Competition — Again

By the PHANTOM

Many, many years ago in the ancient ’90s, before some of you were born, some engineer was writing a column in a now-departed monthly publication for the cable industry. Once, in the pleasant spring, he decided to do an April fool article about competition with the cable industry. Now this was back in the stone ages when we were a one-trick pony; you bought cable as the only alternative to off-air for video — we served no other purpose. If you played with this new-fangled toy called data you got it over your dial-up phone line. Anyway, he warned of this new competition to cable TV that got around having the expense of stringing coax to the subscribers. Rather, the competitor was using something called the “ether” to send video to homes. Providers did have to up the signal level from the headend in order to overcome the loss of this “ether.” Levels reached as high as about 67 dBV coming out of the headend, but were much lower when they got to the subscriber. Besides saving the cost of an HFC network, the set top converter used to receive the signals was just a piece of aluminum or copper tubing — much cheaper than cable set tops that were around $100 at that time.

Well, as you doubtless have already figured out, he was describing over-the-air TV to an antenna at the home — some people have rediscovered this way to get TV recently. But, would you believe, the joker got an email from a cable operator wanting to hire him to figure out if this new competition was in his franchise area, and to help him compete against it. How the heck could he answer the guy without insulting a member of his industry?

Well, I ain’t fooling when I say that there is competition with us today, much of it in the form of telco, the same folks who were operating the dial-up phone networks we used back then to get data service. Back then the telcos operated vast networks of copper wire pairs that had been providing voice service to homes and businesses almost back to the time I was haunting that musty old opera house in Paris. Telco competed with us in Internet access using those copper wires for a while, but they have been actively retiring the wire in the last few years, after a century of great service. But the plant that brought them to preeminence in the 20th century is also the reason they have advanced to fiber so fast: they didn’t have a choice, copper pairs not being up to the task. Fiber is frequently our choice for new builds too, but our coax plant at the end of a fiber is still competitive, so we have been slower to pull fiber all the way to the home.

Not sure how it was that I went down that rabbit-hole thought process, but the point I was trying to make is that we are gonna keep competing, and we have encountered some thoughts recently exposing a weakness of ours, and it are not technology-related. Some say that our pricing model of deep discounts for new service followed by a steep price increase after the first year, may be counter-productive. Lots of folks, it is said, sign up for the promotional price then jump ship after the promo period is up. Heck, we’ve seen in reputable consumer mags that they are suggesting this as a way to keep your TV costs down. And keeping costs down was a good part of the movement to on-demand video the last couple of years. That part of on-demand’s story (lower costs) has kinda gone away as providers understood their true costs, but the genie is out of the bottle and refuses to go back in.

Now any decent marketing type will tell you that it is a whole lot cheaper to keep a customer than it is to acquire a new one. The reason is that you spend so much moolah on getting a new customer — advertising, installation, introductory discounts, and so on ad nauseam. And some self-proclaimed gurus (who just may be correct this time) have said that we are losing customers at the end of their promotional period. If we can keep those customers, it will be a lot cheaper than going out and finding new customers, rare birds in these days of an almost saturated, competitive market. So, what about the idea that our pricing model is costing us customers by putting them off at the end of the introductory period? We gotta think about it. And do something about it if it is fact.

Oh. how did the engineer who wrote the April fool article answer the guy who wanted help figuring out if there were any broadcasters in his market? As he told it at the time and as my feeble memory recalls it today, he thanked him for playing along with the April fool joke. How about that answer from a socially-challenged engineer?

The Phantom
the.phantom@youwontfindmeanywhere.com

You never know when The Phantom is standing right beside you. Sometimes he is in a meeting with you or walking the floor at your favorite cable show. Sometimes he’s hanging with the suits and other times with the front liners. But be assured, The Phantom sees all, The Phantom knows all and, most importantly, The Phantom tells all.

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