Responding to investor worries that cable rate hikes aren't sustainable
, the cable industry has spent the last few years paying a lot of lip service
to lowering cable TV prices, insisting that they were very conscious of the fact that the recession and housing implosion left many users struggling. However, bi-annual rate hikes have continued, and the "discount" tiers we've seen offered have been so packed with restrictions
as to have little to no value.
Time Warner Cable was one of those companies spending the last few years insisting that they'll take a look at lowering rates. So what was their big announcement this week? They'll be cutting back on promotions and will be charging users more for services to counter the death of the triple play and slowed subscriber growth across the TV and broadband sectors.
After a huge surge in digital voice subscribers for cable operators, customers are now dropping those lines to go wireless only, and Time Warner Cable lost 35,000 voice customers last quarter. The company sees the writing on the wall for the death of the triple play, so Time Warner Cable is going to spend more time pushing harder to "upsell" premium offerings like faster Internet speeds and premium television channels.
Time Warner Cable as of January began a new strategy aimed at increasing average revenue per user, with less focus on increasing subscriber totals. With the market saturated Wall Street is no longer seeing the kind of subscriber gains that make them happy, so Time Warner Cable needs to focus on getting each individual user to pay more.
"We still advertise the same beacon prices, but the product packages are leaner, with lower speeds and fewer channels and features," Time Warner Cable COO Marcus stated this week on a conference call with analysts and the media. "Once our beacon offers get the phone to ring, our inbound sales reps are trained to help customers select options that are important to them, like faster broadband or a DVR. As a result, customers are up-sold into packages that better meet their needs."
In other words, Time Warner Cable will offer fewer promotions and spend more time upselling, you pay more money for the same services, and investors get their pound of flesh.