| Big Cable's Package-Pricing Ploy I would like to know how are cable companies by-passing this law ?
Big Cable's Package-Pricing Ploy
Consumers could be saving money by selecting their premium channels a la carte, but don't expect to hear it from your cable outfit
Many cable-TV operators reported strong earnings in the third quarter, a triumph in an otherwise lackluster earnings season. Cable leaders Comcast (CMCSK ), Cox Communications (COX ), and Time Warner Cable (AOL ) each succeeded in persuading customers to sign up for lucrative new services, such as digital cable, high-speed Internet access, and local-phone service.
Even as the fortunes of these companies improve, however, a federal rule took effect in early October, 2002, that could let savvy cable customers cut their monthly bills in half. And if enough penny-pinching viewers act, cable operators could see margins slashed and their quest to deliver greater free cash flow prolonged. The rule, a provision of the 1992 Cable Act, says cable operators can no longer require subscribers to buy multitier packages of programming to get pay-per-view events and premium channels, such as as HBO, Starz, and Showtime.
PICK AND CHOOSE. New York City fans of HBO's Sex & The City who couldn't care less about the 20 or more channels that must be bought to get that particular premium service could slash their monthly cable bill from $56 to about $31. The smaller fee would get HBO and the major TV networks. In Orlando, fans who want Showtime's The Chris Isaac Show but not the assorted channels that come with it, could cut their monthly cable costs from about $51 to just $29.
Yet hardly any customers know about the rule, despite the claims of some cable operators that they began offering the option long ago. It's hard to find any company that publicized it. And in interviews with financial analysts who cover cable, not a single one was aware of the option -- though many expressed an interest as a way to cut their own cable bills.
It's no mystery why cable operators haven't made a big push to publicize this option. While most of their growth now comes from new services such as high-speed Internet access, television still accounts for the bulk of revenues. In the third quarter, 44% of cable behemoth Comcast's $2.75 billion in revenues came from traditional TV customers, while Cox relied on TV service for 68% of its $1.67 billion in revenues.
http://www.businessweek.com/technology/content/nov2002/tc2002116_0167.htm |
