The Scam Of Internet Cable Providers

Last summer I wanted to change Internet providers. I was having bandwidth problems with AT&T, so one afternoon I phoned Time Warner Cable. I gave a representative my address, and he pulled up the package options for my street in Los Angeles:

6 MB             $14.99

50 MB           $34.99

100 MB         $44.99

200 MB         $54.99

300 MB         $64.99

The Time Warner rep said there was no contract, it was a month-to-month basis, and these rates were guaranteed not to increase. It sounded good to me, so I called AT&T and canceled my service.

When I called Time Warner immediately back, I got a different agent, and with her, a completely different set of prices, all because I included my apartment number this time. My new quotes: 

3 MB               $27.94

10 MB             $47.94

50 MB             $52.94

The prices had doubled, even tripled, in under an hour. So much for guaranteed rates.

I asked the agent if there were any promotions. There were not.

I asked the agent if there were any lower rates. There were not.

I asked what the absolute lowest rate or cheapest plan was. Her answer: the one she gave me.

When I complained, the agent apologized and said that was their available price structure. I was getting a non-answer – the typical corporate deflection.

I said that I had spoken to an agent less than an hour ago, and he quoted me a different set of rates. Then I read her the list; I explained that I called back to get the 100 MB plan at $44.95.

Finally, she admitted that since I asked specifically for that rate, she can give it to me for one year.

I asked how that was possible when less than five minutes ago, she told me there were no lower rates. Again, I received a non-answer.

I asked why she didn’t tell me this earlier, and I received another non-answer.

I asked how many different pricing structures there were for my city block, and again I received a non-answer.

I asked why I could not have that rate for more than a year, as the prior rep had said it was guaranteed not to increase. She said she could only give it to me for one year, but that I could call back exactly a year from now to request it again.

I asked her to put that in writing, but she refused.

You don’t have to work in Corporate America to know there’s something shady going on when a company that large refuses to put something in writing.

Flash forward to July of 2016.

I had a note in my calendar to call Time Warner to renew the rate. When I phoned, I spoke to a very friendly agent who looked at my account and said that my rate was not going to expire. He looked at my current bill, then looked at my future billing cycles, and reassured me the rate would remain the same. I thanked him for his time.

This week, I noticed my bill for July was actually $12 higher than the previous month. 

I phoned Time Warner again. This time, the agent explained that the special I had is part of a “three part plan,” and it was entering its next phase, which was $10 higher, and it would go up another $10 in 6 months. (The modem rental went up $2.)

I explained that I’d just called a few weeks ago to ensure this would not happen. He laughed and explained that he’s not sure why representatives don’t explain the three-part pricing system up front.

I suggested because maybe it didn’t previously exist? How much of this script of pseudo-explanations was knowingly false?

I explained my history, including how convenient it was that no agents would put anything in writing, at any point, and how three weeks earlier, my pricing structure was not scheduled to change.

I called out the scam for what it was - and it is indeed a scam. And I refused to be part of it. I demanded that he credit my account $12 and cancel my service.

Suddenly, he could renew my previous rate, but only for another year, at which time I’d have to call and choose another plan. Time Warner had just been acquired by Charter, which means less and less competition for consumers.

Like me, you too may have noticed there are only two cable providers in your area. This is no accident.

Comcast doesn’t compete with Cox who doesn’t compete with Time Warner. 

Why is this? Isn’t the point of capitalism to encourage competition? 

Apparently, this is what happens when we allow so many mergers and acquisitions - there is less competition. 

It’s expensive to wire cable into homes. If a company wants to compete, that’s a hell of a lot of set up costs, even for existing companies, and the product is little different.

Thus, it’s a lot cheaper to strike up a gentleman’s agreement with the competition not to encroach on one another’s established territories.

Each [cable company] stuck to its existing territory and raised prices. As with the twin railroad duopolies in the West and East, there’s an unspoken understanding that, so long as none of the monopolies tries to poach customers from another by cutting prices, everyone gets to earn fat profits, all thanks to Congress.

The hoodwinking doesn’t stop there.

You may have noticed your cable bill slowly creeps up from month to month, as mine did with Comcast when I lived in the Bay Area. 

Cable prices have been rising more than 2.5 times faster than the cost of living since the mid-90s.

David Cay Johnston explains:

In 2008, the worst economic year since the Great Depression, when the national economy shrank and millions lost their jobs, cable prices rose. What is astounding is that, for the first time in decades, there was no inflation that year. A dollar was actually worth 3.6% more in 2009 than in 2008. But the cable companies raised prices 5.9% that year.

You can thank Congress for this too, as they forbade localities from regulating telecommunication prices in the early 90s.

Despite the proliferation of cell phones, don’t expect cell phone companies to provide much-needed competition to the swindling cable companies.

I’ll let Johnston explain that illusion too:

AT&T and Verizon also own traditional landline systems that are legal monopolies. Through one technology or another, the AT&T-Verizon duopoly controls more than 60% of the telephone business in America… Verizon announced in 2008 that it would stop building out its…fiber-optic system… Instead, it has made deals with Comcast to sell its services using Comcast cables.

This is not competition, but a cartel.

But that’s what capitalism looks like when companies get to make the rules.

Thanks, Congress.

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