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The Comcast logo is displayed on a TV set in North Andover, Mass. Thursday, Aug. 6, 2009.

Elise Amendola, Associated Press

Comcast deal could make it hard to unbundle

  • Article by: Farhad Manjoo
  • New York Times
  • February 15, 2014 - 7:34 PM

The typical American household pays about $90 a month for cable television service, according to the NPD Group, a market research firm. But according to the research firm of You and Pretty Much Everyone You Know, when you click on your TV, what you often find hardly seems worth $90 a month.

This is the battle hymn of the cord cutter: You pay too much for television, and you aren’t watching most of what you’re paying for. Millions of Americans have ditched cable plans in favor of online streaming services like Netflix and iTunes.

But can cord cutters truly escape the cord? And are they, in fact, saving much money at all?

Comcast’s deal this week to acquire Time Warner Cable highlights the pickle that cord cutters soon may find themselves in. The acquisition rests on the assumption that as people cut back on their monthly TV plans, the cable lines coming into their homes won’t lose their value. Instead, the more we imbibe of all the glories available on streaming services, the more we’ll need to shell out for high-speed broadband service.

In most U.S. households, the cable cord is the fastest conduit for broadband service. This suggests the canny strategy by which those once-inescapable cable providers might combat cord cutters: The cable giants will become even-more- inescapable Internet giants.

Critics of the Comcast-Time Warner deal argue that it eventually will give Comcast the power to raise prices for its broadband and cable TV services and especially to hold its Internet-only subscription prices so close to its TV-and-Internet prices that few people will see much use in declaring their cable independence.

“Comcast and the new, giant Comcast are going to do as much as they can to stop you from unbundling,” said Craig Aaron, president of Free Press, a consumer advocacy group. “In order for you to get content you like, you’re going to be pushed to pay the cable bill, too.”

There’s a twist

Comcast’s cheapest Internet service — a plan that a cord-cutting household might select — goes for $40 a month for the first year. It offers download speeds of up to 25 Mbps, or fast enough to stream two or three videos simultaneously.

Here’s the twist: Comcast’s cheapest TV-and-Internet plan goes for $50 a month for the first year, or just $10 a month more than the cord-cutter’s plan. Subscribers to the bundle get the same streaming speed as the Internet-only plan, as well as basic TV service that offers a handful of local channels. Comcast also throws in its service for watching TV shows on your mobile devices. More enticingly, the plan includes access to HBO and its streaming service, HBO Go, which — unlike Netflix and Hulu — isn’t available to cord cutters who lack a cable TV subscription.

None of the prices quoted here include taxes and fees for extra equipment. Comcast also notes that prices may vary by location, so it’s likely that your bill for these plans will be higher than the quoted prices. Still, it’s instructive to note the very small price difference between the cord-cutting plan and the TV-and-Internet plan.

Whether and how Comcast’s bid for Time Warner Cable will further shape pricing will be a matter of fierce debate before regulators judging the deal. In its presentation announcing the bid, Comcast argued that because it doesn’t currently offer service in markets served by Time Warner Cable, acquiring it won’t reduce competition in those markets.

Critics of the deal point out that while Time Warner Cable imposes no limit on how much data its Internet subscribers can download, Comcast probably would impose its data cap of 250 gigabytes a month on Time Warner’s customers. That is enough to stream dozens of high-definition movies a month, so it shouldn’t be a problem for most customers. But a few of Time Warner Cable’s most active cord cutters might feel the pinch.

There is also the matter of performance. According to data published by Netflix, subscribers who use Time Warner Cable experience streaming speeds about a third faster than those on Comcast.

Which is not to say that striking down the merger would lead to a cord-cutters’ nirvana. Americans still pay far more for broadband and TV service than people in most other industrialized nations. The FCC has attributed the high prices to a lack of competition in local broadband markets.

© 2014 Star Tribune