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IN PERSPECTIVE: Go cheap, young man

Thu, 07/31/2008 - 8:20pm
Brian Santo, Editor

The deployment of DOCSIS 3.0 might be expected to complicate the balance of pricing and value, but it may in fact simplify matters.

MSOs have made some good money marketing a premium service to a clientele willing to pay the premium. Not providing a low-speed, entry-level tier at an entry-level price was part and parcel of protecting the premium service.

Brian SantoBut now the market is approaching saturation, and affluent potential customers are harder to come by. FiOS and U-verse are draining away some percentage of the customers cable has now.

Meanwhile, the digital transition next February may create as many as 4 million new customers for cable (see “After February 17, the call deluge,” on page 38). No matter what their economic status, these are people who have demonstrated a reluctance to pay a penny more than absolutely necessary.

Finally, it’s supposedly easier to upsell a subscriber than it is to attract a potential customer, especially if that potential customer is already locked in to someone else’s bundle.

So doesn’t it make sense to start offering an entry-level HSD tier? Comcast and Charter Communications do not appear to have one. Time Warner Cable, though, offers a 1.5 Mbps tier at $29.95 (and what if that offer was just a bit less costly than Verizon’s $24.99 768 kbps DSL service, rather than a bit more?).

The deployment of DOCSIS 3.0 might be expected to complicate the balance of pricing and value, but it may in fact simplify matters.

How much value would subscribers perceive if they got free speed increases of 5, 10 or 20 Mbps rather than the meg or two MSOs have occasionally doled out thus far, especially if prices – including the price of the proposed entry tier – stay the same?

And what value might that have when it will take months, and perhaps years, for the telcos to respond with FTTx or a supercharged version of DSL?
Something to think about.

brian.santo@advantagemedia.com

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