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Like many places, Tallahassee has one cable provider. This is, of course, the often reviled Comcast. For quite some time people had the choice of Comcast or nothing, but the rise of DISH TV provided some competition in the TV area. Century Link also recently entered the battle with PRISM and they have offered DSL for a while.
When I moved to my current house I was married and my wife had a deep and abiding love of TV, so we got Comcast cable. We also got a land line phone, since this was well before the days of the mobile phone. When broadband internet became available, I added that that via the only option in town: Comcast. My phone service went through various providers as this company bought or merged with that company, finally resulting in Century Link being the one sending me bills.
As the years passed, I noticed that the bills always went up, although the service provided was the same. Then I noticed that the bills started going up far more frequently, despite the fact that what I was paying for was the same. When my land line bill hit $45 for the basic service, that was that-I went with a mobile phone that provides unlimited data for $35 a month and set up Google Voice with a VOIP adapter (the OBI 100) so I could still have a home phone that worked (more or less) as a home phone.
For Comcast, the final brick that broke the camel’s back was when they started billing me $1.99/month for the digital adapters that had been “free” for the past three years. While I do understand charging for premium equipment, charging extra for what is needed to even use the service pushed me over the edge and that was it for cable TV. While I will miss a few shows that I cannot find (legally) online, most of what I used to watch is readily available online. For free. Most networks now have their own streaming shows, plus there is Hulu. I already had Amazon Prime and Netflix, so I don’t really miss the TV. I sort of miss CNN, but not really.
My situation got me thinking about more general matters, such as how companies can hurt themselves. In the case of Comcast and Century link, they face many problems, some of which are self-inflicted.
One obvious problem is that they increase the cost of their services relentlessly while not offering customers any greater value in return. While I get the need to deal with inflation, the increase in the bills seems to be rather out of proportion to inflation. For people like me who do not get regular cost-of-living pay increases, these increases are especially bad-the increasing bills are push towards a non-increasing salary. Not surprisingly, people do elect to cancel services.
It might be replied that these companies are only raising prices because they must-they have no choice in order to keep up with inflation and other cost increases. However, as my friend Ron always notes, when people cancel a service like cable, they are often offered better deals to stay. As Ron says, if they had offered him that deal before, he would not have cancelled. This sort of thing indicates that they can actually offer the services without such relentless increases but chose not to do so.
One point worth considering is that perhaps companies are following not a stupid strategy, but a clever one. Some years ago, I needed repairs done on my house and got some estimates. One contractor’s estimate was three times that of the others. Naturally, I went with a lower estimate. While the contractor’s approach might seem like a bad idea, it could actually be a good approach. After all, suppose that the contractor charges three times what other contractors do and only gets one third of the jobs they do. He actually comes out ahead, since he does a third of the work (in hours) for the same income. Perhaps Comcast and Century Link have the same approach: when they raise their prices, they lose customers. But, perhaps this is offset by the decrease in their operating costs. So, if Comcast loses X dollars because customers cancel due to bill increases, but the money they get from the increase paid by remaining customers and the lowered expenses from having fewer customers results in them making that X back (or better), then that was a smart move. Of course, they have to be careful to avoid losing too many customers and they probably have to worry a tiny bit about people saying bad things about them.
Another obvious problem is that companies like Comcast and Century Link that increase the cost of TV and phone service run the risk of losing out to alternatives. As I noted above, when my phone bill hit $45 a month, it made more sense for me to abandon Century Link and go with Google and Virgin Mobile. In the case of Comcast, I am still stuck with them as my ISP, but I can do without TV thanks to the internet. It was not so much that I just wanted to not pay anything-I was willing to pay a reasonable amount for cable TV and a land line. But, the relentless price increases convinced me to scrape off the leeches. If I am not unusual in having such a breaking point (at which doing without or finding alternatives beats paying a company), then companies like Comcast and Century Link will need to approach the future cautiously-they might price themselves right out of profits.