Comcast
suffers from an unintended, but surely predictable consequence of its corporate
strategies. The company makes itself an
easy target for scorn by taking every opportunity to maximize revenues. Of course publicly traded companies have to
maximize shareholder value. But Comcast
ignores the usual adjunct of trying to be a good citizen and not coming across
as too clever and greedy.
Set out below are 5 reasons while subscribers, in particular, personify and vilify the company.
Like many companies, Comcast offers “promotional” short term inducements for new subscribers. Unlike most companies, Comcast does not remind you when the “actual” rates kick in. Subscribers who receive a 100% rate increase are not happy with the company, but Comcast knows that most won’t cut the cord.
The company also has a penchant for making lemonade out of regulatory lemons. For example, Comcast wants everyone to know how much it has embraced network neutrality, going so far as to extend it to Time Warner properties. Never mind that the company opposed the FCC at every step, litigated the issue and triggered the campaign for network neutrality by lying to the FCC about whether Comcast used tactics to block BitTorent traffic.
Set out below are 5 reasons while subscribers, in particular, personify and vilify the company.
1) Deliberately skimping on customer
service
I simply
cannot find one Comcast subscriber who lacks a story about shoddy treatment by
the company. It’s that simple: Comcast assumes
that it does not have to invest in customer care. For so many years, the company has been able
to raise rates well in excess of statistical measures of price increases, even
after normalizing for expanding numbers of channels. Such assumed inelastic demand tilts the assumed
negotiating leverage in favor of Comcast.
2) Bait and Switch
Like many companies, Comcast offers “promotional” short term inducements for new subscribers. Unlike most companies, Comcast does not remind you when the “actual” rates kick in. Subscribers who receive a 100% rate increase are not happy with the company, but Comcast knows that most won’t cut the cord.
3) Sneaky Ever Expanding Billing Line
Items
Comcast
appears to have a strategy of raising subscribers’ out of pocket payments with
new billing line items. Perhaps Comcast
wants subscribers to think the government is responsible for the new charges. Perhaps the company thinks subscribers will ignore
a higher out of pocket cost by discounting the new fees, or passively accepting
them just as we do with car rental line items.
Recently
Comcast inserted a new charge ostensibly to help the company defray the cost of
carrying local broadcast signals. Why a
new charge when the company already charges for basic tier service and has a
lengthy history of having to pay for carriage rights? Comcast wants to highlight how such
retransmission consent payments have increased.
Of course the company wins on both sides of this outcome: its NBC
stations receive the payments and Comcast can now secure a dedicated line item
to help defray this expense. Bear in
mind that the company’s charge has no relationship to the number of local
stations carried, or the rate of increase in retransmission costs.
Additionally
Comcast has executed a strategy that makes it difficult or impossible for
subscribers to avoid having to rent devices such as cable cards, modems,
converters and set top boxes. The company
earns over $1 billion annually in equipment rentals. With such a large revenue stream, Comcast
predictably takes ever effort to prevent subscribers from using their own
devices. The company does not cooperate
with consumer electronics manufacturers and has made it near impossible for subscribers
to use a non-Comcast set top box and Comcast supplied CableCard. Extra points for requiring that a Comcast
technician install the Card, only after a few or more calls to customer
service.
Subscribers
can save $10 a month simply by installing their own cable modem. Of course it will take some calls to Comcast
to register the device and yet again poor customer service awaits.
4) Lackluster Compliance with Legislative
and Regulatory Mandates
The FCC has fined Comcast for
failing to comply with requirements the company offered, or the FCC mandated
when approving prior mergers and acquisitions.
Comcast deliberately failed to place the Bloomberg business news network
on a channel near the company’s CNBC network, despite having agreed to do
this. Just slipped their mind.
Similarly the company directed its customer service agents
not to mention that subscribers have the option of buying broadband access
only. Extra points for charging more for
broadband if a subscriber does not also pay for cable.
The company also has a penchant for making lemonade out of regulatory lemons. For example, Comcast wants everyone to know how much it has embraced network neutrality, going so far as to extend it to Time Warner properties. Never mind that the company opposed the FCC at every step, litigated the issue and triggered the campaign for network neutrality by lying to the FCC about whether Comcast used tactics to block BitTorent traffic.
5) Intracorporate Favoritism
Comcast and its sponsored researchers
want to convince Congress and the FCC how a vertically integrated company can
operate more efficiently and presumably better serve consumers. Sometimes this makes sense, but let us not
forget that the largest reduction in shareholder value resulted when two
companies sought such synergy through vertical integration. The two companies: Time Warner and America
Online.
A cheeky
example of Comcast family treatment lies in the place of the Golf Channel on
the basic tier and the Tennis Channel on a more expensive and less viewed
sports programming tier. Was this
decision the product of disciplined financial analysis, or did the company opt
to showcase its owed networks while handicapping unaffiliated ones?
The company
adds insult to injury by sponsoring experts to “prove” that the company did, or
could have done the necessary analysis that would show the comparatively greater
popularity of golf over tennis. An
appellate court bought the analysis in large part, because the Tennis Channel
could not readily prove how much more popular it would be had Comcast opted to
place it on the basic tier.