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Cable Execs Say They're Worried About Poverty, Not Netflix
Which is Why They Raise Rates and Impose New Fees Bi-Annually?
by Karl Bode 06:09PM Wednesday Jun 15 2011
At The Cable Show conference this week there has been a lot of talk by Netflix and cable executives about how Netflix complements -- instead of threatens -- traditional TV. Even if that's not really true, the rhetoric apparently gives comfort to both sides in this increasingly fascinating mating dance.

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A significant impact by Internet video on cable TV and ad revenues is still several years away by any reasonable measure, and cable executives like Cox President Pat Esser say they're more worried about poverty and the housing market at the moment. "We have to be sensitive in making sure we have a product that consumers can afford," said Esser at The Cable Show. "There clearly is a growing underclass of people who clearly can't afford it," he said. "It would serve us well to worry about that group."

Time Warner Cable CEO Glenn Britt (and his modest $17,422,329.00 in annual compensation) this week also paid similar fleeting lip service to "the growing underclass," stating "it would behoove us to work together to meet the needs of that population.”

A place to start? Slowing down the bi-annual rate hikes, only a portion of which can be blamed on the ceaseless upward march of programming costs.

As Internet video, telcoTV, satellite and smartphone video competition rises -- cable may ultimately have to do the unthinkable: actually compete on price. So far, companies like Britt's Time Warner Cable have only paid empty lip service to lower cost offerings, offering discount tiers that lack value and are packed with conditions. For example, users who subscribe to Time Warner Cable's $40 "TV Essentials" cable television tier can't use a DVR, only get this discounted pricing for a year, can't bundle the tier with additional services, and won't get popular major networks that should be part of any base bundle (Fox News, MSNBC).

That doesn't exactly scream "concern with the less-affluent customer." Neither does the ever-growing bevy of new fees charged to such customers if they'd like to pay their bill via telephone or in person. Neither does Mr. Britt's long history of wanting to charge consumers $2-$5 per gigabyte in an age of constantly-dropping landline bandwidth costs. So while cable executives say they're concerned with lower-income customers and price, their actions have consistently suggested otherwise.

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