PVP: Cable company pricing strategies (yes, there’s method to the madness)

Punch line: Cable pricing strategies appear to be a mystery to most, but Comcast confirms the company, does in fact, have a strategy for those wacky prices.

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Excerpted from WSJ’s, “Cord-Cutting: Cable’s Offer You Can’t Refuse”

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When Georgia-based medical student Cathy Vu called Comcast last month to cancel her TV service and keep just Internet, she got a shock.

Taking the Internet alone would cost her more, not less, a month.

Cable providers are making their Internet-only plans less attractive than their cable and Internet packages.

Unbundling often doesn’t pay*

  • Comcast: TV + Internet for about $50/month for the first 6 months vs. standalone samespeed Internet for about $70/month.
  • Verizon FiOS: TV + Internet for about $85/month (two-year contract) vs. standalone Internet for about $80/month.
  • Time Warner Cable: TV + Internet for about $50/month for 12 months vs. standalone Internet for about $45/month for 12 months.

People are pretty much forced into buying both services.  Comcast confirms the pricing strategy, saying it is more valuable for the cable operator to pursue customers who will take multiple services than “single play” customers.

Several pay-TV executives say that cord-cutting is still a small trend that has largely stemmed from weak economic conditions.

But one little-discussed factor is cable operators’ pricing policies, which can prompt people to keep TV even if they don’t particularly want it.

In addition, Comcast, Time Warner Cable and Verizon said that a customer who takes multiple services is more likely to stick with the cable company and add more products later on.

“The deeper the discount, the higher the churn” at the end of the promotional period, one cable executive said.

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Follow on Twitter @KenHoma

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