Your Cable Company is Secretly Stealing from You
BillFixers | June 30, 2016
If you’ve signed up for cable, you know it can be an annoying experience getting everything working initially. You probably aren’t itching to do it again anytime soon. Your cable company knows this, and counts on you not wanting to deal with the hassle of switching to a new provider. In many areas there isn’t even competition, so your company doesn’t need to worry about you jumping to a cheaper provider because there isn’t one!
Now that you’re stuck with their service, they raise the rates. You’ve become…an ‘existing customer.’
The price difference can be dramatic. Take the following cable company, for example. In many areas, they advertise 25Mbps internet for $29.99/mo (not including tax or equipment). That’s the “new customer rate.” When that price wears off, they change customers to the “existing cusomer” rate, or the “everyday” rate, which is code for “more expensive”. Here are two statements for the same services from the same company, the first with the “new customer rate” and the second with the “existing customer” rate.
It’s important to look at the small print when you sign up. Make sure you know when the price is going to increase so you can call in and negotiate it back down yourself (or have someone do it for you).
2. Misrepresenting and Hiding Prices
When you go to your cable company’s website, they automatically change the prices (just for you) to make it look like the higher “existing customer” rate that you’re paying is what they’re offering everyone.
If you want to see what a new customer is paying, you’ll have to go to your provider’s page in an ‘incognito’ window so they can’t track you.
You’ve probably also noticed that these fees aren’t explained anywhere. We’ll get into some of the worst fee-offenders but if you want to read more on the topic, The Consumerist has detailed the fees for several of the major cable companies in their series of Bill Guides.
There are several different types of fees, and I’ll split them into three categories.
By separating out these mandatory fees, it allows your cable company to charge you more for the exact same service you were getting before, while also allowing them to advertise it for a “lower” price. As The Consumerist puts it: “[these fees] might sound like some sort of required regulatory charge, but [they are] a way to raise rates while pretending not to raise rates.”
These are not the only two hidden cost fees. One of the most egregious is the fee for HD service. As of last year, 81% of U.S. households had at least one HD television. But despite how commonplace HD televisions are, most cable companies’ advertised prices do not include HD channels. If you actually want to make use of that HDTV, you’ll have to pay $10-20/mo for an HD cable box and then cough up another $10/mo for the “High Definition” fee. Sad!
4. Yearly Price Increases at 400% the Rate of Inflation
Each year, cable (and satellite) companies increase the price of their services. Now, this in and of itself is not surprising, because many things go up in price over time. You can’t buy a sandwich for a nickel anymore, and gas doesn’t cost 25c per gallon. But most goods increase in price at around the rate of inflation, 2%. Cable, on the other hand? 8%.
According to Time Magazine, at 8% per year since 2010- cable prices are increasing at 4x the rate of the average yearly Consumer Price Index (CPI) increase.
That has resulted in the average subscriber paying almost $100/mo for service. The same Time article article quotes CutCableToday.com to say “if cable prices increased consistently with the U.S. inflation rate over the past 18 years, you’d be paying $35 a month for about 165 channels and there would likely be a lot less cord cutting going on.”
5. Auto Pay and Paperless Billing
However there is a significant benefit for your cable company. Not only are they assured that they’ll get their money each month, but you’re far less likely to question what they’re charging you. When their system automatically pays the bill without you having to look at it first, it reduces the chance that you’ll notice the price increasing from month to month. If you look at your last 12 months of statements, I would bet you’d be surprised at just how much more you’re paying now than you were 12 months ago.
This post is already much longer than intended (and I haven’t even come close to covering every method your cable company uses), but before I leave off, this final trick is one of the most expensive for you.
6. Adding Services You Don’t Need
What’s the catch? They use all the tricks above to talk you into a package that may not be what you think it is. Then later on down the road, that new package is going to be more expensive and harder to change than your original one.
It might sound like this story is exaggerated for dramatic effect but it’s not even uncommon. We’ve worked to help hundreds of customers who went through this exact series of events. The only real way to avoid this entirely is to go without television, internet, and phone. That’s not really possible in this day in age. My advice is to remember these tricks whenever you talk to your cable company, especially when considering a service change. Or, if you’d prefer, you can have our experts take a look at it for you.
BillFixers helps you fight back against your cable company.