Savings from cutting cable slipping away
There was a time not that long ago when you could abandon cable TV and save lots of money by becoming a cord-cutter and getting your television fix via streaming. Today, streaming remains less expensive than cable, but the gap is narrowing. The cost of programming and the balkanization of streaming services are driving up the prices you pay for television, however you watch.
Both Comcast and AT&T hiked their TV service pricing recently.
Comcast raised its internet service fees, too. The increases from both companies were relatively minor; it could have been a lot worse. Optimum, a cable provider in the New York City area, is hiking its fees by more than $20 a month!
Cable companies are walking a fine line. When folks drop TV service for streaming, they still need to pay someone for internet access. So Comcast, AT&T and others may be bleeding TV subscribers, but they are gaining internet customers. For example, in the third quarter of 2019,
Comcast lost 238,000 TV subscribers but gained 379,000 broadband customers.
Cable TV companies typically blame price hikes on the money they have to pay to air programs. That’s not an issue with internet service — but higher costs there come from expanding infrastructure and modernizing equipment, increasing consumer costs.
Streaming services that attempt to mimic the traditional cable TV bundle — YouTube TV, Sling TV, AT&T TV Now and others — run into the same cost issues as cable TV providers. They don’t have the physical infrastructure to pay for — other than highpowered internet connections and servers to handle content streams — so they can charge less than cable. But nearly all of them this year hiked their prices, citing programming costs. AT&T TV Now even had two increases.
A colleague came to me last week, saying my recent story about the Comcast and AT&T increases for TV services made him decide to finally drop cable. He’s paying almost $170 a month for Comcast’s 150Mbps service and a TV package that includes some sports channels.
According to its website, Comcast currently charges new customers in Houston about $50 a month for standalone, 200Mbps service, not including fees that would take it to around $60 or so. He’d cut about $110 from his Comcast bill by dropping TV.
He wants to replace it with YouTube TV, a cablebundle replacement, for $50 a month (its price increased last year) — and that includes live local channels. He’d pay around $110 a month — internet and YouTube TV — by doing this. But a year later, the promotional internet price would expire and he’d be paying the “real” amount: $70 a month. And it’s likely that YouTube TV will see another price hike next year because … well, that’s just what happens.
In that event, he’d be up to $130 a month, and likely more. That’s approaching cable-TV bundle pricing.
He could switch to AT&T internet, which offers its 1Gbps fiber service at his address. That starts at $70 a month, but then jumps to $100 a month a year later. With YouTube TV (and with a likely price hike next year), he’d almost be back where he started!
Competition may be coming to help. Wireless carriers such as T-Mobile are itching to use 5G technology to deliver home internet and TV service. That may keep prices at bay, but the increasing cost of programming is an unstoppable force, making streaming much less of a bargain than it used to be.