 11 2001 11:30 PM

Selling Cable's Latest "Golden Age"

What is it about cable companies that inspires such widespread consumer dissatisfaction? Have you ever met anyone deeply loyal to their cable provider? It was only a matter of hours after Monday's papers brought news of Comcast's bid for AT&T's cable business that I got an e-mail from one AT&T cable customer saying, "I know nothing about Comcast, but I'm sure it would be an improvement."

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Don't hold your breath, would be my advice on that subject. Of course, the cable companies invariably imply that whatever new corporate-level maneuver they're engaged in—merger, acquisition, spin-off, whatever—is sure to move its customers closer to the promised land of satisfaction. "Consumers will benefit from a golden age of new products we'll introduce," pledged Comcast's honcho earlier this week, "from video on demand to television commerce." Presumably these wonderful things will come about thanks to various efficiencies made possible by economies of scale in the new, larger entity, etc., etc.

Maybe all of that is great news if you run a cable company, but I'm less convinced that it will mean anything for cable consumers apart from the opportunity to buy a larger number of expensive services without any real price break for their personal contribution to the "synergy" ideal. I'm a fairly synergistic guy myself, buying both "expanded basic" cable service and Internet access from the same company. It costs me an arm and a leg. Apart from local stations, I would say I'm actually interested in about eight cable networks, but to get them I have to pay for the entire expanded tier (bringing the cable part of my bill alone to around $38 a month), which includes another 70 or so channels I couldn't care less about. A consumer-friendly setup might, say, give me the option of sacrificing those channels for a smaller fee. Forget it! The only synergy in my life is the monthly arrival of a single bill for cable and Net access, allowing me to easily tot up my discount for awarding this business to one company: zero.

Why don't I dump my cable provider? After all, lots of disgruntled cable refugees are opting for satellite service. Well, this wouldn't actually save me any money; it would just get me more channels—that's the basis on which satellite providers compete. And that brings up the competition issue. There's been some hand-wringing over whether Comcast's purchase of AT&T's cable business, if it happened, would give the company more than 30 percent of the U.S. cable market—the ceiling imposed by government regulators until new FCC Chairman Michael Powell came along. He reportedly figures that up to 40 percent would be OK. But I think the whole debate misses the point. It doesn't really matter to me how the national picture looks when I'm choosing a cable provider. That's a local decision, and in my locale, as in most places, the number of cable choices I have is one.

And as it turns out, Comcast's record of dealing with even the indirect competition of satellite providers doesn't sound all that consumer-focused: Early reports on the proposed AT&T deal all note that in Philadelphia, Comcast controls the rights to much local sports programming and blocks a satellite competitor from using it.

Can anything be done about all this? It's actually hard to imagine what might happen that will make cable companies focus more on being authentically responsive to consumers (let alone getting more creative about pricing) and less on undermining the few competitors they have. Certainly there's no obvious regulatory solution—but actually I can think of one new rule that I would support: How about an outright ban on cable executives babbling about how their latest deal maneuverings are great news for consumers? Then again, maybe such a ban is unnecessary since cable customers listened to such promises for years as their bills steadily rose, and by now I doubt a single one of them believes a word of it.

Anyway, I had hoped to make these points yesterday—but my synergistic Internet service was on the fritz. And there was, of course, nothing I could do about it.